Open APIs Have Become an Essential Piece to the Startup Model

This guest post comes from Marc Mezzacca, founder of NextGen Shopping, a company dedicated to creating innovative shopping mashups. Marc's latest venture is a social-media based coupon code website called CouponFollow that utilizes the Twitter API.

Startups need to build quickly and iterate quicker.  That means not re-inventing the wheel -- whenever possible.  Just 5 years ago, people were asking why would you use an API? This has quickly turned to why wouldn't you!  Since March 2007 there are 14 times as many APIs listed on the ProgrammableWeb site.  And the growth rate is accelerating. API listings on ProgrammableWeb have exploded this year so far, doubling the same period last year, and about four times the same period in 2010 (see chart below).

Where are all of these APIs coming from, and who is using them

MxitIn one word: startups. WeWork Labs, a community-oriented co-working space in New York City, just opened the doors to its new place last month and is just one of several co-working spots in the city crawling with startups. I spent some time digging around WeWork and found that many of them are not just using APIs, but also heavily reliant on them! Many of these startups are including APIs as part of their business model. Yet another change from even just a few years ago. I talked to three up and coming startups who all use APIs in different ways...

A Key Part of Your Business Uses an API to Operate?

StartupGiraffe is a perfect example of both the need to build quickly, and as an API user (for business functions). StartupGiraffe helps entrepreneurs bring their ideas to reality in 30 days or less, by working with them and producing the MVP (minimum viable product). StartupGiraffe, a team of three, is using the Stripe API as a core part of their business.They use it on almost every project to handle payment processes, set up subscriptions any time monthly billing is needed, and generally use it for client transactions. It is essentially their finance department. They started using the API while it was in beta. It's a bit of a risky move in my opinion to rely heavily on another company in beta, but who isn't in beta these days anyway!

You've Tied HOW Many APIs Together to Build Your Product?

GoChime,Mxit a TechStars graduate that is still in private beta, connects brands with the millions of people expressing needs for their products across social media. It works by monitoring purchase intent on social networks, and allowing its members ("chimers") to participate by chiming in with product suggestions, and then being rewarded for doing so. They utilize the DataSift API to handle monitoring of the social chatter. Note that the DataSift itself is a product build on several other APIs such as Twitter, Facebook, Klout and other social APIs. GoChime also utilizes the YipIt and Groupon APIs to monitor hot deals. Finally, they use the MassPay / PayPal API to handle rewards sent to the "chimers." Expect to hear more about this company when their product is fully-launched.

Your Entire Business Model is an API?

The web commenting system is certainly due for an upgrade. Disqus has done a nice job in enabling a social Authentication and authority commenting Platform, but following discussions on articles with hundreds or thousands of comments is nearly impossible. Often people need to discuss certain points within an article. That is where ReadSocial comes in. ReadSocial allows developers to add paragraph level conversations on top of their content. Their entire business is in offering an API to provide this functionality. They offer a client-side JavaScript out of the box, so webmasters can simply drop it in their site. However, developers looking for custom integrations can do so by building their own on top of the ReadSocial REST API.

Concluding Thoughts

I've mentioned in nearly all my posts that it is important to have a good working relationship with your API provider. This is especially true for startups who are based entirely, or rely heavily these external APIs. I really can't stress this enough. If the API provider is a small shop, get to know them personally. If it is a large company or enterprise, get to know someone on the API development team!

I think we can equate a portion of the acceleration in API growth to businesses with APIs being built upon other businesses' APIs. APIs have turned into building blocks and become essential to the foundation and structure of new startups. That being said, they've also become an increased risk, as is always the case when having key external dependencies. If the Twitter API went down for an extended period, thousands of websites, apps, and businesses would be affected. Let's just hope it doesn't become like a game of Jenga when some of the important "pieces" are removed.

Be sure to read the next API article: The Chictopia API Proves APIs Are in Style