Richard Koh knew he had hit rock bottom when he realised he could no longer pay his workers. A Series-B financing deal in 2012 for his fintech start-up M-Daq had fallen through due to disagreements between investors ASX and Citigroup. This caused its funding levels to fall to near zero. With a heavy heart, Koh broke the bad news to staff, his dream of a world without currency borders seemingly all but dead and buried.
Still, 14 out of his 25 employees then made the surprising decision to stay on for no pay. Even more amazing was that many those who did leave continued to help the firm in other ways — some even interviewed new job candidates long after they had left the company. In normal circumstances, most workers would be unwilling to continue engaging with their former employer.
How did Koh manage to inspire such great loyalty? When asked, he attributes most of his success to his philosophy of servant leadership. “Whenever there are tough things happening, we take on the hits from the top-down,” explains Koh, noting that the firm’s management had slashed their pay packets as the company drew down its cash reserves. The higher the position one occupies in an organisation, the earlier one gets hit and with a bigger quantum to boot.
Such an attitude was in full display following the onset of Covid-19, as M-Daq departed from the traditional playbook of cutting human resource costs. Instead of paying wages at the end of the month, it paid its workers upfront at the beginning of the month. The rationale, says Koh, is to provide a firm assurance to his team that their jobs were safe by putting money into the hands of workers ahead of time — the company could hardly dismiss them having already paid them.
But care for workers is not just limited to downturns. “You may not believe this but in the last ten and a half years, I have never had a bonus or a pay increment,” he claims, despite M-Daq achieving profitability two and a half years earlier. Believing that the rest of the team deserve a greater share of the spoils, the tech entrepreneur instead takes pains to wrangle as large a bonus as possible for his staff from the company board.
Koh also says nobody really “leaves” M-Daq — the door is always open for former employees to return. Employee numbers are both permanent and unique. Returnees retain their old number and are presented with an engraved boomerang on which each stint at M-Daq is labelled as a new act in their story with the firm. Alumni regularly pop in for meals and socialising.
“[Our employees] never left us, they merely just went to learn a new skill somewhere else and one day, they may come back,” says Koh of M-Daq’s “boomerang policy”. This builds a strong network of alumni and contacts across the tech industry who can help the firm in times of need or even bring back new skills and ideas at a later date. It also elevates the employer-employee relationship from a transactional deal to something far more meaningful.
M-Daq’s unique company culture has not gone unnoticed. In 2019, it was named the best technology company to work for in Singapore by the Singapore Computer Society for the mid-sized (between 50 to 500 staff) category. M-Daq has a four-star average employee rating on Glassdoor with 29 reviews, with employees praising its pro-family and friendly work culture.
Spark of creativity
Born with a spark of creativity, it is little surprise that Koh would go on to become a startup founder. His path into entrepreneurship came at the tender age of 14, when he sold computer games — to the detriment of his GCE O-level results — and he now holds three patents to his name. This includes a large orange “fishbone” standing desk that now takes pride of place in his beautiful self-designed office for meetings and company gatherings.
With a decade of experience in foreign exchange (FX) at investment bank JP Morgan, M-Daq was born out of Koh and co-founder and the company’s chief technology officer Noboru Takahashi’s frustration at FX risks in financial transactions. They observed that failing to price in fluctuating FX rates into investment decisions could see investors unwittingly missing out on the best time for buying and selling securities. E-commerce buyers and sellers could also find themselves paying more or receiving less respectively due to FX conversion charges from credit card companies.
The reason for these problems, the founders argue, is due to existing FX solutions focusing on the supply-side rather than the demand side. Most existing solutions, he claims, merely respond to future global FX rates, resulting in fluctuating currency conversion that increase FX risks. What M-Daq seeks to achieve, on the other hand, is to guarantee a given exchange rate by anticipating currency demand at a given time on e-commerce and trading platforms, buying much as much FX as required to maintain that rate despite currency fluctuations.
This quickly negates significant FX risks in international transactions, with Koh claiming that M-Daq’s platform would even be able to hedge offered FX rates against “black swan” events like currency shocks. Consequently, parties in international transactions enjoy greater price certainty when engaging in trade involving multiple currencies. This solution also cuts out the need for currency conversion via credit card services, thereby reducing transaction costs.
Despite difficult beginnings, the market has increasingly embraced M-Daq’s innovative new FX solution. Today, the firm has companies like AliExpress, CGS-CIMB and Taobao among its clients. M-Daq also won the top gold prize at the SG:D Techblazer Awards in 2018 and first runner up at the inaugural MAS Fintech Awards in 2016. Koh was also awarded Entrepreneur of the Year by the Singapore Computer Society in 2018.
Most recently, Koh was also named EY Entrepreneur Of The Year – Financial Technology at this year’s EY Entrepreneur Of The Year Awards. He will be competing with two other entrepreneurs — managing director and co-founder of Mlion Corporation Eric Leong and Secretlab co-founder and CEO Ian Ang — for the overall title.
The self-effacing Koh, who claims to be media-shy, was initially reluctant to take part in these awards. It participates in such contests mainly because of encouragement from partners or the government. Still, Koh remains wary of companies that inflate their credentials to get noticed. (he prefers to let M-Daq’s work speak for itself). Nothing exemplifies this approach more than the company’s website. A statistics counter shows that M-Daq has handled transactions amounting to $19.4 billion in total while generating $319 million in economic value, $171 million in shopper savings and $135 million in new revenue streams since 2016. Once on the brink of going under, M-Daq is now a shining light in dark times.
Not about the money
Despite the numerous accolades — along with $82 million in paid-up capital with 10 successive quarters of profit — Koh does not feel that he has truly succeeded. M-Daq’s core team, he says, is not motivated by material things or glorious milestones. “As long as we are able to continue to learn, have fun and inspire the next generation, that to us is already success,” adds Koh.
Disciples of “failing fast”, the culture of M-Daq is one that sees too much success as a symptom of stagnation. Citing Amazon’s Jeff Bezos and Netflix’s Reed Hastings, Koh says that failing is just part and parcel of being an innovative company. He adds that even as a successful company, M-Daq’s VC funding pitches often return their fair share of disappointments.
Success also brings its own challenges. As M-Daq grows ever more prosperous, it will inevitably begin attracting people who join for the wrong reasons — money, prestige and position — rather than a genuine resonance with the company’s mission. Such individuals could jeopardise the unique company culture that Koh and his team have so carefully nurtured.
“You try to see the sparkle in a person’s eye, whether they believe in the same mission you believe in,” Koh says of finding good people as a more established firm. His acid test is to offer employees 50% to 60% their salary in company shares. Only committed candidates, the logic goes, would sacrifice such a large portion of their pay to bet on a start-up.
But Koh’s innovative business and people-centric approach has seen him build up a “fan club” of sorts within the industry, with a quarter of M-Daq’s headcount consisting of such individuals. They have proven valuable allies within the fintech industry, providing valuable contacts and advice. Drawing on the strength of these “fans” as well as its alumni, Koh likes to think of M-Daq as having a team of 500, despite having an official headcount of around 60.
The biggest lesson that Koh has learnt from M-Daq’s ups and downs is that business is all about people. “If you invest in the right people who have innovation and integrity, during bad times they will endure and during good times, they will not profiteer of you.”
