The API Economy (with speaker notes)

THE API ECONOMY
Exploring the reinvention of business by
API’s and software developers
James Parton
Ignite Keynote, 15th March 2016

Privileged & Confidential, Copyright 2016 Twilio Inc.
A LITTLE ABOUT ME
2
20 years at the intersection
of telecoms & the web
6 years actively supporting
the community
@jamesparton | james@twilio.com

Privileged & Confidential, Copyright 2016 Twilio Inc. 3
In computer programming, an application
programming interface (API) is a set of
routines, protocols, and tools for building
software and applications.
DEFINITIONS - AN API

THINK BUILDING BLOCKS
APIs are the building blocks that are the raw ingredients of innovation because they enable developers and organizations of any size to rapidly build new
ideas.
The sum is greater than the individual parts - think lego - modular, ﬂexible. You can build thousands of unique things with the same basic blocks.

A process or system by which goods and
services are produced, sold and bought in a
country or region
DEFINITIONS - AN ECONOMY

A set of business models and channels based on secure
access of functionality and exchange of data to an ecosystem
of developers and the users of the app constructs they build —
through an API, either within a company or on the Internet with
business partners and customers
DEFINITIONS - API ECONOMY
There are no geo or political boundaries
The ‘Goods’ are API calls, software to software, with no human interaction
The enablement of other goods / services is the end game

An invisible revolution
THE API ECONOMY
As i mentioned in the deﬁnitions, much of the API economy happens ‘under the hood’, software to software, with end user being unaware of how, they just
experience the beneﬁts
Consequently many of the API power houses are not house hold names

AND ITS A WILDFIRE
$680m raised
Source: businessinsider.com, 18/12/15
Interesting Business Insider article in December which picked up on this - the 9 startups that secretly run the internet.
They are all developer focused, with an API at the heart of their product delivery.
Just this half dozen have raised over $600m - US VC’s in particular are switched onto platforms & ecosystems powered by APIs

THE NEW VALUE CHAIN
API API
Source: Sam Ramji ‘Darwins Finches, 20th Century Business. and APIs’
You have to ensure you remain in the modern value chain
The primary interface between the provider and the developer, and the brand and the consumer is the API

CONNECTED APPS AT THE HEART OF MODERN BUSINESS
“We are moving into an age of extensible apps
and Slack is likely the new norm for software
businesses.
In the earlier days of the Internet, applications
could stand alone, but now they are expected to
not only connect and share information, but
extend their functionality by connecting with
other apps.”
- Jack Berlin, CEO of Accusoft.
Source: forbes.com, 30/11/15
Another interesting article, worth reading is from Forbes…
I love this quote from Jack Berlin.

BUSINESS IMPERATIVE
“Today, a ﬁrm without application program
interfaces (APIs) that allow software programs
to interact with each other is like the internet
without theWorldWideWeb.“
14,700 APIs listed
REVENUE GENERATED via APIs
50% 90% 60%
Source: hbr.org, 07/01/15
Harvard Business Review is also writing about the API Economy.
They say….quote
To give you an idea of the scale of change…programmable web
And this is driving the bottom line - % of revenues.

So why now?
THE RISE OF THE API

AN ABRIDGED HISTORY
SalesForce
7th Feb 2000
eBay Developer
20th Nov 2000
amazon.com Web Services
16th July 2002
Source: apievangelist.com
Well actually APIs are long established in the IT world.
Things got interesting, and the API economy started, when the shift to modern web APIs, exposed externally from the organisation started.
Visit apievangelist.com for more

What were the triggers?
THE RISE OF THE API

The maturation of the web and cloud stack
Rabid demand from Tech Start Ups
Enterprise reinvention
THE RISE OF THE API
The modern tech stack - RESTful API design, Programming languages, Cloud
The rapid rise of API powered startups - ﬂexibility to build businesses on API platforms - they can focus on the problem they are trying to solve. Mention
Go Cardless.
And enterprise needing to reinvent how they do business and add speed

THE NEED FOR SPEED
Source: CEO Keynote I Love APIs 2015: Chet Kapoor Apigee
The rules have fundamentally changed.
Startups need to build and grow fast for hyper growth
Enterprises want the agility of start ups

26 million developers by 2019
THE RISE OF THE DEVELOPER
Start Ups Enterprise
Technical co-founders
Bring your own device
Bring your own service
Build vs. Buy is natural -
differentiation is key
The speed of change has far out
paced procurement
Focus on the problem they are
trying to solve
Transformation of Digital Agencies
Speed of change has far outpaced procurement, even the IT department?

CASE STUDY #1
• Needed a solution for beat police to
communicate with Neighbourhood and Farm
Watch groups
• Support channels the public wanted to use.
Special consideration for rural areas with
limited mobile internet
• Single platform covering all communication
forms for a better customer and user
experience
• Built by a team of in-house developers - vendor
solutions too bloated and expensive
• 28,000 people have used the service generating
260,000 SMS & 20,000 call minutes.
• Cost per digital interaction of 30p vs £5 for
traditional call centre
Launched June ‘15

CASE STUDY #2
www.parkinsonsvoice.org
www.ted.com/talks/max_little_a_test_for_parkinson_s_with_a_phone_call
Over 6 million people are currently diagnosed with Parkinson’s disease
The vocal fold displays tell tale tremors
Developed algorithms that can analyse ﬂuctuations, tremors and other symptoms in recordings of the human voice
Mass data collection project to collect 10,000 voice recordings
Remote, non intrusive identiﬁcation of the disease and severity - 30 second phone call replaces a $300 clinical test

Some food for thought
THE HOME STRAIGHT
Thought I would wrap up by putting together some statements to provoke some thoughts.

Who could have predicted the worlds largest book seller
would be hosting a ⅓ of all internet trafﬁc,
earning them $6Bn a year,
And all in the space of just 9 years?
FOOD FOR THOUGHT

The time between identifying a business need and
delivering the IT solution to address it will become
hours and days rather than months and years.
No matter what the area, those who look to software
solutions will outmanoeuvre those who look to
monolithic platforms.
FOOD FOR THOUGHT
Cloud will win - rapid procurement, scalability, adaptability, cost savings.

Complacency has never been so dangerous
Think at scale
Differentiation is built:
75% of all app purchases will be build by 2020
FOOD FOR THOUGHT
Source: Gartner, Enterprise Application Software,Worldwide, 2Q15 Update
Competitive plays can now launch in months
You have to build for differentiation. How can you stand out if you are buying the same solutions from the same vendors as your competition?

2000: Rent by the year
2003: Rent by the month
2008: Rent by the hour
FOOD FOR THOUGHT
Lets look at AWS again.
If you don’t believe me when I say complacency has never been so dangerous,
You think for one minute they have sat back and patted themselves on the back for the great job they have done?
They continue to disrupt themselves

What is your developer strategy?
How are you attracting developers to your brand?
Is your motivation genuine?
Traditional sales & marketing approaches are not appropriate
Is your success truly linked to the success of the developer?
FOOD FOR THOUGHT

FOOD FOR THOUGHT
Don’t buy into the clichés that your success with developers is linked to the volume of pizza you buy.
You have one shot to get it right
I’ve seen large companies thinking they need a hackathon, not being clear on why, and then asking their marketing agency to lead it. Recipe for failure.

FOOD FOR THOUGHT
hackdaymanifesto.com
Learn from the experts, and get them involved before you reveal anything publicly

The right business model is also
the right motivational tool…
Twilio +69 NPS vs. +29 s/w industry average
FOOD FOR THOUGHT
Traditional
Hardware
Traditional
Software
Twilio
Multi-year Capex
Maintenance Contracts
Per seat licenses Pay as you go
Breeds complacency Customer Focused
You want your people coming to work everyday thinking about how they keep your customers happy

AND FINALLY - API’S READY FOR THE MAINSTREAM?
If This Then That
A B2C API service - 293 APIs already integrated
Big focus on IoT and the smart home
And ﬁnally…
Smart home - Philips Hue, Nest, Hive - very hot right now (see what I did there) - and I believe a number of these companies are at the event.

Slides - bit.ly/apieconomyslides
@jamesparton | james@twilio.com

The API Economy (with speaker notes)

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