The new dial tone: How the API economy accelerates the growth of cloud apps

SAN FRANCISCO — When companies compete for cloud developers these days, they have to provide a way for developers to customize their platform for their own needs.

In programmer’s lingo, that means they need an application programming interface (API), which is the basic glue that enables developers to plug different technologies together and launch services on top of them in a quick and automated fashion. The building-block nature of the cloud makes it easy to layer an API atop a platform and get a brand-new industry off the ground.

The importance of this growing API economy was the subject of a panel of API owners at VentureBeat’s CloudBeat 2013 conference today.

“APIs are the new dial tone,” said Jeff Lawson, a cofounder and the chief executive of Twilio and one of the panelists. “APIs are the connective tissue of everything you do.”

Sam Schillace, the senior vice president of engineering at cloud enterprise platform vendor Box, agreed. He said, “If I give you a computer, but it has no connectivity, then you would consider it to be broken. In five years, for any Web service, if you don’t have an API that developers can program against, then it is broken.”

APIs have been around for a while, but they represent the maturation of software, as it has evolved from the days of single-copy sales to the cloud. Instead of creating enterprise software that has to be customized in every single installation, software creators can now deploy their core platform along with APIs, Lawson said. Then outside developers can take the platform and customize it 100,000 different ways via the APIs, which are an automated, self-service way to accomplish the same thing as custom software.

“What you have in the cloud is a better way to take multitenant integrations and make it available to 100,000 others through one installation,” Lawson said.

Schillace called this self-service nature of APIs the “consumerization of development.” Juan Benitez, the chief technology officer at Braintree, said that APIs enable his company to work with large enterprises, which appreciate stable APIs, as the two-person shop in a garage. The test is now how many minutes does it take to take an API for a platform and adapt an application for it.

“Customers want to get up and running right away,” Benitez said. “They don’t want complex APIs. They want to build things out right away, get merchant accounts up and running, and do that without needing to talk to a human being. At the same time, we want robust interfaces to serve the large companies.”

A lot of customers want to create their own app store. But they don’t need to build it from scratch. They can adapt an existing app store, using APIs. They can still add their own features to it, but don’t have to spend two years making that happen.

The power of the API economy is becoming evident as successful platforms show that APIs can give them a competitive advantage over rival platforms that don’t have support. The logic? If a platform can’t get traction with developers, it’s not likely to get support downstream with the ultimate users of the service.

In this new world of APIs, developer contests, education events, and other ways of publicizing APIs are becoming more important, the panelists said. Procedures for testing apps using an API are essential.

But there are interesting questions that developers have to contemplate. With more APIs, there is more flexibility for developers to pick and choose what they need for their own purposes and then get something working quickly. On the other hand, the API world is becoming more complex too.

Byron Deeter, a partner at Bessemer Venture Partners, asked the panel, “Will we have hundreds of successful APIs with a bunch of developers? Or will we have three winners?”

The panelists said they didn’t foresee a consolidation of APIs coming, partly because the technology world continues to change with new platforms such as mobile coming along and becoming more important.

Benitez said, “You’ll see abstractions rise,” meaning that a platform will become more useful with more things sitting on top of it that just plug into each other and work. Lawson said that customers don’t care if you’re getting your hands dirty in the infrastructure. They just want your service to work.

Lawson said, “You no longer brownie points for using servers. You get them for serving users.”