Failure Intelligence

Welcome to the 24 new subscribers this week joining a force of now 196 members discovering their own path in the entrepreneurial duck pond.

This week, I really dove into learning how to code on my own (using Claude). My evenings have been spent getting familiar with all the systems and how everything fits together. I’ve managed to change the authentication in an app, switch how sales data is fetched, run a data backfill, and build a website using a template. It’s given me real insight into how huge the opportunities are for anyone willing to take on the craft of digital creation.

Yesterday, I suggested to my aunt that she should start coding. There are no real barriers—and it was an eye-opener for her to realize that I genuinely believe she can do it. On top of that, she immediately came up with a brilliant idea for something she’d like to build. Just like that, she became an entrepreneur at 75. Solopreneurs are here to stay.

I was so absorbed in my coding that I forgot to send out my newsletter yesterday. So it’ll be a weekend special instead.

And it will be a bit of a special edition. For a long time, I’ve been diving into the dynamics of how failure affects us—how so many people fear it, even though it’s a vital part of every entrepreneur’s journey. At first, I considered creating a separate newsletter entirely focused on failure, but then I realized how closely it aligns with everything Capitaholic stands for. That’s why there will be special editions focused on failure that aren’t necessarily directly connected to capital issues. I hope you’ll like it.

I’ve coined the term “Failure Intelligence.” Here’s the story behind it.

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Okay, so AI and FI aren’t mutually exclusive, and they don’t really have much to do with each other—except that they’re both forms of intelligence. “So what is FI?” you might be thinking. Well, I decided to coin a term on my own initiative. Because I believe it’s an intelligence we’ve been overlooking.

Back in the 1980s, Harvard researcher Howard Gardner described seven types of intelligence. Those seven later became nine: linguistic/verbal, logical/mathematical, visual/spatial, musical, bodily-kinesthetic, social, intuitive, naturalistic, and reflective. He is said to have remarked: “It’s not about how intelligent you are, but about how you are intelligent.” He was intelligent, that Howard. But I think he failed.

He forgot one intelligence.

After talking to so many successful—and above all, spectacularly unsuccessful—investors, company builders, thinkers, leaders, and followers about their journeys and the failures along those journeys (reference to my Podcast Failpodden (Swedish for “The Failure Podcast”)), I’ve started to see a pattern. A pattern in how failures are navigated and how failures are handled. The more important it is to succeed, the more important it becomes how you fail.

I believe I’ve found the tenth intelligence.
I call it “Failure Intelligence.”

I understand that when you coin new concepts, you’re expected to provide some sort of explanation, definition, and preferably some research. So that the concepts actually become… comprehensible concepts. Thanks to my studies at HHS, I’ve learned that qualitative studies are the fuzziest possible foundation for hypothesis testing—but they still work, more or less.

And I have a hypothesis, born out of my qualitative research into the successful life journeys of highly successful, and failureful, people.

I define Failure Intelligence through the following factors: hypothesis formulation, frequency, ratio, reflection, and stubbornness. Like Howard, I’ve probably failed to be exhaustive—but let’s start somewhere.

It begins on a meta level with the ability to formulate good hypotheses.

Your hypothesis is your guiding star. For some people, it stays intact over time. Others are brilliant at formulating multiple hypotheses and iterating on old ones. Two wildly different examples of hypotheses are:

“Distribute the right music to the right person, anywhere, anytime,”
and
“Become the best tennis player in the world.”

Many people have committed themselves to goals like these. Most have never succeeded. But they are hypotheses with ambition, potential, and relevance.

Every failure along the way becomes another lesson in how not to fulfill the hypothesis—which brings you closer to fulfilling it. The hypothesis is your point of departure. And it has to be potent, so that your tiny chance of success gets multiplied by something other than zero.

Frequency is how often you make attempts—whether to succeed or to fail. Ratio is how often you fail out of all the iterations, steps, and decisions you take.

A high frequency and a balanced ratio are the keys here.

High frequency generates massive learning. A balanced ratio indicates that you’re innovative and brave enough—without drifting too far away from reality, timing, and the market. The ratio becomes a quantitative measure of your risk-taking.

Reflection is about what you learn from failure.

Failure is not the goal in itself. Learning from failure is. Reflective behavior is the key to navigating those insights in new ways when you make your next attempt.

Stubbornness may be the brightest star here—apart from you, dear reader.

If you just keep doing what you’re doing long enough—getting back on your skis and brushing off the snow again and again and again after you fall—then eventually, you will succeed.

Assuming, of course, that your hypothesis isn’t completely detached from reality and modern life, you will succeed sooner or later. It’s a matter of time. And timing is a crucial factor that you cannot control. So make sure you have time, get time, and allow it to take time.

As my tennis coach Frank once said to me:

“It’s so much easier to train boys than girls. Boys are so stupid they think they can become the best in the world. Girls are too smart.”

I think he was really referring to the particular group of students he had at the time—rather than making a general statement about gender. And I was probably the most naive of them all.

So my advice in this context is this:

Skip the other intelligences. Focus on the tenth one.

Set up your hypothesis. Be properly naive—or stupid, as Frank would have put it. And then just go for it with the stubbornness of a madman.

It’s not that stupid to fail.
And it’s not that stupid to be stupid.

It’s actually intelligent.