APIs (Application programming interfaces) have been around for decades. “They allow different systems to talk to each other in a seamless, fast fashion,” said Gary Hoberman, who is the CEO of Unqork.
Yet it’s been during the past decade that this technology has become a major force. For example, in early 2019 Salesforce.com shelled out $6.5 billion for MuleSoft, a management system for APIs. Then there was another notable deal that actually was announced this week: Visa agreed to pay $5.3 billion for Plaid (here’s my post about the acquisition in Forbes.com).
So then why all the interest in APIs? Well, one of the most important reasons is the secular growth in cloud computing, which has led to the need for integration. Just look at the Uber app. A large part of the underlying technology is not even created by the company—but is instead called from APIs!
“APIs enable companies to more easily build products and services that would otherwise take too long to build,”said Augusto “Aghi” Marietti, who is the CEO of Kong. “Developers can use these APIs to more easily access business-critical information and focus on other priorities instead.”
This is not to imply that APIs are a cure-all. No technology is. “The world is on course to having a trillion programmable endpoints,” said Tyler Jewell, the managing director at Dell Technologies Capital. “The momentum behind containers, serverless, multi-cloud and APIs is increasing into this year, so the world will probably double the number of endpoints that are generated. This is going to create all sorts of new problems that need to be solved: autonomous management of APIs, ML-assisted development tools to improve coder productivity, new programming languages and cloud abstractions to remove complexity.”
Despite all this, APIs still have many benefits—and will likely be critical for digital transformation.
"The prospects for the API economy are exponential," said Bernard Harguindeguy, who is the CTO at Ping Identity. "APIs are creating powerful ways for businesses to streamline how they engage with partners and together deliver new generations of applications that empower consumers with more services and options."
Jeff Lawson And Twilio
One of the pioneers of the API economy is Jeff Lawson, who is the co-founder and CEO of Twilio. In 2008, he pitched Fred Wilson of Union Square Ventures, saying: “We have taken the entire messy and complex world of telephony and reduced it to five API calls.”
Wilson was naturally skeptical but listened. Lawson asked for his phone number and wrote some code—and then sent a message to him. Wilson was blown away and said: “You can stop there. That’s amazing.” He would go on to say it was the best seed pitch he’d ever heard.
Twilio has certainly come a long way since then. In the latest quarter, revenues soared by 75% to $295.1 million and the market cap is about $16.4 billion.
Before creating Twilio, Lawson worked as a technical product manager at Amazon, where he saw how APIs were critical for AWS. He also worked at several other startups where there was lots of heavy-lifting in creating new applications.
“With web services, you can go from idea to prototype quickly,” said Lawson. “Because of this, developers can focus on what customers really want. It’s why we are seeing an explosion of startups.”
But the megatrend of the API Economy is not just about tech companies either. “Every company is becoming a software company,” said Lawson.
How APIs Can Transform An Industry
Steven Wang grew up in China and then came to the US to get his PhD in computer science. He would work at several companies and then start is his own, called Measure Square. The idea was a practical one. His wife, who worked at a flooring company, said her boss wanted to find a way to automate some of the manual processes.
So Wang built a program that worked quite well. And so he quit his job to start his own software company.
But it was far from easy. “We made lots of mistakes along the way,” said Wang. “One was developing software on Java. Another was relying on outsourcing.”
Oh, and he did not have any external funding. Measure Square was a pure bootstrap.
But he was persistent and the company has since become a leader in the flooring industry, with thousands of customers, including Sherwin Williams, Redi Carpet, Daltile and RiteRug.
“The technology world is very dynamic,” said Wang. “You can’t sit still. So a few years ago we completely revamped our technology infrastructure to allow for an API platform. It was a major undertaking and a big risk. But we are also very customer-centric and knew that this was the right strategy.”
As of today, the Measure Square cloud logs 2.5 million API calls per month that streamline accurate estimates and integrate with Salesforce.com, Microsoft Dynamics, NetSuite, Rollmaster, and QPros. There are also deployments for Lowe’s installers (covering more than 750 stores). There is even an API that leverages AI (Artificial Intelligence) for automatic plan takeoffs.
“We are still in the early stages,” said Wang. “The APIs have also made it easier to roll out new products, such as PropertyLink—which is for hosting property measurement plans—and JobTrakr, an app that empowers large commercial users to track their job productions on construction sites with exact 3D models. No doubt, APIs have been a game changer for us.”