It’s the late 90s and the tech boom is in full swing. Walking the streets of downtown San Francisco, the buzz is palpable, with dot.com advertisements everywhere; one particular set of ads cuts through the clutter. These depict smiling people with picture-perfect white teeth, holding up what appear to be plastic dental retainers. Upon a closer look: meet Invisalign, the world’s very first invisible plastic dental braces – now popularly known as ‘aligners.’
This was the world’s very first introduction to Pakistani-American Zia Chishti – co-founder of Align Technology, the company behind the iconic clear dental aligners. After leaving Align, Chishti set up The Resource Group (TRG) with a couple of other equally pedigreed Pakistani-Americans: Rhodes Scholar Mohammed Khaishgi and Harvard-grad Hasnain Aslam, creating a platform in the tech and tech services industry: another apparent success story.
Throughout the early noughties, it appeared that Chishti really did possess the Midas touch. Other than what he positioned as a ‘hiccup’ with OrthoClear – a company in direct competition with Align which was forced to close down after being sued for patent infringement – it seemed like everything Chishti touched turned to gold. In the early 2010s, before the current AI-boom, Chishti established Afiniti, under the TRG umbrella, and heavily marketed it as an early adopter of Artificial Intelligence.
Then, like Icarus who flew too close to the sun, came the fall from grace. In November 2021, a former Afiniti employee disclosed, in a high-profile US Congressional testimony, a multi-million-dollar arbitration award against Chishti for sexual harassment, assault, and battery. Amidst a global outcry, Chishti stepped down from his role as CEO. The aftermath was brutal; his victim’s testimony then led to a bi-partisan change in US law ending forced arbitration for sexual assault and sexual harassment. Chishti’s attempt to sue his victim for defamation in the US backfired: not only did he lose the lawsuit, but the US Congress published on its website his previously private arbitration award, with all its incriminating details.
For some time, Chishti disappeared from the news. However, recent headlines have revealed Chishti’s attempts to wrest back control of TRG Pakistan, a PSX listed entity within the TRG corporate umbrella, through a series of legal maneuvers in Pakistan. The purpose of this article is not to discuss the US arbitration case, nor will we go into the current legal saga that surrounds TRG Pakistan. Instead, we will attempt to sift the wheat from the chaff, and examine if Zia Chishti really is the entrepreneurial genius that he portrays himself to be.
Let’s start with Align, considered by many to be Chishti’s first crowning glory. Chishti’s initial narrative was that he was forced to step down from Align due to his differences with its board about Pakistan operations. Remember, this was soon after 9/11, and given that Align had a large back-office presence in Pakistan, prima facie this sounded plausible. However, a closer examination reveals that, at the time of Chishti’s departure, Align Technology had a market value of a mere $200 million. While this may sound significant, it was significantly below the funds that investors had put into the company, including in its IPO. To add insult to injury, the company was suffering from massive operating losses and was close to running out of cash.
Digging into company documents reveals that it was Align’s mounting losses, consistently missing financial targets, running out of cash, and its massive decline in stock price that caused the Align board to replace Chishti. Along with Chishti’s resignation, the existing venture capital and institutional investors had to raise emergency capital to save Align from running out of money. Only after Chishti’s departure did Align prosper, eventually reaching a multi-billion-dollar valuation, with its market cap multiplying over 50x, belying the narrative that Chishti was the godfather of its financial success.
Chishti’s next big venture was TRG that he co-founded with Aslam, who previously worked on Wall Street as an investment banker at JP Morgan, and Khaishgi, who was previously a Senior Investment Officer at the IFC. Established with initial capital from Pakistani shareholders through PSX-listed TRG Pakistan, TRG was basically a holding company for investing in various technology-based businesses. Initially, TRG’s investments and portfolio companies seemed to be doing well, scaling operations globally. However, the company had persistent profitability challenges and even a decade later, TRG Pakistan’s share price remained slumped. By the mid-2010s, just like with Align, TRG’s valuation struggled to exceed the money that investors had put into it.
By this time, Chishti’s attention had turned to Afiniti, into which he had ploughed nearly half of the $100 million that TRG had raised over the years. In early 2016, Chishti officially became the full-time CEO of Afiniti, where revenue growth was accompanied by an even higher growth in costs. When Chishti had to resign because of his sexual misconduct, the company had taken on nearly $500 million in debt (against equity of just $100 million), which had to be restructured in 2024 as a large portion of the debt came due. So far, Afiniti has failed to make any return on TRG’s initial investment of $50 million.
Meanwhile, after Chishti’s full-time transition to Afiniti in 2016, the management of TRG’s other portfolio companies passed to his co-founders and partners, Khaishgi and Aslam. From their moribund valuation at that time, the next few years led to a significant increase in value of those portfolio companies under their oversight. In August 2020, during the midst of the covid crisis, the pair led one of the operating companies, IBEX, to a successful NASDAQ IPO. In 2021, Aslam and Khaishgi led the sale of another TRG company, e-Telequote, for a substantial return. These two successful exits earned TRG shareholders a whopping 10x return of over $500 million on initial TRG investments of $50 million. So, while the $50 million invested by Chishti in Afiniti struggled to earn a return, TRG’s performance was driven by the superlative success of IBEX and e-TeleQuote under the stewardship of his partners and co-founders.
Specifically, since Chishti’s departure in late 2021, one of the two remaining TRG portfolio companies, IBEX, has seen its share price more than double on the back of powerful operating results, even as its BPO competitors have encountered significant headwinds given AI-related concerns, resulting to significant declines in their stock prices. This makes the performance of IBEX even more remarkable. At Afiniti, to clean up the $500 million debt mess left behind by Chishti, Aslam and Khaishgi successfully delivered on a highly complex restructuring for TRG, which preserved a significant equity stake in Afiniti for existing shareholders – this restructuring was cited by industry publications as a deal of the year.
And in a repeat of the Align-OrthoClear saga, after being forced to resign from Afiniti, Chishti started an Afiniti copycat selling similar products and services through primarily ex-Afiniti employees in China. Not surprisingly, Afiniti sued Chishti for IP infringement and other breaches in what appears to be déjà vu.
Chishti’s actual track record undermines his myth of being a serial unicorn creator. Chishti was asked to resign from of each of his companies with valuations upon departure well below unicorn level, often with mounting losses and a trail of conflict, litigation and damage. At both Align and Afiniti, Chishti developed a reputation of excessive spending and either nearly ran out of funds or left the company with unsustainable debt. Perhaps Chishti’s greatest strength lies in developing ideas and launching new businesses, which other seasoned leaders then have to transition to financial success, all while creating the false image of a serial unicorn creator through a carefully choreographed PR machine.
As of now, the TRG / Zia Chishti story is far from over. The battle for control of TRG Pakistan – and through it control of TRG’s international assets – rages on. But as we await the courts’ final decision, it behooves us to separate the man from the aura he has created, and realize that, for all his great PR, Zia Chishti’s entrepreneurial success may be more of a mirage.