Ten New Breeds of Businesses That Have Emerged out of the API Economy Bill Doerrfeld March 21, 2016 Unprecedented tech revolution often spawns brand new services and companies. As technological evolution opens new possibilities for humanity, is also leads to a flood of ideas and new business ventures never before possible. Now, as hyper-specialization occurs throughout the Internet, the API economy has become a macrocosm in its own right, spawning brand new types of adjunct companies.Once simply a strategic offshoot for existing tech, APIs or Application Programming Interfaces have transformed into Software-as-a-Service (SaaS), the bread and butter upon which many apps are nowadays built. With this reliance and wide spread use, innovative tooling and new industry experts have come onto the scene to support APIs.A lot has been said about the emergence of the API economy/industry. But what exactly has emerged? What type of businesses are pioneering in this new ecosystem, and what tools or services do they contribute exactly? Thus, the goal of this article isn’t to showcase certain providers, but rather to make sense of the ever growing industry through categorization. We’ve done our best to identify new breeds of companies that quite literally owe their existence to the emergence of the world of APIs.1) company that provides API to developer consumers as #1 priorityFor some time now, many companies have provided a public API as a means for others to access their infrastructure, but this was historically done on the sidelines. We now see more and more API-first companies emerge whose entire business model exists around developers using their Software-as-a-Service. These sort of APIs are often niched, performing one functionality extraordinarily well, and monetized in a freemium model, like the Stripe payment API, for example.Companies have built and sold tooling — languages, frameworks, etc. — for web developers to create new software with for decades. This relationship between software vendors and developers isn’t new, but the ubiquity of offerings we see throughout the API space is impressive.2) company whose infrastructure depends heavily on third party APIs for survivalThere are of course the users, the consumers of APIs. Many mobile apps are essentially married to various APIs. In our article on choosing brick products, we identify the emergence of the composite enterprise — the core IT for large industries is becoming an assemblage of microservices as well. Internal IT may be completely API-fied, as in the case with streamlining internal operations at Amazon or Netflix.APIs are also leveraged to grow social networks — some have argued that without third party developer apps, explosive growth for Instagram for example, would not have been possible. From our research, it’s safe to say that most digitally savvy companies now rely on either Private, Public, or Partner APIs in order function in the state we know them.In a composite enterprise, a competitive advantage thus arises out of the unique assemblage of functionality. In the future, what companies bring to the table will become only increasingly embedded with the digital services at hand, thus increasing the reliance on near 100% uptime for SaaS.3) company that supports APIs with management solutionsProviding an API is no easy task. Even after the core functionality is programmed, you must still consider hosting, filtering API calls, monitoring usage, access control, documentation, how DevOps will handle ongoing maintenance, and much more.Because of this, a sea of platforms has emerged to support APIs throughout their lifecycles, allowing developers and non developers alike to create, run, distribute, and/or monetize APIs. API Management may involve offering server space for API functionality, a front-end documentation for developer consumers, a dashboard for performance monitoring, billing, and/or specific security solutions. We won’t attempt to list all solution providers out there, but they perform things like:comprehensive API management solutions,monitoring tools for analytics,gateways, rate limiting,middleware from enterprise to cloud,key generation,security tools for access management, identity control.‘API management’ is still a nebulous term, and we’ve attempted to reach a vendor neutral definition that includes the Developer Portal — the forward facing facade that developers can visit to learn about your API, the API Registry — where data and functionality is actually stored, and the API Gateway — that which receives API calls and filters traffic. API management is certainly an area that has seen much expansion. API Evangelists lists 52 different management companies in his research.Read our article on The Core Principles of Vendor Neutral API Management4) company that specializes in API testing and monitoringAPIs need a careful eye. To avoid bugs, and to improve all around Developer Experience, testing must be routinely performed, especially before deployment, but at all times for continuous integration scenarios.Testing may be part of an API management solution, but many companies have emerged that specialize solely on testing, helping automate functionality testing and performance monitoring for your APIs or API dependencies. These tools often act as a proxy which can perform things like:load testing: demand is put on the API to determine how it behaves under peak load conditionsperformance monitoring: helps identify bugs and makes sure the API behaves as expected, helps consumers adhere to their service level agreementsresource management: the monitoring of resources that support API performancetrack usage: automated logging of use to track method access and analyze trafficA testing paradigm could be manually developed as a simple tool to test requests, but as we’ve mentioned before, it doesn’t always help to reinvent the wheel. There are also companies that go a little further with virtualization, a “mockup on steroids” designed to mimic live API performance.The ongoing monitoring of uptime and performance behavior is cornerstone to a quality API with good developer relations. Though outsourcing may not fit every situation, a well-polished automated monitoring mechanism means increased response time to errors, and better preparation for increased traffic, both meaning an increase in end user happiness.Related: check out Monitor the Status of APIs with these 4 Tools5) API documentation-as-a-serviceSome have suggested that in the near future you will literally own nothing. Instead, everything will be consumed in the same way we now use media or integrate cloud software components — as a subscription model. Not surprisingly, the Everything-as-a-Service (XaaS) trend spans to how we expose APIs as well.The way we describe APIs is vital. A key component to the developer hub, documentation is the visual, forward facing resource that users will refer to until the end of your service’s life cycle. Great documentation is often structured in the 3 columned approach, outlining all potential requests and functions, the proper HTTP calls to use, and code examples.Documentation should be readable and optimized to increase the onboarding time for the service — this means lucid description, ample commenting, intuitive site architecture and design, and more. With quality reference being such a fundamental tool for API existence, it’s no wonder that experts have arisen, and that providers are willing to pay a per-month charge for their services.Tools like Swagger, owned by SmartBear and powering the Open API Initiative, can be used to generate API server code, client code, and documentation for these services. Or take Readme.io, which can be used to create API references, extend a developer portal with a platform for additional guides, code packages, use cases, tutorials, common troubleshooting questions, and more.Though some API specification formats are going open source, these projects are supported by parent companies with a steadfast stake in supporting the API economy.Our other article does a decent job of describing RAML, API Blueprint, and Swagger documentation tools: Top Specification Formats for REST APIs6) tools for API development and continuous deliveryThe wealth of companies creating tools for building out and maintaining APIs is tremendous — making it difficult to sum up in a single section. To get an idea, subcategories include:Web frameworks: Microframeworks specifically designed for building lightweight web services are all the rage. We’ve experimented with using Spark, Play, and Lumen frameworks in the past.Continuous integration: Rapid change requires iterative and quick releases. Therefore, tools that support the DevOps approach to API development are numerous.Configuration management. Docker containerization has changed the way the build process for web development is packaged.Library generation: Tooling has emerged that enables one to automatically derive SDKs or language specific code libraries from their API specification.7) cloud hosting providersEvery web application needs a place to live. Cloud computing didn’t exactly emerge out of the API economy like others on this list, but it is a huge part of the API industry equation — the thousands of chugging APIs have increased our reliance on cloud server providers.Writing for Airpair, Daniel Rice outlines how to go about hosting a Ruby on Rails application on various cloud computing providers. He mentions that in the 90s and 2000s choosing a service to host a PHP application, for example, was relatively straightforward. Today, many frameworks exist — it seems that every cloud PaaS provider is doing something slightly different. These services charge monthly fees for varying bandwidth, providing things like:a virtual server, permanent cloud storage for resources,using a console to create instances and deploy,aggregation of virtual private servers,and targeting for geographical regions.A software’s cloud stack will rely on the makeup of the technology from which the API is derived. Whether you go through Amazon Web Services, DigitalOcean, Heroku, or others, every web application needs to exist somewhere.Look into Living in the Cloud Stack — Understanding SaaS, PaaS, and IaaS for a more complete description of cloud computing8) company that specializes in API discovery or marketingAs a developer, finding an integration for an app may be as simple as a Google search. Nevertheless, many have sought to profit in some way from the overwhelming amount of APIs available by organizing them into directories, or designing new formats to automate search and discovery.Many discovery tools — we listed 11 ways to find APIs — are available to help entrepreneurs and app developers discover APIs to integrate with. Some API management solutions supply publicly searchable directories, while other aggregations are manually curated or automatically compiled using unique methods.For discovery by web search to be possible, typical SEO and digital marketing should be considered. But making something discoverable is really the tip of the iceberg when promoting technology; developer engagement and evangelism are full time jobs.This outreach and community-building aspect of API marketing is starting to be outsourced by niche agencies. For example, Catchy agency helps grow developer communities, a strong parallel with marketing API programs.9) API brokers – independent API strategy consultantsWith all these new businesses, novel technology, confusing terminology, and competing services, the industry is certainly daunting for newcomers. There is room for experts to fill in the gaps. In 2014, Cyril Galliard described the need for an API Broker to consult his startup, stating that “Understanding the World of APIs” was the #1 important asset he could hope for in a co-founder. Similar thoughts were echoed throughout the blogosphere. API experts that follow the industry aid business in the following ways:Brokers understand the economy and can recommend integrations,Strategy consultants review existing APIs, and consult with overall business strategy,Programmers offer design advice, develop an API, or build libraries,API advocate for hire: individuals who have experience in evangelism or outreach will become more and more valuable.Already, many consultants like Mike Kelly (Stateless.co), James Higginbotham (LaunchAny), Kin Lane (APIware), and others have emerged that are doing this sort of personal consultation on API strategy, design, and implementation.10) organizations that disseminate API knowledgeLast but not least on our list are the groups that spread the word of API. There are plenty of conferences, blogs, and news channels that circulate industry expert opinion, as well as coding academies that turn novices into practitioners. The increasing number of dedicated channels covering the API industry is a clear indicator that a thriving economy has formed.API Economy AnalysisThe API industry hasn’t been around for all that long, but in it’s decade of active growth has spawned a new ecosystem of interconnected services, with unprecedented companies that owe their existence to the ubiquity of this tech. Emergence is clear, but the next question to be asked is how many of these companies are sustainable, and turning a profit. The API economy is a thriving and high-yield field, certainly with much room for growth.There is inherently overlap between the businesses models mentioned above — testing and documentation are often parcels of holistic API management “solutions”; infrastructure and deployment specifics may be embedded into a holistic cloud server arrangement, etc. The high impact of APIs on our web usage makes it difficult to condense or categorize the economy; other business models that could be appended to our list are services like:companies that make API integrations more accessible for non-developers — Zapier, IFTT.IoT gadgets and supporting servicesSOA-to-cloud integration specialistsAnalytics firms that track trends throughout the developer economy, such as Vision Mobile.…do you feel another category belongs on our list? Suggest in the comments below!What will the future API economy resemble? We will likely continue to see more and more experts in the field emerge who specialize in even finer details surrounding the API lifecycle. We’ll be here tracking all we can, so sign up to the newsletter to read our weekly thought pieces. Also, if you enjoyed this piece, consider downloading our soon to be released eBook, the API Economy: Disruption and the Business of APIs.