Inside The Money Supply Driving The API Economy

Bernadette Nixon, CEO at Algolia, is an entrepreneurial & driven CEO with a strong track record of growing and scaling global businesses.  

Most of the world’s economies operate with a formally established financial body to govern their treasury and banking system. By constantly monitoring and manipulating their economic model, countries are able to track their money supply, balance imports and exports, identify areas that need investment and ultimately produce a figure for GDP that points to the wider health and wealth of the nation.

Organizations across every vertical industry have long realized that, above their own core monetary balance sheets and trading models, data and application services have now become the new currency of connected commerce. So if there is truth in this statement, then how do exchanges take place on this new marketplace? What shape is the currency? And how do we establish a fair rate of exchange?

The Ubiquity Of APIs

The answer lies in application programming interfaces, or APIs as they are now quite ubiquitously known. APIs form the glue, the bond and the exchange channel between different applications and application components so that they can make “function calls” to request input from other applications or some higher-level operating system (OS).

Written to a defined and essential syntax, API function calls are made up of verbs and nouns and now form the lifeblood of much of what happens over modern cloud-based enterprise software systems. In terms of form and function, APIs are built, deployed, updated, managed, secured and (when they reach end of life) can be ultimately retired.

But is there really an API economy developing? Investor Patrick Salyer thinks so. In May, he wrote in Forbes to remind us that, “Investors like myself are taking notice [in the API economy], with more than $2B invested in API companies in 2020, increasing from just $0.5M in 2017.”

If there actually were a global stock market for API interchanges, then the trading room floor would be a fairly frenetic (although still tightly digitally managed) place. We know that organizations are now under pressure to survive massive market disruptions through not just rapid innovation but also through constant iteration. So how do software engineers build the API economy?

Building The New Trading Room Floor

In case you hadn’t noticed, nobody turns the Web off at night, so software application developers worldwide have been under a huge weight of pressure since the turn of the millennium (if not before) to create new user experiences that satiate the now standard demand for instant gratification.

This has meant a lot of grunt work. Why? Because a lot of the mechanics in the infrastructure and tooling needed to build the API economy from authentication to messaging — and ultimately to search — did not exist as recently as a decade ago.

Software developers have to build from scratch using a collection of services from big cloud service providers (CSPs). This is a tough job because they need to pick and choose across thousands of services and learn the documentation, integration protocols and best practices.

The other option is to purchase monolithic SaaS products — the same SaaS products their competitors were buying — and then attempt to modify these shared SaaS offerings in order to deliver unique, differentiated experiences for their customers. No less grunt work and frustration there.

An End To Barter, Blend, Bolster And Bash

It’s clear that the barter-blend-bolster-and-bash processes needed to work with the cloud behemoths were never going to help developers produce variation in terms of user experiences.

But thankfully, a new bottom line has emerged in the API economy as a new generation of API-first companies, such as Twilio, Segment, Zapier and Stripe, have risen to the challenge of giving developers the jumpstart they need with composable APIs.

Embracing the notion of API-first means that software teams can expose their applications to multiple digital touchpoints (desktop web browsers, mobile, connected devices, speech systems and more) and provide a consistent search experience inside an enterprise’s user interface (UI).

We know that enterprises need many operational capabilities, and perhaps core among them are scalability, compatibility, flexibility and longevity. Being able to use an enterprise search API delivered today with an application built 10 years ago might sound like a backward-compatibility step too far, but it isn’t, and this is now widely achieved.

A Core Validation For API-First

This is a core validation for the API-first technology proposition: Why attempt to build blazing fast, instant and relevant search and discovery experiences into an enterprise application when a pluggable, composable and manageable alternative is readily available? Answer: You don’t — or at least, you shouldn’t.

When thinking about API-first capabilities, organizations should also know that through the use of powerful dashboard technology, on top of search-and-recommendation products, they can now fully democratize the capabilities of APIs for developers and business users alike.

This means that a user doesn’t have to be a search guru to be able to create great search functionality. You might be a rookie developer fresh out of bootcamp but still be capable of creating great search functionality for your company and its customers. For example, two of our clients, Under Armour or Decathlon, both significantly increased their conversion rates as a direct result of search. 

Ultimately, this functionality reduces the need for online visitors and in-app users (using any web, mobile or voice device) to needlessly forage for information — by surfacing the desired information in as short a time as possible. Organizations can now win the hearts, minds and trust of their customers, which comes full circle back to economics (i.e., when spend and commerce levels increase, so do profits).

As the API economy develops up to the full height of the API stack — from infrastructure to services, platforms and through all the management layers that will exist in between — a new type of “ka-ching” is being heard in the cash registers, wallets and pockets of all users who now engage in the digital economy. It’s time to trade up.

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