My Favourite Failure: Knowing when to give up is one of the hardest decisions you’ll face - Anita Abildgaard

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1:01And I just realized this is not someone I want to spend the next five years with. This is not someone I want to really spend many more days with. Because it just got, I mean, it got to the point where I was in tears after we'd had board meetings, right? Because it was just so unpleasant. That's Anita Abelgar, who's the founder and CEO of Iris AI, a company helping humans make sense of the world's scientific knowledge. She'd always wanted to be a founder and lead companies. In fact, that was her specific goal after finishing her MBA. She achieved that, but her first venture ended in failure, as did the next.

1:40She went through two bruising startup experiences in a row. So, what did she learn from it? And what did she learn about walking away? Because that's something we don't talk about enough in startup circles.

2:01At her MBA school, they had a pretty cool initiative, which was to pair up students with an external idea provider. The idea provider would come in with a piece of software, a patent, an IP, something like that, and the students would form a company around it and try to scale it. In Anita's case, they were working on energy-optimizing heat exchanger networks in the processor industry. Yeah, I wasn't really sure what that meant either, but it's not actually relevant. What really matters was the quality of the IP and the person supposedly behind it. It looked really good on paper, right? This person said, you know, he'd been in this industry for, I don't know, 25, 30 years.

2:40He said he knew this space very well. There was a piece of, you know, there was a software, you know, to this, this kind of, there was a, it was a mathematical method that had been turned into a piece of software. And that piece of software really just needed, you know, commercialization. That was essentially what we were told. That all seemed very fair. He was, you know, he was the head of a consultancy firm that was doing work in this field. So like it all, it all checked out, to put it like that. And what it turned out to be was that he actually did not know this method at all. He had no idea about the math behind it.

3:18He knew the industry, but he was very old school. Turns out the person who'd written all the software was missing in action. We don't know. We never found out, but I think he had a breakdown of some sort. So that person essentially didn't exist to us. And it had, you know, this, you know, functioning piece of software was a piece of kind of visual basic code in an Excel sheet that didn't work and that this person who was running it had no idea how to get it to work. And at the end of the day, we were sitting there with essentially nothing, but this is what we had committed to and signed a paper on.

3:58And this guy owned approximately half the company and we had to try to make a business out of it. Try they did. They worked hard on it for the best part of a year. Anita got good at what she needed to. They signed up a pretty big Swedish company as a client. On the surface, the business was progressing. And yet this person who, you know, who owned the IP, but had no idea what it did, had no idea how to make software. You know, whenever I would bring up technical issues, he would just laugh at me and pet me on the head, literally. And, you know, tell me that, you know, we all, you know, we all we're all afraid sometimes.

4:37sometimes. And, you know, basically, well, you have to, he had these like anecdotes of like, we have to learn to walk before you have to run. And I'm like, this is not helpful. I need, you know, I need this kind of researcher with this kind of background, your anecdotes are not helpful. But it was just, you know, and he would, he would, you know, stop me and laugh at me. And just, there was definitely a gender component, there was definitely an age component. And at the end of the day. Yeah, that was a good year of my life that I'm not going to get back. Anita realized she couldn't continue anymore.

5:18People were surprised when she called it a day, but it wasn't very visible from the outside. But as she says, starting a company with someone is a bit like a marriage. And as is true in marriages, you never know what goes on behind closed doors. so what next for Anita? I reached out to a connection of mine who's he started kind of 30 plus companies in his career and he's he's brilliant and he's fun and he's smart and he's very very successful and I kind of you know inquired with him to like hey you know do you have any projects going on I want to start a company I don't know what I want to do it within I have no plans for the rest of my life and so he invited me on to this kind of you know we were a group of kind of newly graduates working together, hacking together some prototypes and ideas over the summer.

6:08And this became kind of somewhat of an intrapreneurship thing because it was within his kind of group structure that had a lot of companies, etc. And, you know, in his defense, like I think he and people around him had the best intentions for sure. But there were definitely politics in the larger organizations around it. The business was a way to help students get into real-life working situations quicker. She was a co-founder and became the CEO. She was told verbally she had 5 % of the company, but it was never formalized on paper despite asking and pushing for more because she saw what other people in the company had been promised.

6:50Not that what they were promised ever got formalized either. Anyway, Anita ran into some problems unique to this kind of entrepreneurship structure, where she was running one of many startups within a larger company? I was basically just doing one of his projects, our projects, and making myself part of the co-founder team and eventually the key person running it. But this wasn't the only project, right? And so then it becomes a thing of who funds it, because this was then funded by the company structure, right? We weren't fetching capital from the outside, I would prefer if we would just go fetch capital from the outside, go pitch to some VCs, get some angel investments in so that we had our own capital.

7:41But that's when kind of the politics started of do we want to keep this in-house and do we really want outside investments and then someone else is going to own this and no, we would rather just invest in this off of the balance sheet. But the moment you start investing in something off of the balance sheet. Well, you compete with all the other things on the balance sheet. And suddenly, you know, hiring two new sales rep in the main organization, I don't know, that's just a example, but like, hiring two more sales reps or focusing on selling last year's reports, whatever it is, right? That competes with your little startup.

8:16And when you then don't have an overview of how much capital you're going to have in the next three months, six months, 12 months, it's really, really hard to run a company. And that's what I mean by politics, that different people have different opinions of how companies should be run. And when you're in an entrepreneurship setting, well, you suddenly have more battles to fight. It's not just about getting angel investors or a seed investment in. It's about fighting sometimes unknown priorities on the other side. Anita found herself for the second time in her then short career wondering, should I stay or should I go?

8:56And yes, she was listening to the song. She said the decision to quit involves a lot of pride, not wanting to admit defeat, the sunk cost fallacy. It was easier in the first company because she knew she'd started it with the wrong people or person and there was a deadline. But at the student matching business, there was no such deadline. She just kept mulling it over and over as it dragged her down. should I stay should I go is this worth it am I wasting my time am I you know have we failed already and I just refuse to see it because I'm so stubborn like that whole thought process that gets to drag out when there is no like when you run a company on your own there is no date at which you have to make up your mind and so for that that was a very long and drawn out process I'm sure it could have been longer.

9:49But it was like a two month process where every morning where I woke up, I was feeling nauseous. To the point that I like I didn't want to open my laptop. I didn't want to do any work. I was like I was dragging my feet. um and and to be clear I've had those days later on as well I mean running IRISAI right now there's definitely days in the last what seven years I've been doing this where I'm like I don't I really don't want to go to work today or like I really don't want to face the things I need to do today but like never more than like one maybe three days in a row right but like two full months in a row I woke up and I'm like, I don't want, I don't want to, I'm dragging my feet.

10:36But there's also this fear of like, but that makes me a failure, right? If I, if I leave, if I say I can't do this, this is not working out. So, so at the end of the day, after, after about two months, I kind of woke up one morning again, and I realized this is not sustainable. I'm draining myself. I'm not going anywhere. The company's not going anywhere. And so I communicated, you know, after giving it some thought, I communicated to this guy I was running the company with and I said, I need a break. The break became permanent. So what did Anita learn from these experiences about when it's the right time to quit?

11:17For me, knowing when to quit is when I've lost the passion to do what I do. And that's why, and it's fascinating. There was an entrepreneur I listened to a talk from the other day who said like, the one thing successful companies have in common is that they survived the rough times, right? And which means you have to have that grit and tenacity. And again, it's about that entrepreneurial, like, you know, you got to do it, you just got to keep trying, which is also true. But I think fundamentally, it comes down to like, how passionate for me, how passionate am I to solve this problem still. And I guess with with the, you know, the example that I gave about this kind of talent matching, I guess there came a point where like, I just didn't care as much anymore about solving that problem.

12:11And I think with with Iris now, I just really still want to solve our problem. I just like seven years later and like being close to bankruptcy at several points and going through some really rough patches, both company wise and personally in those seven years, I still just fundamentally, stubbornly really want to solve the problem we're solving at a global scale. Anita has an opinion I can get behind about how to pick yourself up after a big failure. Yeah. It becomes a bit of a, almost like a spiritual question. Like how do you deal with hardship in life in general? And, and startups is definitely not the only part of my life that's had hardships.

12:52And I think for me, it's, it's, and it might sound a little woo woo and I'm not religious in any way, but like, for me, it's just trusting that I am exactly where I'm supposed to be and that everything that happens in my life is something I can learn from and grow from. And that there really isn't such a thing as failure. It's just life experiences.

13:30Anita Abelgar, who trusts in the universe even when life serves her lemons. Thanks for listening to this episode. I've been your host, Dan Murray-Surter. If you liked this episode, please hit follow or subscribe. See you next time.