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Application Programming Interface
In case you’re not sipping a Mojito celebrating the fruits of a startup exit, it’s a good idea to be arming yourself with some Application Programming Interface (API) know-how. This technology isn’t the new kid on the block, however, its range of business model applications are expanding as we enter a new interconnected environment.
In 2013 alone there were over 10,000 APIs published by companies for open consumption. That’s quadruple the total number available in 2010! There’s a good reason for it. The API thrives in information technology environments, like the one we’re currently in.
This post will introduce the API and bring to light why entrepreneurs should learn how to use it.
Keeping it simple
What exactly is an API?
In a nutshell.
“It’s the tool that’s making the world more programmable”
An API is a set of carefully written pieces of code that allow, as well as govern the interaction between multiple softwares. They’re crafted to expose only chosen functionality and/or data while keeping other parts of the application protected.
If you’re not a programmer, it’s probably still a little fuzzy, so here are a couple examples.
Imagine that you’re a blogger with plans to start embedding video within your posts. If you haven’t got the talent or budget to create this function, YouTube’s API allows you to integrate video sharing into your blog. It’s as though you’ve outsourced that function. Why reinvent the wheel when you can order one on Amazon?
Google Maps API
In this example, you’re the CEO of Yelp, a company that helps customers find local businesses. You’ve concluded that as smartphone adoption rises, people will use their phones to find local businesses while on the move. You don’t have the map technology, neither the finances to build what you’ve realised to be the next big thing in your market. This is where you could use Google Maps API to seamlessly marry both your data with Google’s expertise with maps.
Source of Innovation
Try to understand APIs as keys that open doors to data and functions within the marketplace. They allow you to integrate 3rd party products and services with your own imagination to create new products and services, however, they’re not limited to this application. The best thing is, there has never been a better time to use this technology.
Blossoming API Environment
Rise of Digital Communication
As humans, we are inherently social, so it was only a matter of time before we built a digitally connected environment. Roughly 39% of the planets population currently has access to the internet and as the price of Internet access falls, that number will most certainly rise. The decline in cost for basic technologies has lead to the accelerated entry of digital products and services sometimes creating new markets overnight. From new interfaces to big data, they create value by effectively communicating information between different systems, which is where the API proves to be invaluable.
“By 2014, 75% of the Fortune 500 will open APIs” — Forrester
Let’s not forget that this decade marks a historical moment when we, as well as the products we buy are connected to the internet every hour of every day. Fuelled by the smart phone, mobile internet, quantified self, big data, internet of things, and smart wearable trends; It won’t be long until will see tens of billions of devices and people connected to the internet. With so much more global internet connectivity, the possibility of combining and integrating new systems will present a wave of new innovations entering the market place. The exciting thing for entrepreneurs is these innovations mostly require little or no capital investment, because you’re building on top of what’s already been built.
“There will be more API enabled opportunity as the world connects”
5 API Benefits Entrepreneurs Should Know?
APIs are powerful at leveraging growth opportunities. The ability to quickly open up entire parts your business as well as integrate with others can allow you to find new partners that repurpose, resell and re-bundle your solutions to new audiences that you could never have reached alone. This co-building environment also promotes the platform, usually improving your overall products functionality helping word of mouth referrals. By focusing resources on levers of word of mouth, your startup can capture market share effectively.
This platform effect is becoming a key objective for many savvy startups due to the gained ecosystem advantage, which has stakeholders and resources migrate to the largest ecosystem in the network. These API derived advantages and the simplification of technical infrastructure means more time, money, and effort can also be spent on growth initiatives. Startups that build into large ecosystems also take advantage from the mother platform’s reach, which is also made possible using the API.
The fear of having our big idea stolen is something a lot of entrepreneurs deal with. Not allowing your idea to be critiqued by the harsh reality of the marketplace is not the solution; ensuring you have some defensible position is. By opening up a network of co-creation, you facilitate the growth of your platform more rapidly than if you build everything internally.
In most cases your competitors are better than you at something. What’s even worse is that it’s usually in something that your customers might enjoy to have — scary thought! By using an API partnership approach you can leverage what others are good at to create a complete platform. Just imagine if Facebook didn’t allow developers’ access to their API for a moment. Some other social network would have, potentially leading to that platform jumping on the Candy Crush / FarmVille waves first. Who knows where Facebook would be without them..
Even though entrepreneurship can be boiled down to product, customer, and place for the transaction to happen, all successful companies need to add value during a complex array interconnected processes. APIs are great at automating processes, transactions and distribution, permitting startups to radically improve the way they create and deliver value to employees, partners, and customers.
Agile Business Model
In an environment where business models are made redundant overnight and markets opened the next day, the way we think about building businesses needs to adapt. Business models need to be made more agile so that they can adjust better to the external environment. Installing agility in to your startup early can better prepare you for the future.
Some recent successes in the marketplace demonstrate that the requirement of flexible, powerful, and on demand integration with external systems is becoming a proven way of doing business. It works of the premise that every software system may one day be addressed by multiple different, as-yet- unknown groups for unknown purposes. This agnostic approach benefits from the API by reducing the complexity of system integration.
If you’re wanting to throw right hook to the status QUO and haven’t heard of the disruptive innovation theories, I highly recommend reading Clayton Christensen books. Shaping your business ideas using these theories will earn you a lot of perks, the most interesting being a higher success probability. APIs in many ways allow you to simplify, make something more convenient, and decrease the cost of products & services, which are the 3 value propositions that foster disruption. They do this by opening new markets, or disrupting old ones with a cheaper solutions.
As we develop new technology and connect more of it to the internet, combinations of these technologies will enable a more efficient delivery of many services. These opportunities will change how we perceive, and interact with the physical world. With all these new conversations between different systems just on the horizon, I see learning how to strategically use the API as a critical skill that will play a role in the next big business model innovators. That being said, lets not forget that APIs are the means and not the end. It’s how you apply this technology that counts. Here are some action takeaways you can apply to speed up the learning process.
Join a Relevant Community
Meeting API savvy people (who are better qualified than I) will usually be get you pointed in the right direction. You can find them by participating in relevant forums and blogs, or attending events such as Hackathons and startup weekends.
I’ve also found that Facebook, Meetups.com and couchsurfing.org are great places to organise gatherings around a particular subject. If you happen to be in Scandinavia, you could also check out NordicAPIs to get involved in a scandinavian API community.
Learn From Case Studies
I still find analysing case studies a great way to understand business. They can help you internalise the scope of potential API business applications. Try to find cases of companies that have catapulted themselves into a great market position against everyone’s expectations. It’s hard to learn from a company that was born brilliant right out of the incubator.
In an environment where it’s possible to innovate by building off other products, services, and platforms, it’s important to develop a thinking technique that suits this playing field. One that comes to mind is an associational thinking technique used by business leaders around the world. This technique works by taking sometimes very contrasting ideas. Through a combination of questioning, observing, networking, and discovery processes; finding new insights or breakthroughs as the ideas intersect.
I hope this post has highlighted that fact that the current generation of business builders will need to distinguish themselves by creating and maintaining programmable business models. If you found this post useful and would like to know when I publish again, find out here.