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A study that most iPhone apps fail is being picked up by credible news outlets.  This is a classic abuse of the “Man Bites Dog” principle:

When a dog bites a man, that is not news, because it happens so often. But if a man bites a dog, that is news.

The fact that most new efforts fail is not news.  In recent years, we’ve seen amazed reporters discover that corporate and brand Facebook apps fail as FB developers struggle.  Shockingly, most businesses fail in virtual worlds.  Although small business failure rates are often exaggerated, the real numbers show that most startups fail.  Without going to the trouble of actually doing research, I will make the following guesses:

• most Google advertisers fail.
• most blogs fail.
• most eBay sellers fail.
• most television shows fail.
• most movie producers fail.
• most book authors fail.
• most cave drawings fail.

I look forward to the startling exposes crafted by hardworking reporters on these topics.

Sarcasm aside, it’s interesting to consider the underlying assumptions of those who would find news in high failure rates.  If these stories really are about man biting dog rather than vice versa, then the assumption must be that there is a new means of business delivery that ensures success for the majority of its users.

That of course is a flawed assumption.  There is not now and never has been any way of delivering new business efforts that guarantees success in a free market.  Apple does not make businesses successful, Facebook does not make businesses successful, even mighty Google does not make businesses successful.  Instead, each of those companies have enabled some businesses to become successful – which is just another way of saying that they’ve given most businesses a new way to fail.

So the ultimate test for these companies is not whether they magically improve failure rates for others.  The test is whether the company itself operates a profitable business.  Apple and Google have passed that test with flying colors, Facebook has yet to do so.

With all the recent coverage of Twitter’s financing, and earlier news about the Twitter-Facebook acquisition dance, you might think that the two are destined to compete to the death.

Some say they’re already competitors, that Facebook will kill Twitter, or that they are at least competitors for developer mindshare.  They are certainly competitors for media mindshare – the lower half of this chart shows that news coverage of the two has become nearly equal.

Ah, but what about that upper half?  Search traffic for Twitter doesn’t even register compared to Facebook.  Will it really take Twitter 36 years to catch up to Facebook’s active user base? Is Twitter really even in the same game as Facebook?  There’s a hint in the #1 reason that Todd Chaffee invested in Twitter: because it’s “open.”

I like to think of Facebook and Twitter not as direct competitors, but as classic heroes of competing ideologies.  They represent yet another chapter in that old Internet story, The Walled Garden and the Open Future.  In the primary exemplum, America Online introduced the Internet to the masses, delivering a “safe” experience that attempted to control all content delivery to the end users.  AOL was eventually swamped by services that aggregated more open content (Yahoo), excelled in specialized commerce experiences (eBay, Amazon), and found massive monetization through key horizontal services like search (duh, Google).

The moral of the story is supposed to be that the open future always wins in the end.  But the moralizers conveniently forget that the story keeps repeating itself.  The walled garden is replanted again and again, and the open future is always in the future.  And people make money at both ends, and people fail at both ends.  Let’s not forget that early AOL shareholders saw the company sell at $182 billion, and let’s not ignore former heroes Yahoo and eBay struggling to remain relevant today.  Amazon and Google look like winners today, but they’ll have their rough patches too – when the game lasts forever, the only prize is that you get to compete for your life over and over again until you die.

With that cheery thought, let’s look at Facebook vs Twitter again.  Facebook fills the role of a classic walled garden experience, notwithstanding their apps platform, which seems more of a concession towards prevailing tech ideology than a coherent strategy.  Twitter is part – only part – of the competing ecosystem of open web apps.  Take Twitter together with Flickr, WordPress, WidgetBox, glue it all together with some OpenSocial and OpenID – and there you have a Facebook replacement in the classic Open Future:  it doesn’t all quite hang together yet, but someday it will – one or more of these services will become a huge new business, and Facebook will shrivel to a shadow of its former self (though early shareholders will get a chance to enjoy a huge liquidity event before then).  The open futurists will declare victory, but it’s just another battle in a neverending war.

Facebook turned 5 years old last week, and a couple of commentators took the opportunity to compare the company’s progress unfavorably to Google’s.

I understand the compulsion to compare every hot startup to the current media darling that literally put its name next to the definition of “Zeitgeist” – but still, I don’t believe there is any practical value in that exercise.  A meaningful comparison compares things of like kind, and comparing every company to the once-in-a-decade champion is not apples to apples.  Take a look at this list of companies, which I’d say are all the same kind of apple (of course one of them is literally an Apple):

These are the true giants of Silicon Valley (plus our favorite giant from up north), all companies that have spent a goodly amount of time with a market cap over $100 billion.  Comparing any private company to these monsters is a fool’s game; it’s like comparing a college basketball player to Michael Jordan.  Actually it’s worse than that – projecting athletic talent is considerably easier than projecting $100+ billion success for a company, because there are orders of magnitude more points in a company where externalities and luck play a tremendous factor.  (I always like to recall that Intel and Microsoft were initially made giants not by their own strategy, but by the strategic decision made by IBM when it chose to outsource production of its PC microprocessor and operating system.)  These true giants are Black Swans, by definition nearly impossible to predict, and useless as comparative points except when holding both points in retrospect.

If you must make comparisons, it’s more realistic to compare to the next tier, for example:

I could put a dozen more on that list, but I’ll let you pick your own peer group.  Any one of those companies (yes, even that one that you think is irrelevant/dying/dead) could still take the multi-decade journey to giant-hood.  But even if they never do, they’ve accomplished something extraordinary in growing up from a tiny Silicon Valley startup (with one favorite from up north) to an independent company, a true a difference-maker in technology and the daily lives of millions upon millions of people.  Because they haven’t had such outstanding externalities and luck in their favor, they are a better basis for comparison.