Blockchain was never something Michael Teh imagined he would ever get into. But it was a term he kept on hearing about, so Teh, being the curious person he is, wanted to see what the fuss was all about. “I started reading about it in 2017, and by that time, it already quite a hot topic,” he remembers. “I understood the basics, but it reached a point where I became very confused about how it really worked. I almost gave up learning about it.”
Luckily, he didn’t, and his fascination led him to do more research in his spare time. After a number of years working at a Big Four firm and various tech companies, an opportunity presented itself at an up-and-coming blockchain company. He jumped at it, and took on the role of Financial Controller (FC) at Algorand Foundation, in 2019. He thought he knew enough about blockchain, but he was caught in a stream of technical jargon to wrap his head around, all from the get-go. He also found himself running both the finance function of the company, and in some ways, the company itself. “In Hong Kong, we’re a new start-up, so I find myself doing a bit of everything,” adds Teh, who is a member of the Hong Kong Institute of CPAs.
Algorand is an open-source decentralized blockchain platform that allows the public to create projects and applications within its blockchain. Non-profit organization Algorand Foundation provides assistance to the Algorand blockchain network, which it governs through monitoring the use and distribution of its native tokens and engaging with developers who want to build on its blockchain. “Our mission is to build a trusted, public and permissionless blockchain infrastructure for a borderless economy,” says Teh.
Teh feels humbled to work in an industry as burgeoning as blockchain. Indeed, blockchain start-ups accounted for nearly 40 percent of 57 fintech companies that established operations in 2019 in Hong Kong, compared to only 28 percent in 2018, according to a report from Hong Kong’s Financial Services and the Treasury Bureau. Many entrepreneurs are drawn to the city’s status as a fintech hub for its free flow of capital, reliable legal system and thriving financial services market, according to InvestHK, a Hong Kong government body responsible for foreign direct investment.
The coronavirus pandemic, which has disrupted lives and the global economy, has generated growth in the fintech market, as social distancing measures force companies and consumers to do more business online. Teh expects the industry to continue flourishing with time. “Business leaders are becoming more familiar with blockchain technology,” he explains. “There’s now a shift in conversation. Previously, they’d ask ‘what is blockchain?’ but now, they are asking ‘how can blockchain help our business?’ or ‘how can we implement it into our business model?’”
Ensuring supply, meeting demand
Algorand has its own native cryptocurrency known as ALGO tokens, which are used to boost public participation, contribute to the stability of the Algorand blockchain and support the Algorand community.
Algorand Foundation has already formed partnerships with companies for them to utilize its blockchain. For example, it has partnered with an Australian tech company that, through Algorand’s blockchain, will be able to buy and sell gold. Another collaboration sees an investment company using the blockchain to record the ownership of real estate assets and proof of loan transactions.
In April, Algorand Foundation announced the launch of its ALGO Grants Programme, where 250 million ALGO tokens will be allocated in the form of grants to developers across four categories: innovative research, development tools and infrastructure for the Algorand blockchain, use cases of decentralized applications to be built on top of the blockchain, and education and community initiatives. “This programme encourages individuals to build on our blockchain,” explains Teh. He says Algorand Foundation’s two primary goals are ensuring fairness in the distribution of its native ALGO tokens, and engaging with the community. “We maintain independence in how we govern the use of the tokens, as we want them to promote the mass adoption of our blockchain,” he says. “Algorand is an open-source blockchain. So if any developer is interested, they can simply start coding on it.”
Since the announcement, the company has received more than 50 proposals from developers requesting to code on its blockchain. Teh, along with the other members of the research team, is in charge of deciding which proposals to accept and how many tokens will be required to help them to achieve their proposed applications. “We decide who to grant the tokens to, and how many of the 250 million tokens we can afford to grant this year or over the next five years, for example,” he says. “Once our research team approves a proposal, we work closely with these developers to help build what they have proposed. We don’t just disappear.”
Teh adds that developers who receive ALGO are able to use them to run and test their applications on Algorand’s blockchain. “Our aim is to encourage people to adopt our blockchain, so when we grant them tokens, we need to make sure they are of value.”
Michael Teh heads Algorand Foundation’s finance department, and is in charge of financial reporting, budgeting and even takes on administrative roles.
A key link
Teh heads the finance department, and also takes on administrative duties. “I would say about a quarter of my time is spent on finance-related tasks such as financial reporting, budgeting and looking at balance sheets and income statements,” he says. “The majority of my time goes to ad hoc roles such as helping out with human resources (HR), administrative and legal tasks. We don’t have an HR manager, so I’m also in charge of payroll and sometimes recruitment.”
Teh knew the FC role would call for expertise beyond accounting. “People, especially in management, will always expect you to take on roles beyond accounting or finance, so being familiar with different areas gives them a higher level of confidence when assigning tasks, especially ones outside the finance function,” he says.
One of the most challenging aspects of the role, Teh admits, is attaining a solid understanding of blockchain technology and cryptocurrency. “This isn’t a traditional industry,” he says. “When I find myself unsure of something, it’s hard to find help. I can’t ask my peers, ex-colleagues or even my mentors. There are a lot of technical terms to learn, and many of them, frankly, sound completely alien to people new to this area.” To address this, Teh teaches himself. He reads about blockchain and makes a conscious effort to stay updated. “There are constant developments in this area,” he says. “Every morning, I read through updates on blockchain and cryptocurrency. I zone into high profile news and make sure I understand everything. This all happens before I even touch my emails.”
“This isn’t a traditional industry. When I find myself unsure of something, it’s hard to find help. I can’t ask my peers, ex-colleagues or even my mentors.”
Being as familiar as possible to the field has helped Teh to work better with tech and research teams in the company. “It was a challenge to translate accounting terms such as accounting standard requirements into a language that the tech guys could understand,” he says. “Now I’m able to communicate more effectively with them and explain these requirements, such as how we record token sales. They might think revenue is recognized immediately upon the sale of a token, but it isn’t necessarily that straightforward.” Though International Financial Reporting Standards (IFRS) and Hong Kong Financial Reporting Standards currently do not have guidelines that explicitly discuss crypto-asset transactions, the IFRS Interpretations Committee published an agenda decision in June 2019 on applying IFRS standards to cryptocurrencies. The IFRS Interpretations Committee concluded that International Accounting Standard (IAS) 2 Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business. If IAS 2 is not applicable, an entity applies IAS 38 Intangible Assets to holdings of cryptocurrencies.
Teh also manages the company’s legal matters by allocating time to look at contracts. “I need to look at every potential financial liability, for example, if the relationship with a counterparty turns sour or if there’s a clause in a contract which might lead to liabilities. This is my main focus when I review contracts at Algorand Foundation.” Teh credits his experience in his previous roles with equipping him with the added knowledge. “I used to study a lot of legal contracts, and whenever I had questions I would speak with the relevant external legal counsel. After all these years, I started to build a sense of familiarity with standard legal terms such as warranties or limitations of liabilities.”
A prime example
Teh graduated from the Chinese University of Hong Kong and began his career at KPMG in 2007, where he built a solid foundation in financial reporting and learned how to lead a team, manage pressure and communicate effectively. It wasn’t easy, as he remembers, and the steep learning curve meant having to learn fast. “When I started off as an auditor, I didn’t have weeks or months to get used to working with a client before the engagement. I would get a call from my manager and have to be at a new client’s office within a few hours’ notice,” he recalls. “I needed to understand their business, their business model, and most importantly, whether everything made sense in a very short period of time.”
Having to manage multiple engagements when he became an audit manager taught him how to carefully manage his time in meeting deadlines. With his team often caught under pressure, Teh says he took charge and led by example. “One very important skill I learned during those years was persistence,” he adds. “When faced with meeting difficult requirements or deadlines, you can’t give up – in a way, your team’s persistence depends on you. If you persist, that motivates others too.” He says this skill ultimately helped him to take on the role of a manager.
“When faced with meeting difficult requirements or deadlines, you can’t give up – in a way, your team’s persistence depends on you.”
After six years, he decided to bring his expertise to work in business, and took on the role of finance manager at technology manufacturer World Wide Touch Technology (Holdings) Limited in 2013. The company manufactures products such as wireless charging devices, biometric devices and capacitive touch screen controllers. The role saw Teh running the entire finance department. “I did the financial reporting, auditing, budgeting, and often had to work closely with lawyers and regulators from the Securities and Futures Commission,” he says. Looking back, Teh says that taking charge of the entire department gave him the confidence to do the same at Algorand Foundation.
He worked a year before joining TCL Communications Holdings Limited, a Chinese multinational electronics company as an FC, where he stayed for five years. He was responsible for overseeing the global financial management department of the mobile division. The company sells mobile devices such as smartphones, tablets and smart watches. As Teh remembers, he joined the company during a rough time. “The company had just been restructured, so employee morale was quite low,” he says, adding that the finance team was, as a result, put in charge of overseeing all shipments of products and company orders. “The finance team had never been in charge of something like this before, so there were doubts whether this would work. Even I had my doubts.”
Teh immediately took control and led the team. “I demonstrated to my team how we were going to introduce our new global policies,” he says. He put together new policies and procedures to aid with product shipments, and then communicated those developments with various country managers across the world. With better procedures put in place and operations running smoothly, morale picked up as other departments took note. The experience taught him the importance of leading in the face of uncertainty. “I first had to believe in myself. I convinced myself that the task at hand would be feasible. I made sure the team’s goals were aligned and that we were all moving in the same direction.”
Teh graduated from the Chinese University of Hong Kong where he majored in Business Administration. He spent six years at KPMG and a number of years of other tech companies before working at Algorand Foundation.
A kick out of life
Teh attributes his success to a combination of perseverance and having the right attitude. “I don’t believe that failure is the opposite of success. Instead, it’s a part of success,” Teh says. “By failing, you simply learn what to avoid in the future. Fear of failure might stop you from trying or embracing something bigger in life.”
The fear of making mistakes, he adds, may bleed into other facets of work, such as having the courage to ask questions. “For example, during internal company meetings it’s always good to clarify any doubts instead of remaining silent over fear of asking the wrong question,” he explains. “There’s always a chance that the whole room of participants has the same doubts and questions but no one’s willing to take the initiative to raise their hand and speak up.”
He also advises professionals to remain focused on their own goals and to avoid comparing themselves to others. “Compare yourself today with the person you were yesterday,” he urges. “When you find yourself thinking about why you aren’t earning as much or receiving the same awards as someone else, you bring yourself into an endless negative thinking loop. Instead, ask yourself what you can do better in the future.”
The Institute’s Qualification Programme (QP), he adds, is a highly comprehensive and practical programme. “The training one receives from the QP will equip that individual with the knowledge to be a business decision maker,” he says. “Even when working in the commercial field, for example, we need to apply multiple facets of knowledge together, such as from financial accounting, management accounting, tax and business law, to form a holistic view when making a business decision.”
Teh is thrilled to be at the forefront of blockchain at Algorand Foundation, and while he occasionally finds himself working late, he has recently learned to strike a better balance between work and play. When he isn’t working, he is a family man who enjoys spending time with his two boys, who are six and two. “Having children forced me to maintain a work-life balance,” he laughs. He is also a keen football player. Though he doesn’t play football as often as before, his ideal weekend involves afternoons spent kicking, passing and scoring with the boys. “My older one is learning how to kick, and I can’t wait to teach the younger one how to play as soon as he grows up.”
Michael Teh knows first-hand how the intricacies and even the basics of blockchain can be a challenge for some people to grasp. But one way he explains the technology to others is by illustrating its role in a simple financial transaction. “When you transfer money to someone, you need to go through a centralized authority such as a bank. They keep your ledger and verify that you have that amount of money to transfer. So all your data is stored in a centralized body,” Teh explains. “But with blockchain, when people perform transactions with each other, that information is stored in a ‘block.’” Each block is an intangible digital storage unit, and a single block can store thousands of transaction details such as the amount, date, and time of transfer. A blockchain itself is an ever-growing digital ledger of transactions that are cryptographically linked or “chained” together. The transactions are duplicated and distributed across an entire network of computer systems on the blockchain.
Blockchain’s high level of security is attributed to blocks being immutable – information stored within a block cannot be changed once it is written. If one attempts to modify the data in one block, it would require that individual to change the data of all the other blocks preceding it, making the task near-impossible due to the large number of blocks. Each block’s transaction data creates a hash, or an algorithm-generated code made of jumbled numbers and letters similar to a password, to keep it secure. This allows blockchain users to distinguish one block from another. “This feature is what makes blockchain secure and difficult to manipulate,” adds Teh.
This level of security presents a multitude of ways for blockchain to be used – ways that are still being explored today. For example, blockchain can be used by healthcare professionals to securely store patients’ medical records and share medical data between health organizations – this was adopted by Taipei Medical University in 2018. Suppliers in supply chains can record the origin of materials they have purchased using blockchain – a method already used by companies such as retail giant Walmart, shipping company Maersk and package delivery companies UPS and FedEx, to move goods.
According to LinkedIn’s Future of Skills 2019 study, expertise in blockchain is in high demand, especially in the Asia-Pacific region. The report found blockchain to be the fastest growing skill in Singapore and among the top three in Mainland China, Japan, Taiwan, South Korea, Hong Kong, and Vietnam. Professionals like Teh hope to make their mark in the field, while they can. “I truly believe in blockchain,” he says. “There’s potential for blockchain to be part of our daily lives in the future – we would probably use it without even noticing it. Nowadays when most people interact with apps on their smartphones, they probably don’t always realize they’re using the Internet. The same could be said for blockchain in the future.”
Blockchain start-ups accounted for nearly 40 percent of 57 fintech companies that established operations in 2019, compared to only 28 percent in 2018, according to a report from Hong Kong’s Financial Services and the Treasury Bureau. Read more about the business of blockchain in October 2020 issue.