Opportunity in Failure
Anil Aggarwal ('95), founder of several financial technology start-ups, on his steps and missteps as an entrepreneur.
Anil Aggarwal (’95) went to bed on February 6, 2002, in despair. “I remember going to sleep and thinking, ‘So this is how it ends,’” he says.
At a board meeting earlier that day, Aggarwal and his co-founders had planned to meet a representative of Allied Irish Bank (AIB) to finalize $3 million in equity funding for their financial technology start-up, Clarity Payment Solutions. That morning, however, AIB announced a $700 million trading loss, the largest in US history at the time.
“And so our funding got pulled,” Aggarwal says. “It was completely out of our control.” The dot-com bubble had begun its devastating burst two years earlier, and funding for tech start-ups had all but dried up. Aggarwal, then 32, didn’t know where to turn for the cash he’d soon need to make payroll for his 60 employees.
But his story did not end there. After weeks of continued conversations, the bank came through with the funding. Two years later, Aggarwal sold Clarity Payment Solutions for $53 million.
Since then, Aggarwal has successfully launched seven more businesses. During his 17-year career as an entrepreneur, he’s raised $75 million in venture capital, sold several of his companies for a total of $400 million, and stopped losing sleep over mistakes and setbacks, accepting them, instead, as essential to the entrepreneurial journey.
Growing up in London, Aggarwal watched his father run a succession of small businesses—ranging from a neighborhood grocery store to a plastics factory—and felt the urge to follow in his footsteps.
“I grew up in a very entrepreneurial environment, where people were thinking up ideas and making them a reality,” he says. “It always seemed interesting and exciting.”
After earning his undergraduate degree in accounting, Aggarwal graduated from BU Law in 1995 with a focus on business organizations and finance law. He practiced corporate and M&A law in New York and Washington, DC, as he waited for the right business opportunity to pursue.
The kernel of the idea for his first company came while he was an associate at a DC law firm. He had intended to buy a gift card to a local department store for his secretary for Christmas, but he got busy, ran out of time, and ended up giving her cash and a sheepish apology. She told him not to worry: she didn’t shop at that particular store anyway. Retailers had only recently transitioned from paper gift certificates to plastic, magnetic-stripe gift cards, and Aggarwal got the idea to create a secondary market where people could offload gift cards they’d received but didn’t actually want.
He shared his idea with two entrepreneurial friends, and over time the idea evolved into Clarity Payment Solutions, an early innovator in processing technology for prepaid cards, such as payroll cards, Visa gift cards, and debit cards like those associated with flexible spending accounts. While Aggarwal exudes confidence today, he admits he was filled with doubt during his early days as an entrepreneur.
“It took time to understand what it actually means to be a tech entrepreneur,” he says. “The last 17 years that I’ve been doing it have been, in many ways, the first 17 years of it becoming mainstream. There was no playbook when I started.”
Today, technology start-ups exist in a business culture that embraces trial and error.
“They call it iteration now,” says Aggarwal. But when he was feeling his way along in the early 2000s without industry precedent, he says, his missteps and wrong turns didn’t feel like the most efficient path to a viable business model. They often just felt like failure.
Together with his business partners, Aggarwal has since built two technology companies (Clarity Payment Solutions and TxVia, which he sold to Google in 2012), and he’s also worked to help build entire industries. After selling Clarity, he launched a trade association, a trade publication, and a conference, all aimed at strengthening the nascent prepaid card industry. He later founded Money20/20, a successful conference for the financial technology (or “fintech”) industry, one of today’s fastest-growing tech sectors. His current venture is Shoptalk, a conference that brings together established retailers, e-commerce companies, and technology start-ups to explore the future of commerce.
Aggarwal says Shoptalk is his most exciting business yet. His goal, he says, is to reshape the dialogue for the entire retail and e-commerce industry, one of the world’s largest and most important business sectors. During his opening remarks at the inaugural Shoptalk, held in Las Vegas in May, he told the audience of over 3,000 that Shoptalk is such a huge undertaking that you’d have to be a little crazy to try it. “The good news,” he said, “is that we are crazy enough to try, and that’s because we’ve done it before successfully.”
Aggarwal has no doubt that Shoptalk will become what Money20/20 is now: “a product that people absolutely love.” How is he so confident? With 17 years of accrued business knowledge, relationships, and credibility to draw from, Aggarwal knows he can build successful products more quickly and with fewer mistakes than he did in the past. He also knows he doesn’t have to have all the answers. In today’s business environment, he says, “solving really hard problems isn’t all on you.”
Thanks to the start-up culture that he and other early tech entrepreneurs created, we now live in a society that embraces innovation, he says. Instead of abandoning a less-than-perfect product, customers recognize its potential and provide feedback for improving it. With this is mind, Aggarwal now embraces the uncertainty inherent in each new venture with the certainty that he’ll succeed in the end.
This feature originally appeared in The Record, BU Law's alumni magazine. Read the full issue here.
Reported by Corinne Steinbrenner (COM'06)