Introduction to the API Landscape

Before diving into the details of what API products are and how to build them, we'll need to first look at the market landscape of API products to understand the products and services that exist in this space.

History of web-based APIs

The history of the web-based APIs we know today can be traced back to the late 1990s when Salesforce launched a web-based sales automation tool. This application marks the beginning of the Software as a Service (SaaS) revolution. The World Wide Web has strengthened the underlying infrastructure that enables this newly discovered way of delivering software. Before the World Wide Web and the internet, APIs existed. Still, they were a form of proprietary protocol that supported small, distributed computer networks that spanned a limited area most of the time. The purpose of APIs in the pre-internet and post-internet eras is the same. APIs allow API providers to provide services, so external systems can call API providers to take advantage of those services. At the internet level, where developers worldwide create applications and host them on the World Wide Web, APIs are the future of the distributed computing paradigm.

We’ve come a long way since Roy Fielding’s famous REST dissertation, which laid the groundwork for innovation in the API space. A few emerging technology businesses such as Salesforce, eBay, and Amazon paved the path for the current definition of web APIs. We’ve seen how Amazon Web Services laid the groundwork over the years while specific APIs, such as Flickr, have failed.

Once foundational APIs such as payment APIs, SMS, voice, and Google Maps started to come into being, the API economy had the foundation for a lot more to be built using these as building blocks. The 2007 release of the iPhone exponentially increased the speed of the API revolution and resulted in a vast universe of mobile apps that we know today.

In 2012, the then US president, Barack Obama, issued a comprehensive Digital Government Strategy aimed at delivering government data freely in machine-readable formats to enable researchers, innovators, and entrepreneurs to use and generate new products, services, and jobs. This has resulted in several APIs being launched by the US government over the years, such as airport delays, customer complaints, a Census API, HealthData API, Healthcare Finder API, and Mars Weather API.

In 2014, tools such as Postman and GitHub became available, allowing developers to discover, evaluate, explore, and integrate with new APIs faster than ever before.

In 2015, NASA launched NASA's API catalog, where developers can learn to use existing NASA APIs or contribute their APIs to the catalog. In the following illustration, we can see a timeline of when some of the most noteworthy APIs and API tools have been launched that have shaped the landscape of the API business today.

API products and services have evolved substantially in the last two decades. They are now at a point where various job functions have been established around APIs’ development, maintenance, and support. The developer community is also a big part of the API landscape because developers actively explore new APIs to learn to integrate with them; this community has fueled an area of expertise around developer education such as developer evangelist and developer advocate functions.

Several aspects of API design guide us in building robust and scalable APIs. As multibillion-dollar companies get built on API-first business, an evolving function of API product management, measurement, and analytics for API products enables a methodical and systematic approach to creating successful APIs.

The pandemic effect

The outbreak of coronavirus acted as a forcing function that brought 332 million people online for the first time. This resulted in a digital transformation of shopping, socializing, and communicating. Voice and video APIs provided the infrastructure to build remote healthcare services that helped medical professionals serve their patients remotely. This also allowed children to attend school virtually and a vast population to work from home.

The pandemic fast-forwarded the plans of many businesses to come online by at least five years. Storefronts had to be closed overnight due to public health measures to avoid the spread of coronavirus; social distancing and stay-at-home rules catapulted heavyweights such as Walmart and Amazon to the front of the pack as consumers leaned on online shopping and grocery delivery more than ever before.

Platforms such as Etsy and Shopify allowed small businesses to set up e-commerce sites quickly. Shopify reported a record $2.4 billion in Black Friday sales globally in 2020. Etsy saw a 108% increase in sales from November 2019 to 2020, according to Edison Trends, a digital commerce research company.

APIs have been an integral part of this transformation, with voice and video APIs being the building blocks of all applications used across educators, healthcare, banking, and others. When a customer purchases something online, the transaction triggers a series of payment APIs to complete the transaction, email APIs to send confirmation, and ultimately, deliver shipment updates using package tracking APIs, SMS, and email APIs, to name a few among many APIs that are invoked for each transaction that a user makes.

API providers worked hard to scale their infrastructure considerably during the pandemic to deliver at such a scale. This has increased conversation around the maturity of APIs and usage monitoring and analytics of API products—topics we'll be diving into in this course.

Great for business

SaaS has been the fastest-growing segment in the software revolution. According to IDG’s 2018 Cloud Computing Survey, 73% of organizations have at least one application or a portion of their computing infrastructure already in the cloud. SaaS has dramatically lowered the total intrinsic cost of ownership for adopting software, solved scaling challenges, and removed the burden of local hardware issues.

APIs are a critical part of their strategy for fast-moving developers building globally. Instead of dedicating precious resources to recreating something in-house that’s done better elsewhere, it is more time- and cost-effective to focus special developer efforts on creating a differentiated product.

For these and other reasons, APIs are a distinct subset of SaaS. By often exposing complex services as simplified code, API-first products are far more extensible, more accessible for customers to integrate into, and can foster a greater community around potential use cases.

At this point, several multibillion-dollar API-first companies are changing the way software is built. Stripe is the largest independent API-first firm, with a market capitalization of over $95 billion in 2022. Stripe’s early focus on the developer experience setting up and receiving payments helped it take off. It was even known as /dev/payments at first! Stripe’s attention to creating idiomatic SDKs and beautiful documentation for each language platform allowed them to design the whole business around APIs.

Checkr is another excellent example of an API-first company simplifying the HR workflows of completing background checks on their employees and contractors, which used to involve manual paperwork and the help of third-party services that spent days verifying an individual. This process had to be completed every time an employee got a new job or contract, which could be as frequent as every three months in the case of contract employees.

Checkr’s API gives companies immediate access to various disparate verification sources and allows them to plug Checkr into their existing onboarding and HR workflows. It’s used today by more than 10,000 businesses, including Uber, Instacart, Zenefits, and others.

Plaid delivers a similar service in the banking space by abstracting away banking relationships and complexities. Plaid started in 2013 and is currently valued at $13.4 billion as of 2022.

API tools such as Postman and Oracle Apiary have enabled the rapid evolution of the API economy and made working with APIs accessible to low-code/no-code customers by building UI-based tools.

This has given rise to an increasing number of jobs in software development, maintenance, and support of API products. Since APIs are significantly different from web- or mobile-based consumer products, and much of the technology and standards are still evolving, at this point, the most significant opportunity in software is to work on APIs and API-first companies.

Throughout this section, we'll learn about the application of product thinking for API products, which will enable us to build and grow API products. We'll cover the following topics:

1. API as a product.

2. API product management.

3. API life cycle and maturity.

4. Building and managing API products.

5. Growth for API products.

6. Support models for API products.