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Feb 7, 2010 | Comments

Back in 2006, I dreamed of an API from my former employer, American Express.  (Some background: what’s an API? It’s code for 3rd parties to access the inner-workings of a website. E.g., Facebook Connect, Tweetdeck, every Google Maps mash-up.)

Data-rich companies like AmEx are potential API gods–imagine the countless insights (i.e.,  AmEx has payment info on millions of transactions and customers) and hundreds of apps, from payment mash-ups to flowingdata-esque visualizations.

And of late, API popularity has surged. But it’s been, predictably, only from the big digital firms (Google, Amazon, Netflix, eBay) and small startups (Facebook, Flickr, Digg).

So it got me thinking: why don’t the big, old-world companies have APIs?

Why API?

Why did the darlings of tech (i.e., Google,  Facebook, and Twitter) create APIs?

It certainly wasn’t for a quick buck; APIs are not an explicit source of revenue [1]. Google Maps is one of the most elaborate and well-documented APIs, but I doubt Google considered a pay-back period. The API did convert a ton of savvy programmers and loyalists to its platform, part of the reason that few of us use Mapquest.  This buzz is valuable, as described by ReadWriteWeb:

“The technology press and enthusiastic geeks are thrilled whenever a new API is announced – and tech-savvy marketers circle anything that smells like it could be a big Platform. Offering an API is a great way to make developer friends and developing for a large Platform has the potential to bring your work to a huge audience.”

This is great if you’re a start-up, but few brick-and-mortar companies prioritize digital street-cred. So most API value propositions are justified by the intangible benefits, like innovation, partnerships, brand extensions, and exposure.

Twitter found a ton of success via its API, reportedly receiving traffic 10x higher than twitter.com (2007). Twitter CEO Biz Stone sums it up:

“The API has been arguably the most important…thing we’ve done with Twitter. It has allowed us, first of all, to keep the service very simple and create a simple API so that developers can build on top of our infrastructure and come up with ideas that are way better than our ideas.”

Fortunately, Twitter had eager developers to create those services, something most brands lack. How many coders would rush to develop the next app for Tide detergent?

Old meets new

Surprisingly, a few non-tech companies created APIs (how the CIOs persuaded the old-world CEOs without a profitability model is beyond me).

Last year, the NY Times built an API Development Network to critical acclaim, releasing data on everything from campaign finance to movie reviews. And to engage the community, they invited the media and coders to an API Seminar.

Big brands, like Best Buy and MTVcaught the API bug” as well. Behind this change is a startup called Mashery. They built APIs for many companies that could not have had the knowledge and resources to do it internally. In short, Mashery’s services make it easier for companies like American Express to create an API, if desired.

But what about a true brick-and-mortar, data-less business, such as Starbucks?

Several months ago, Fast Company did a piece on Starbuck’s new store model, 15th Avenue E Coffee and Tea. The new coffee shops were identical to Starbucks in every way (supply-chain, IT), except visibly re-branded. Snarkmarket called it something of a Starbucks API:

“What if Starbucks was offering up a Starbucks API—a set of hooks into a vast, efficient coffee shop support system with incredible economies of scale? You, the local coffee shop owner, simply plug in, and wham, your costs drop by thirty percent because you’re leveraging Starbucks’ insanely optimized supply chain.”

It’s an interesting idea, illustrating that an API is not limited to data rich companies.

A few other API possibilities that I’ve pondered:

  • JP Morgan: write your own rules to transfer funds in investment and banking accounts.
  • JetBlue: integrated flight/vacation bookings, limitless search opportunities
  • ESPN: brilliant data-crunching possibilities
  • Verizon: apps built on account usage, signal strength, etc.

I would not, however, expect to see an API from these companies, especially a bank. The biggest challenge will always be company culture. Most firms treat data as sacred, protecting it with ridiculous user permissions and firewalls. Go to any medium to large firm and request the company’s total number of customers–I guarantee the answer requires a special, custom-built program that only few can access.

Regardless, every technology change has an incubation period, where it popularizes until it cannot be ignored, even by the most digitally-ignorant. It’s happening now–if you own an iPhone, you’ve observed 3rd party developers actively develop remixes of popular website content.

Until then, check out Programmable Web–it’s the de facto source for the latest APIs and mashups.

[1] In some cases, API’s can generate revenue. Some sites charge for queries over a certain volume, such as 5,000 per day.

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  • delynator

    Great post, Matt! I'd argue that any company that has an online, mobile, set-top, gaming console, desktop or other platform presence today -- be they traditional brick & mortar retailers, media companies, telecomms giants, financial services -- can benefit from product development efficiencies inherent to building with APIs in "the Web way." I agree with you that Web services and APIs are not just for the Twitters, Diggs and Flickrs, nor the Web-based giants anymore. In 2010, the smart money is investing to become more nimble, adaptable and preparing for disruption before it happens.

  • Avi

    Your on fire with your posts lately. I really like this one too. Its all about transparency. Bringing people into the fold. It definitely helps with the perception of the company as an "honest" company. Its great for them too, you have people developing your software and you don't even have to pay them or...there healthcare.

    Furthermore, on transparency, I am watching this show right now where a CEO goes undercover in his own company. This guy is the CEO of Waste Management. Up until now, I thought the mob ran WM. I definitely have a more sympathetic view of WM now. Seems more benevolent to me. You should write an article on this show!

  • transparency is definitely an important point--something that I glossed over. data.gov, for example, has done a ton for the government in terms of releasing data in an easy-to-use manner.

    i watched the show as well--brought me to tears. i might start an investment strategy and see if the show bumps up WM's stock price given the huge publicity its gotten for an otherwise unknown brand.

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