APIs for biz dev 2.0 - Which business model?

APIs for Biz Dev 2.0
Which Business Model?
Guillaume Balas - CMO @3scale
guillaume@3scale.net - @guillaumebalas

Introduction

THE RISE OF THE APIS

The Plug & Play Cloud API Management 2
Platform & Infrastructure

APIs are growing & reshaping the new
Web
This is not a trend, this is a fact

13B / Day (May „11)

5B / Day (April „10)

5B / Day (Oct „09)

3B / Day (March „09)

1.1B / Day (April „11)

1B / Day (Q1 „12)

50% Traffic (March „08)

Success for these businesses is
8,000 APIs
heavily relying on their API(s)

8,000 APIs: that’s just the tip of the
Iceberg

Private for Partners At 3scale we actually
believes that there is
5x to 10x this number out
Private (for Now) there.
With an approximated
100% annual growth, that
would mean around 1
Truly Private Million APIs by 2017


APIs are everywhere
Examples

Media & Content SaaS Integration

Social & e-Commerce Others

Interest is broad and deep. APIs are currently reshaping the web, and
disrupting some industries: telecoms, payments, etc!

What is an API ?

API 101


Application Programming Interface
Tech. Definition

“A particular set of rules and specifications that a software
program can follow to access and make use of the services
and resources provided by another particular software
program that implements that API.

It serves as an interface between different software
programs and facilitates their interaction, similar
to the way the
user interface facilitates interaction between humans and
computers.”


Application Programming Interface
A Business Definition

“ We are nearing the time when
pps
opening our supply chains across
the Web isn‟t just a good idea, it
will be essential for competitive
survival.
Dion Hinchcliffe, ZDNet
A
artners
“ APIs provide a scalable way to do
business development and create
P
ncome
I
partnerships. “BizDev 2.0. I call
it”.
Caterina Fake, Flickr
Adam DuVander,


API

WHY IS IT IMPORTANT?


Web sites are local
There was 645 Million Web sites as of March 2012

Disadvantages:
 Limited reach
 Lost business opportunities
 Very Limited brand awareness
 Significant SEO and SEM costs
 Web scraping risks

Source: Dion Hinchcliffe, http://blogs.zdnet.con/Hinchcliffe


APIs help you grow your business
APIs are Biz Dev 2.0 – The first paradigm shift

Advantages:
APIs unlock new distribution
channels & enable the expansion
of your business beyond the limits
of your web site.

API Deployment Focus

38% Multi-Channel
51%
Mobile Apps
11% Non-Mobile

Source: Dion Hinchcliffe, http://blogs.zdnet.con/Hinchcliffe


APIs Deliver Raw Data, Content and
Services
Allowing you to…

Create New
Build an Power Mobile
Distribution Partner Up
Ecosystem Apps
Channels

Serve any type Rationalize &
Decrease your
of Control access
Protect IPR cost of serving
device, software to your
your customer
, anywhere resources

“Externalize”
Create New
your R&D. Lower Barriers Reach More
Business
Foster to Integration Customers
Models
Innovation


APIs Deliver Raw Data, Content and
Services
Generating

Strategic Advantage

Business Advantage

New Revenue Streams


An API?

SO WHAT NOW?


Take away #1

Don‟t put lipstick on a
pig.
It will still be a pig…


Take Away #2

Don‟t just build it and think
they will come…

You might wait very
long…


Take Away #3

It is the organization‟s core business
which is valuable.
The API is “just” the channel into this.


Take Away #4

What API for my
Business Model?


So what now?

API STRATEGY 101


API business strategy
Get the most from your API

APIs enable cloud scale MVC,
① Identify your core asset
② Choose the complementary asset
which will deliver most value
③ Define the strategy to capture the
value most effectively

Examples of API Business Strategy

allowing you to focus on your core Presentation Logic Data Mission
Revolutionize the way
asset. ✓ people watch movies

Simplify the world of

✓ telecom by providing
simple, powerful, pay-as-
you-go IaaS

Increase the world's
✓ access to data, especially
free and open data


API typology
Concepts
Typical Evolution of an API
1

Private APIs Rationales
They are used internally to facilitate the Rationalize infrastructure
integration of different Reduce costs
applications/systems used by your Increase flexibility
company.
Improve internal operations

Partners APIs
Enable the integration of software between
your organization and your business Value-added service
partners. Up sell
Must have for your partners
Public APIs
Publicly expose information and
functionality of one or various of your Foster innovation
systems/applications to 3rd that don‟t Increase reach, traffic
necessarily have a business relationship New revenue stream
with your company
1 Not necessarilly always the case (e.g musiXmatch, Viadeo, Skype)

API openness cycle
Concept Internal Re-Use
Inter
Depts, Dashboards, Processes

Raw Service Customer
Mesure, Collect, Analyze
Re-Use
Apps, Integration
CORE
ASSET
S

Open to Partners &
Anybody Distribution
1000 Flowers, Market Extension New Revenue, New Reach, Ecosystem


API business model
Another paradigm shift

Source: John Musser, ProgrammableWeb.com


API delivery
How?

Developers
Your core
assets Customers

Partners
Your
API
Affiliates

Mobile Users

Internal
Projects


API delivery
How?

Access Control?
Developers
Your content &
services
Security? Customers

Monitoring?
Partners
Your
API Monetizing ?
Affiliates

User Experience?
Mobile Users

Scalability? Internal
Projects
Flexibility?
Reach?

API Management
“Managing” your API operations

Developers
Your content &
services Access Control Customers
& Security

Analytics & Partners
Your Reporting
API Business

API
Developer & Affiliates
Partner Portal
Engine

Billing & Mobile Users
Payments

API Management Solution
Internal
Projects


What is your API? Who will use your How do you offer
WHAT

HOW
WHO
API? your API?

Your API is the product? Business Partners? Business Model?
Calls/requests to your API are the Facilitate the integration of your product Direct/Indirect? Tiered/Freemium?
primary (only?) way to interact with your in as many devices, services or software Revenue sharing? White labeling?

The Plug & Play Cloud API Management
technology, data, content provided by your business partners Partnerships?
(e.g. Twillio, Amazon (e.g. Samsung & Skype, Spotify &
AWS, SImpleGeo, Musixmatch ) 7Digital) (e.g. Bluevia, Wine.com, PeopleBrowsr)

Extends the reach of your
Customers? Technology choice?
product?
Your API is a way for your partners to Sell your product (content, data or Authorization, provisioning and control of
make their customers experience your services) directly to clients through your accesses? Usage Tracking?
product via their own API Proxy versus Plugin API Management
apps, devices, solution or service (e.g. Twilio, Daily Telegraph, LiveOps) solution?
(e.g. Skype, Maxdome, 7Digital)

Promotes your product? Developers? User Experience?
Advertise your product in different ways - “Outsource” your R&D to Developers. SDK? Widget? Interaction and Support?
such as via an affiliate program. Tap into their fantastic creativity and T&C and SLAs proposed? Blogs?
(e.g. Wine.com, Oodle.com) innovation skills to evolve your product Forum? Documentation?
(e.g. Twilio, Salesforce)

Makes your product better, richer? Your Company? Marketing, Promotion?
Your API is a channel to get new Make it easier, faster and more flexible to Hackathons, Dev. Challenges? Private
content/value "into” your business that use/access your assets. Homogenize Beta, Public Beta? Use cases?
goes to make up part of the service. and centralize access to your data. (e.g. Viadeo Dev Challenge)
(e.g. Twitter, eBay, Facebook) (e.g. Netflix, Seevl, The Guardian, NPR)
27

Conclusion

RECOMMENDATIONS


Dos & Don’ts
Tips and tips to avoid pitfalls

Dos Don’ts
① API first, Mobile second, Web third ① API as a “side project”

② Do your homework ② Neglect developers
(Who, What, How)
③ Bad documentation (or inexistent)
③ Start “small” in terms of
functionalities (you can always add ④ Bad sample code/examples (or
but you can never remove) inexistent)
④ Provide a compelling value ① No or unclear Terms &
proposition to drive adoption and Conditions
grow your API ecosystem

⑤ Remain flexible to evolve with the
needs of your user base

The Plug & Play Cloud API Management
Platform & Infrastructure 29

Business Opportunities

APIS TYPOLOGY


4 types of business APIs
First it’s worth thinking about the different functional roles of an API

e.g

1 The API is the product

2 The API projects the product

3 The API promotes the product

4 The API powers and feeds the product


Digging deeper
Each type of API has different potential business value associated with it

1 2 3 4
Powers and
Projects the Promotes the
Is the product feeds the
product product
product
• Direct revenue • Reach more • Biz Dev / Lead • Content
• Utility / Pay per places Gen acquisition
transaction • Provides more • User acquisition • Partner tie-in
• Tiered pricing utility • Advertising • Internal
bands • Enable mobile • Brand promotion innovation
• Allow deeper • Affiliate
integration programs


1 2 3 4

Direct Revenues
The API as a direct revenue driver

The only customer experience may be
is the product via the API or via a 3rd party using the
API.
projects the
product
Billing relationship may be to the end
user or the partner / distributor.

e.g

Whitelabel Channel

“Sell Through” Channel


1 2 3 4

Indirect Revenues
The API as a indirect revenue driver

promotes the The API plays a supporting role – the
product product is the main event. The billing
relationship is unlikely to be tied to the
API.
feeds the
product
API ROI needs to be measured by
product metrics.
e.g

“Free” Modality

“Affiliate” Modality

Business Opportunities

APIS & BUSINESS MODELS


The API Is the product
Core value is tied up in the API

Others

API is Core Value

Direct customer usage
Encourage resellers
API
Ecosystem Build tech knowledge
Strategy
e.g Enable new services

Brings easy access Encourage 3rd party tools
to complex Telecom
technologies

$ If Core service sees usage growth.


The API Projects the product
Extends availability of functionalities to new places

Mobile apps
3rd Parties integration
Added utility Others
Added to a product

Cultivate partner ecosystem
Innovation opportunities
API
Ecosystem Build switching costs
Strategy
e.g Encourage 3rd party tools

Enables new services
1,700+ Apps on
Force.com
50k+ Developers
Increasing customer spend (primary) and
$ If number of customers (secondary) for core
product


The API Promotes the product
Secondary function and indirect revenue impact

Secondary (non core) service
Designed to drive leads/traffic Others

Widge
t

Distribute “Teaser” information
Brand Diffusion
API
Ecosystem Promote to niches
Strategy
e.g Cultivate partners
Widgets to
Whole sites powered Improve partners Impact

10‟s 1000‟s of affiliates

$ If Increasing customer number (primary) and
spend (secondary) on core product


The API Powers & Feeds the product
Content acquisition via the API

Content, User Others
information,
Ratings, comments
Etc. into the service

Leverage social networks
Brand Diffusion
API
Ecosystem Facilitate Access
Strategy
e.g Virtuous circle data in/out

13 Billion calls/day on API Improve partners & businesses
>75% of traffic by API Impact
250,000 Apps (probably less
now…)
when UGC (user generated content) brings
$ If
appreciable value to the central product


Conclusion

Business Models Diversity What API(s) for my Business
Model?

10.40%  What are my core assets?
12.50%
 Who will use my API(s) and for what
23.60% purpose?
 How will I make available my API(s)?
Don’t put lipstick on a pig, it will
26.30% still be a pig…
20.10%
Don’t just build it and think they
7.20% will come…
API is the Product Product Addition It is the organization’s core
Product Projection Government business which is valuable and the
Scientific Non-Profit
API is the channel into this.


Thank you !

QUESTIONS & ANSWERS


Thank you ! | Q&A
Web: http://www.3scale.net
Email: guillaume@3scale.net
Twitter: @guillaumebalas

3scale USA. 3scale SPAIN 3scale UK
440 N Wolfe Rd, Calle Llacuna 162-164 Techhub, 76-80 City Rd
Sunnyvale, CA 94085 08018 Barcelona London EC1Y 2BJ
USA Spain United Kingdom
+1 (408) 524 1503 +34 933 092 786 +44 758 069 2832


Resources

• http://www.3scale.net/wp-content/uploads/2012/06/What-is-an-API-1.0.pdf
• http://www.youtube.com/watch?feature=player_embedded&v=7r7QpIDEI_o
• http://www.slideshare.net/3scale/apis-the-glue-of-cloud-computing
• http://blog.programmableweb.com/2012/06/13/the-new-api-apps-partners-income/
• http://www.youtube.com/watch?v=lFv5lH7nNX8
• http://www.slideshare.net/3scale/more-than-the-sum-of-its-parts-the-apis-whole
• http://blog.programmableweb.com/2011/11/03/private-api/
• http://www.slideshare.net/3scale/reaching-1-million-apis-and-what-to-do-when-we-
get-there
• http://blog.apievangelist.com/2011/02/28/if-you-build-it-they-will-come/
• http://www.slideshare.net/jmusser/j-musser-apishotnotgluecon2012
• http://www.3scale.net/2012/11/building-great-apis-the-api-gold-standard-part-i/
• http://www.slideshare.net/3scale/the-api-economy-api-provider-perspective-
european-identity-summit-2012


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