Just as organizations moved to cloud hosting & storage in mid-2000s, companies are now moving en masse to adopt cloud API platforms. This has been covered somewhat extensively by the tech press. Reinforcing the trend, two API companies IPO’d in the past year (Twilio & Apigee), with more on the way.
What do we mean by “API platforms”? This Quora answer is pretty good, but even more succinctly: APIs boil complex processes down to simple commands that magically do lots of work for you.
It’s like that feeling you had the first time you pressed a pink lyft button, and two minutes later a car was there to pick you up. Except, we’re talking about software, so the scale can be staggering. You can request a lyft a few times per day. There are literally trillions of API requests happening right now as you read this.
APIs platforms are software building blocks that are higher level than infrastructure services (e.g. AWS servers) but lower level than SaaS apps (e.g. Salesforce). They allow developers to bolt-on core pieces of application functionality with minimal effort, and in way that is seamless to end users.
Here are a few examples of API requests being handled by API platforms:
- Run a query on a huge dataset | Keen IO (Analytics API)
- Deliver an email | SendGrid (Email API)
- Charge a credit card | Stripe (Payments API)
- Text, video, or call someone | Twilio (Communications API)
- Run a search on a website | Algolia (Search API)
- Authenticate a login | Auth0 (Security API)
It’s not that these kinds of things couldn’t be done before these API platform companies existed. It’s just that an engineering team would have to build & maintain servers, services, and operational processes to do that work. Five years ago, adding any one of those functionalities to an application would have represented several months of engineering roadmap time. Now these features can be up and running in days.
The end result is that developers can build new applications in increasingly shorter timeframes, and at a far lower upfront cost and risk. Indeed, API platforms are part of the reason we’ve seen a boom in venture funding for software businesses over the past five years. Software that used to take two years to prototype can now be brought to life and tested with a small round of seed funding and a few months of work.
Take Instacart as an example. Instacart was founded in 2012. Had it been founded five years earlier, their engineering team would likely have needed to hire engineers, write code, and run servers for email delivery, text messaging, and collecting payments. But by 2012 you could simply bolt-on SendGrid, Twilio, and Stripe to handle all of that for you. The Instacart team was left to focus on making an intuitive mobile grocery shopping experience.
While some companies may have specialized requirements that make it difficult to use API platforms (e.g. Facebook’s data infrastructure must be 1000x the size of the next closest competitor), for 99% of businesses, API platforms are far more reliable, efficient, elastic, have a lower TCO, and are usable without hiring up specialized engineers.
One of Keen’s largest customers stealthily uses Keen’s APIs to white label an in-app analytics suite for their Fortune 500 customers. Their delivery manager probably made the point most succinctly: “It would have taken our team two years to deliver what we’ve done with Keen in nine weeks.”
That’s the kind of leverage we imagined when we founded Keen IO, and what inspires us about building an API business.