Zia Chishti, once considered one of Pakistan’s most prominent tech entrepreneurs, is again in the headlines-not for innovation, but for litigation. His latest legal maneuverings to reassert control over TRG Pakistan have renewed scrutiny of a corporate record that, when closely examined, reflects a pattern of instability, unfulfilled promise, and controversy.
Track record prior to TRG
Chishti first rose to fame as a co-founder of Align Technology, the pioneering company behind Invisalign clear dental aligners. Despite the company’s early success and eventual IPO, Chishti’s tenure came to an abrupt end in 2002 when he was ousted as CEO by Align’s board following operational missteps and leadership concerns, and a market value of just $200 million, well below the amount that investors had ploughed into the company. Subsequent to Chishti’s departure, widely regarded as a necessary course correction at the time, the value of the company has increased 70 times, becoming a multibillion-dollar success.
Chishti then started another venture in mid 2000’s in the healthcare industry, Orthoclear, which aimed to compete with Align by producing similar clear aligners. But rather than becoming a viable alternative, Orthoclear quickly collapsed under legal pressure. Align Technology sued Orthoclear for patent infringement, resulting in a settlement that forced the startup to cease operations entirely. The venture not only failed to gain traction but also highlighted a recurring issue: Chishti’s inability to build enduring, competitive businesses and becoming embroiled in legal matters.
TRG – value unlocking by other co-founders
In the early 2000’s Chishti co-founded TRG with two other Pakistani-Americans in what has become the most lasting venture associated with him. Founded as a platform holding company for various operating ventures in the technology and BPO sector, TRG secured a significant portion of its early capital from Pakistan through a PSX-listed company called TRG Pakistan. TRG’s operating companies initially focused on the growing outsourcing industry, and were able to scale rapidly, setting up operations not only in Pakistan but also in other geographies notably the Philippines. However, the companies faced profitability challenges and ten years later, by the mid 2010s, TRG struggled to command valuations exceeding its total paid in capital of $100 million.
Chishti’s own interest was drawn particularly towards Afiniti, a TRG venture that Chishti had incubated and deployed $50 million of TRG’s capital towards. Afiniti branded itself as a predictive AI-based enterprise software company, and in 2016, Chishti became its full time CEO, leaving the day to day management of TRG’s other operating companies to his partners.
Over the next few years, those operating companies prospered as freed from Chishti’s erratic management style, his co-founders focused on disciplined growth, consistent strategy and cost control, and in 2020, took operating company IBEX public on NASDAQ and in 2021, sold e-Telequote to a large US financial services player. These two exits have generated a return for TRG of $500 million on total deployments of $50 million. Investors credit the dissociation from Chishti as a turning point that allowed for unlocking of the value in TRG’s businesses outside of Afiniti.
Afiniti – unfulfilled potential
In the meantime, Chishti also grew Afiniti rapidly but increased costs much faster, burdening the company with $500 million in debt to fund its losses that later became its undoing. Using a PR-heavy approach-complete with splashy events, high-profile board members and even a corporate jet – Afiniti pointed to multi-billion dollar paper valuations during the heady tech valuations of 2020/21, but was never able to raise any real institutional capital at such levels.
Chishti’s leadership of Afiniti ended in disgrace. In end 2021, a former employee provided testimony before the US Congress of the existence of an arbitration award against him for sexual misconduct and retaliation, with significant damages paid by him to the victim. The outcome prompted a swift exodus: Chishti resigned from all corporate positions, including Afiniti and TRG-related positions, under pressure from clients and stakeholders.
Over the next two years, the market and valuation landscape around Afiniti had changed. With the rise in interest rates, technology sector valuations had come down, and debt providers were pushing to pare down their debt levels in line with cash flows. As a result, TRG’s management negotiated with Afiniti’s lenders to restructure the unsustainable debt incurred by Chishti, with control passing to its lenders and with TRG retaining a significant equity stake.
To date, Chishti’s $50 million investment in Afiniti has not generated any cash returns. TRG investors have lamented a missed exit opportunity in 2020/21 for Afiniti when sector valuations were at their peak and when TRG generated highly successful exits for its other companies, and have been left wondering whether Chishti’s own knowledge of his shocking arbitration award, that was not public yet, was a contributing factor.
Analyzing Chishti’s corporate record
The story that emerges from Chishti’s corporate record is one of unfulfilled promise, where an innovative founder’s mind collides with the realities of actually running a business. Align Technology and TRG were both solid entrepreneurial ideas that flourished and generated investor returns only once Chishti was no longer in day-to-day operational control. As for Afiniti, the story is yet to be fully written given the new ownership but the potential of the pioneering AI venture, and a possible successful exit, were waylaid by the weight of unsustainable debt and the body blow of Chishti’s sexual misconduct.
Another theme that emerges from Chishti’s record is one of conflict and unrelenting litigation. His first run-in with litigation took place when Orthoclear, his competing venture with Align following his departure, could not bear the weight of legal scrutiny when faced with IP infringement challenges. Unchastened by that experience and fifteen years later, Chishti started Isbei, yet another competing venture from a company that he recently departed (Afiniti), and is embroiled in intense litigation at the hands of Afiniti for similar charges of trade secret theft and IP infringement.
Losing his way post departure from TRG
Chishti’s post-resignation behavior has unfortunately followed that destructive yet predictable trajectory. Observers point to a pattern of disruptive litigation across multiple jurisdictions, with suits ranging from arbitrations to civil court petitions to regulatory challenges-all aimed at regaining influence over PSX-listed TRG Pakistan and then eventually upon all of TRG. Many of these actions have been dismissed or stayed, including recent orders from Pakistan’s Supreme Court and Islamabad High Court that have upheld the status quo in TRG’s governance.
His post resignation behaviour has taken a heavy financial toll. From a net worth of nearly $100 million at the time of his departure from TRG, Chishti is now essentially bankrupt, having doubled down on expensive litigation, on purchasing shares of TRG Pakistan at the top of the market, and on funding competing ventures. The United States tax authorities have placed a $10 million lien on his assets for unpaid taxes; he is in court against his allies at the JS Group as he has defaulted on a Rupees 3 billion loan that he took from them to fund his purchase of TRG Pakistan’s shares; and he is dodging enforcement of a $9 million court order against him in a US arbitration that he lost against TRG. In a certain sense, taking over TRG and its assets is the only “Hail Mary” move left for him to survive financially, but at the expense of other shareholders.
From Align to Orthoclear, Afiniti to TRG, Chishti’s track record appears to be defined by sustained value creation that took place after his departures. His recent legal battles are being interpreted not as signs of entrepreneurial resilience, but as the last moves of a once-celebrated founder who lost his way-and, by most accounts, his mandate.