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Notes from the Business of APIs Conference

John Federico

These are pretty much my raw notes from the Business of API's Conference held on March 17th at the Yale Club in NYC. Send any corrections my way via email or in the comments.

-jf.

 


Jeremy Zawodny, Yahoo! Developer Network

Yahoo! Developer Network founded in February 2005

Initially focused on Search API's

Why did YouTube Succeed?


  • Free

  • Made one simple thing easy

  • Viral

  • Branding

How does Jeremy define Openness?


  • Open API's

  • Open Content

  • Open Communication

  • Open Platform

  • Open Standards

  • Open Source

Examples:

Open API's
Open Content
RSS, etc.
MyYahoo benefited from this a great deal
Open Communication
Blogging
Access
Open Hack Day
Open Platform
Open API's and Search Results
Open Standards
Open Source

Why Open Up? Why API's?
(Pac-Man slide)
The yellow slice is "the internet"
The rest is usually "your company, your business, your developers"

"In the battle of you (or your company) vs. the internet, the internet always wins...eventually."
For the same reason that YouTube didn't charge to upload, host or transcode your video

Why would any smart business knowingly limit itself to a small subset of the available resouces - be they people, time attention, ideas or customers?

(more pac-man)


  • Yahoo API's

  • Answers

  • Finance

  • HotJobs

  • Local

  • Mail

  • Maps

  • Search/Advertising

  • shopping

  • Travel

  • Fire Eagle

  • Utilities

  • Delicious

  • upcoming

  • flickr

  • messenger

  • widgets

  • live

using...


  • RSS

  • JSON

  • Serialized PHP

  • XML

Yahoo Buzz
Taking community input and letting people determine what is popular or interesting. Content from Yahoo Buzz actually gets placed on the Yahoo Home Page. Companies featured there have had one of their highest traffic days.

Q: What are some of the dangers of challenges of doing this?
A: Uncertainty. You never know if people will like what you're doing. Access: "People may just take their data and go somewhere else."

Q: What are the business models behind the API's?
A: General syndication - make it easy for people embed your stuff to create awareness and traffic.
Utilitarian - encourages people to come back to see what else yahoo has to offer (advertising, apps, etc.)
Lead generation for paid services
Search Marketing - the more they open the business, the easier it is for people to create tools to help place and monitor ads. (That's why eBay opened their API.)


Panel Discussion

How do you choose what to open up in the first place?

Nathan Freitas, Cruxy

Cruxy is a digital marketplace for items - any item, any price. Engine powers all types of commerce including virtual goods. They take 10%.
Video computing engine using a utility model (a la EC2).
They want to power companies of all sizes.
Reselling Amazon S3 services. AWS sells 10 cents for CPU services, Cruxy charges 13 cents.

Eric Rafer, Lookery

MyBlogLog

Lookery had put out a rudimentary ad network on Facebook. Microsoft funs their ad operations for 1.5 cents per thousand.

Tracking is available via API. Business is split between customers who want to work with them just for data and those who want the ad network. They're actually selling data to other ad networks via the API.
Global API, but it's relatively personalized. For instance, if you're an auto-related site, you'll see general demographics plus auto-related data. Lookery doesn't get much downstream data from ad response like the behavioral targeting networks. 25 cents per thousand for access to the data.

Oren Michels, Mashery
Smaller customers recognize that general growth distribution is important to their businesses. Offering stuff on their own web sites is a bonus.

Large companies are evolving - usually an early adopter in the organization will test the theory of open API's and may generally open certain API's if proven successful.

Potential Bad Outcomes: Everyone might use it! They actually had it crush their infrastructure due to underestimated demand. Customers will expand the API's based on feedback. Ultimately what's released is a combination of what you thought developers might use and requested additions.

Tracking and scaling api usage- what are the differences

Scott: machines and humans behave differently. In the past, we've blocked bots and crawlers. An API invites those people in on a controlled basis. You can begin to track the traffic and value of your partners web sites.

Nathan: Half of our API's are built for machines. The other half are for humans (widgets, etc.)

Oren: They originally opend the API for people to put a search box on their web sites. What they actually wanted was to send millions of concurrent requests so they could generate pages for AdSense. Classic API is around control. Mashery has a control panel (a la Google AdWords). Created an API to update the behavior of the dashboard.

Cruxy: Russian hackers found a workaround to display videos. 60 terabytes later, they discovered that the system really scales. ;)

MyBlogLog requires a link back in order to license the API.

Scott: People who understand what value traffic to their web site is worth will embrace this model. If you can't make money to your own traffic, bringing more people isn't going to help.

Oren: Is your business model baked into your API? Ads, traffic, etc. Google monetizes attention, others monetize in different ways (commerce, etc.)

Nathan: Will monetize and change the API based on future demand and enhancements (Silverlight, HD, etc.)

Q: Are there free trial API's and what have the success models been?

Mashery has a free trial API. Thousands of trials turn to hundreds and create the best leads. If you open up API's and something gets build on it, you can sit down and create a deal structure that works for both companies. Generally working with Biz Dev folks.

Q: How do companies find out about your API services?

Nathan: have to invest yourself in the developer community (barcamp, etc.) and invest in kits for various frameworks (.net, etc.)

Q: What size business are paying for API services?

Oren: mostly larger developers/companies.

Q: In a successful API release, how many people would be involved in the process?

Scott: It depends on what it does.

(Scott also runs on Amazon.)

Biz Dev, Product, Ops, Development (99% sales and biz dev after production.)

Oren: usually a small team that understands the value of the build.

Nathan: Everything is the API - that's product. How it's interfaced with the public is sales/biz dev.


Chris Phenner, SVP, Business Development, thumbplay

thumbplay is largest off-deck mobile content provider in the U.S.. Billing events directly appear on consumers wireless bills.

"Like the bank teller about to introduce the ATM that will replace me..."

For two years spent a lot of time doing classic biz dev. Working with Mashery for the past 6 months. ended year of just shy of 40 partners live and driving subscribers. Two weekends ago they pushed live their developer program - in 15 days they signed up 40 partners.

Provides a means for developers to help themselves and let's biz dev get out of the way.

Happiness is..

Instant Gratification

Gratification is...
Requiring only one email to start.

Flexbility is...
Offering tools for all partner types

1000 new subscribers a day @ $10/month

Feedback is...
Constantly changing content/services...

Availability is...
Partners cannot live by URL alone...


  • A sense of voice and presence

  • A team at-the-ready to respond

  • A means to reach out - in all forms

Competition is...

Shared best practices and success stories


  • Who did what with which tools?

  • What drives the best conversion?

  • What financial outcomes accrue?

Q: Do you still do manual biz dev deals or do you push people into the automated process?
A: Sure, if the opportunity is worthwhile.

Q: What sort of radical changes did you need to make to internal processes to prepare for the API?
A:

Q: Can you manage retention and churn using the API?
A: New Metric: How many API calls does it take to get a subscriber?


David Cancel, co-founder and former CTO, Compete.com (now with Lookery)
First Mashery customer

Founded in 2000
Clickstream data
License data from ISP's, ASP's and their own panel and mash it up

Detailed data example:

My Yahoo users are less loyal than iGoogle users

Weren't making use of much of the collected data. What could they do with it?

Benchmark data for U.S. sites from panelists released for free - creating massive growth.

"If you want to get people to come to your web site, free data is a great way."

Launched an API in 2007 through Mashery, driving more traffic. (NOTE: And credibility.) Didn't earn money directly from the API, but opened up a ton of new verticals with new clients. Also happened with core vertical clients.

The API was a large factor in the acquisition of Compete.com by TNS. Looking to expand beyond the U.S.


Oren Michels, CEO, Mashery
Managing your API

Quote on slide: "What is an API? Biz Dev 2.0!" --Caterina Fake


  • Security

  • Metrics

  • Scalability

API's can push to web sites, widgets, third-party platforms and desktop applications.

"The web site is the front door of your business, the API is your loading dock."

How do you manage the next 1000 partners?

Self-select, self-serve, self-manage.

Quote on slide: "Twitter API has 10x the traffic of the web site." -- Biz Stone

Mashery: Proxy for your API: API Management, API Metrics, API Distribution


Dave McClure, 500 Hats
Successful Developer Programs

Ran the PayPal Developer Network.

All about the geeks.

A geek is a cool smart person. A nerd is an uncool smart person.

7 Habits of highly successful developer programs


  • Who's your Audience?

  • Who are you trying to reach?

  • indies
    small cos
    enterprises
  • What makes them tick?

  • What problems do they have?

  • Are there geeks who are already solving your customers problems?

  • If so, find and recruit them to your cause
    If not...better find some fast.

Your Product Better Be Cool


  • To get Geeks behind your product, it better be Cool

  • cool = new, innovative, useful, latest tech
  • If it ain't cool, MAKE it cool

  • Provide code examples; Find developers who are already solving the problem; see if they'll use your tools. If not, back to the drawing board.
  • Your number 1 job is to help geeks make money or become famous (either one works)

Your Team = More Geeks

Q1: Are you a geek?
If yes, good. Now go find some more
If not, stop. Do not pass go. Do not collect $200

Hire EXTROVERTED geeks (tough)
Bloggers / Writers
IRC / Wiki / Forum Addicts
Hang out at Conferences & Draw a Crowd
Enjoy writing code samples and helping others

Recruit Geek Advisory Board with Target Expertise
Target Languages / Platforms
customer Veticals
already successful / making money / well-known

Geek Metrics
Have some
Make sure they're aligned with real world business goals
Examples
# of new customers
# of downloads
# of active developers
# of transactions
$ revenue from API's

Tip: Make sure your (non-geek) bos / business unit signs off on your metriccs & goals

The API Biz Model should be your Biz Model
Bake your business model into your API
no free rides (unless your produdct is free)

Education: It's the Only Thing


  • To win, you must Educate (product mktg)

  • To Educate, you must speak (blog)

  • To speak, you must do/show (code examples)

Tip: DO NOT require registration or login to educate. EVER.
Perhaps require reg to make money, get fame but only if absolutely necessary

early beta programs = virtue
NDA's & Legal Docs = sin

Marketing: Sell the Geeks, Not You

What do Geeks crave?


  • Respect (always)

  • Attention (sometimes)

  • Money (sometimes)

  • If you help them = BFF

Sell your best geeks, other will follow


  • Product directory of third party apps

  • Preferred developer pgoram

  • Affiliate / incentives for your geeks

  • Send them a steady stream of customers

  • Geeks rule the earth

  • A developer program is like a loyalty program


Media and the Open API

Nielsen syndicates data through an API. Business models will vary - some will include embedded advertising.

Sandor Marik, CondeNet

Securing rights to distribute content is becoming easier, making API's more attractive. Syndicated content is still their brand.

Ty Ahmad-Taylor, MTV Networks

"The content trickle back to your site is short-sighted."

"The brand of the channel is not as relevant to the audience as the content."


APIs and Corporate Strategy
Lauren Cooney, Program Director, Info 2.0 Community, IBM
David Boloker, CTO, Emerging Technologies Group

IBM is using the term Info 2.0 to describe their process for turning all your data into XML feeds, mashing them up and delivering them to the needy folks in your organization.

The whole thing is controlled by "MashupHub".

Follow the Money

Brad Burnham, Union Square Ventures
Chris Fralic, First Round Capital
David S. Rose, Rose Tech Ventures

David: "What's your API strategy? If don't have one, you're probably not a company that we want to take a look at."

Brad: "It's been rumored that twitter built their API first, then built their service on top of it. It requires a lot of forethought."

Chris Fralic: We ask, "why aren't you using services like Amazon's S3? Sometimes, they have good reasons not to but if they say, 'What's that?' we get concerned." "Chris Phenner is the business development executive of the future."

Brad: "Joshua Frachter started delicious for $300K. He had 30K users when they met him, 60K users when they closed the round and a million users by the time Yahoo came around."

David: "Scalability is what VC's are looking for. And what better way to scale than to plug into everyone and everything out there and leverage that connectivity?"

Brad: "We often look for young companies that are aggregating assets - usually data - from a variety of sources and ways and producing something where the sum is greater than the whole of it's parts."

Chris: "The one way to help break Google's lock on search is to open it up to the world to figure out how to make it better."

Brad: "Looking for a company that has a native revenue model, not one that comes from elsewhere."


Platforms and the Next Generation
Steve Fisher, Salesforce.com's Force.com Platform

Will do $1B in business this year.

Steve is focused on native SF.com apps as well as those that integrate via API's.

Delivering apps on-demand on their own platform is very resource-intensive. APIs help to add value while reducing the overhead.

In our company we can only do so much, but we know that there will be a huge number of companies that will

"We'd like to provide the underlying infrastructure for that."

[tags]Business of APIs Conference, APICON, Yale Club, Jeremy Zawodny, Chris Phenner, Thumbplay, API, Software, Web Services, Salesforce.com, Steve Fisher, Chris Fralic, First Round Capital, Brad Burnham, Union Square Ventures, David Rose, Rose Technology Ventures, AngelSoft, Angel Investors, Dave McClure, 500 Hats, Mashery, Oren Michels, David Cancel, Lookery, Compete.com, Yahoo, Yahoo Buzz, Nathan Freitas, Cruxy, Eric Rafer, MyBlogLog, Developers, Developer Programs, Business Development, Venture Capital, MTV Networks, Condenet, Nielsen Business Media[/tags]