Have you used an API today? No really, think about it. Think about what you’ve done today online and think if you interacted with an API. Chances are, you have. Today, almost every software company uses an API in some way shape or form. What’s different about this from 2005 is that there are A LOT more APIs, and some companies entire business models are based on APIs.
First off, what are APIs?
API stands for application program interface. In layman’s terms, it allows platforms and applications to communicate and interact with each other. Have you ever seen Google Maps embedded inside of a program you’ve used? That’s API magic at work.
APIs can be internally used inside of a company or opened up for external use by the public. Up until the mid-2000s, companies were generally using private APIs to help make the processes more efficient inside of a company or to keep their data more secure. It wasn’t until the last decade where companies started seeing the business benefits of releasing public APIs.
Lighting the spark
One of the pioneers of the open API was Twilio. Twilio is a simple API that helps businesses use SMS and phone calls inside of their applications. Although it seems like a simple solution, the process to use SMS inside of an application before Twilio was nearly impossible, taking dozens of hours and hundreds of lines of code to implement. With the creation of Twilio, a new type of business was born. Without Twilio, Uber may not have grown at the speed it did. This concept of an API-first company was fairly new, but Twilio carved out a place for it.
Shortly after, in 2010, Stripe came along and took the grueling process of online payments and made it as easy as seven lines of code. This was somewhat unprecedented, as no company ever went through the work to simplify the process of setting up a merchant account and working with the banks for its customers before Stripe.
This sparked a trend in the API world. Businesses realized that they could build a business around a single API that represents a business function. Companies were off to the races, building open APIs as fast as one could count. There were APIs being built for customer success, billing, subscription management, CRM, and almost every other business function under the sun.
In 2011, there were so many APIs that platforms such as Zapier, IFTTT, and MuleSoft were created, to let non-developers use the APIs as well. As for today, there are over 1,000 apps listed on Zapier. This brought the API economy out to the public.
The API economy fosters new business benefits
In 2018’s API driven world, there are new business models emerging that never could have existed 10 years ago. Smart company executives are taking advantage of this trend and using it to unlock more value for their business. Here are some of the ways that businesses can unlock more channels through APIs:
APIs can increase revenue for companies
Companies are always looking for smart ways to unlock new business channels and APIs are a great way to do that. A company can use an API as their core product (like Stripe) or another option is to offer API access as an add-on (like having developer access to Google Maps). Regardless, if your business has built something valuable and/or collects data that is of value to others, one way to benefit from that is to sell your API and grow revenue that way.
APIs allow businesses to save time and money
Another incredible aspect of the API economy is that there seems to be an API for everything. As mentioned, no company needs to develop their own billing solution again thanks to Stripe. No one needs to build their own live chat system thanks to Intercom. The time that is being saved by using third-party APIs in software products is being spent on making the features better for customers.
APIs allow you to connect with your community
When you create an open API, you are enabling a community of developers to build on top of your product. This fosters collaboration and gets developers thinking about creating with YOUR product, not someone else’s. Additionally, when you start to establish a developer community, you can host an online community on Slack or host in-person meetups if your community is local.
What is the future of the API economy?
The API economy has had a major impact on software development but many believe that it’s just getting started. It allows companies to build products faster with fewer resources. The API economy enables technology leaders to spend more time thinking about their core product and less time thinking about the non-core tasks needed to get there. Lastly, the future of the API economy includes a lot more APIs that help unlock even more business functions. Chassi is excited to be a part of it.
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