API Analytics for Product Managers E-Book

Deepa Goyal

• Herausgeber: Packt Publishing
• Sprache: Englisch

Seitenzahl: 582

Veröffentlichungsjahr: 2023

Beschreibung

Research, strategize, market, and continuously measure the effectiveness of APIs to meet your SaaS business goals with this practical handbook

Key Features

• Transform your APIs into revenue-generating entities by turning them into products
• Meet your business needs by improving the way you research, strategize, market, and measure results
• Create and implement a variety of metrics to promote growth

Book Description

APIs are crucial in the modern market as they allow faster innovation. But have you ever considered your APIs as products for revenue generation?

API Analytics for Product Managers takes you through the benefits of efficient researching, strategizing, marketing, and continuously measuring the effectiveness of your APIs to help grow both B2B and B2C SaaS companies. Once you've been introduced to the concept of an API as a product, this fast-paced guide will show you how to establish metrics for activation, retention, engagement, and usage of your API products, as well as metrics to measure the reach and effectiveness of documentation—an often-overlooked aspect of development.

Of course, it's not all about the product—as any good product manager knows; you need to understand your customers' needs, expectations, and satisfaction too. Once you've gathered your data, you'll need to be able to derive actionable insights from it. This is where the book covers the advanced concepts of leading and lagging metrics, removing bias from the metric-setting process, and bringing metrics together to establish long- and short-term goals.

By the end of this book, you'll be perfectly placed to apply product management methodologies to the building and scaling of revenue-generating APIs.

What you will learn

• Build a long-term strategy for an API
• Explore the concepts of the API life cycle and API maturity
• Understand APIs from a product management perspective
• Create support models for your APIs that scale with the product
• Apply user research principles to APIs
• Explore the metrics of activation, retention, engagement, and churn
• Cluster metrics together to provide context
• Examine the consequences of gameable and vanity metrics

Who this book is for

If you're a product manager, engineer, or product executive charged with making the most of APIs for your SaaS business, then this book is for you. Basic knowledge of how APIs work and what they do is essential before you get started with this book, since the book covers the analytical side of measuring their performance to help your business grow.

Leseprobe

API Analytics for Product Managers

Understand key API metrics that can help you grow your business

Deepa Goyal

BIRMINGHAM—MUMBAI

API Analytics for Product Managers

Copyright © 2023 Packt Publishing

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, without the prior written permission of the publisher, except in the case of brief quotations embedded in critical articles or reviews.

Every effort has been made in the preparation of this book to ensure the accuracy of the information presented. However, the information contained in this book is sold without warranty, either express or implied. Neither the author, nor Packt Publishing or its dealers and distributors, will be held liable for any damages caused or alleged to have been caused directly or indirectly by this book.

Packt Publishing has endeavored to provide trademark information about all of the companies and products mentioned in this book by the appropriate use of capitals. However, Packt Publishing cannot guarantee the accuracy of this information.

Group Product Manager: Alok Dhuri

Contributor: Kevin Swiber

Publishing Product Manager: Akshay Dani

Senior Editor: Nithya Sadanandan

Technical Editor: Jubit Pincy

Copy Editor: Safis Editing

Project Manager: Prajakta Naik

Project Coordinator: Manisha Singh

Proofreader: Safis Editing

Indexer: Pratik Shirodkar

Production Designer: Prashant Ghare

Developer Relations Marketing Executive: Deepak Kumar and Rayyan Khan

Business Development Executive: Puneet Kaur

First published: February 2023

Production reference: 1010223

Published by Packt Publishing Ltd.

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ISBN 978-1-80324-765-6

www.packtpub.com

To my parents, Kailash and Renu Goyal, for exemplifying courage, boldness, and humility. To my husband, Sushant Thakur, for his love, encouragement, and support.

– Deepa Goyal

Foreword

I first met Deepa in January of 2021 when she was a guest on my Breaking Changes podcast. I was captivated by the way she described her journey to becoming an API product manager, and how hard it was for her to obtain the knowledge she needed, but also how methodical she was about how she did her research and went about gathering the data and knowledge she needed. Her experience with API product management at relevant API providers such as PayPal and Twilio made her a sure bet for me when it came to launching season two of my podcast.

Fast-forward six months. I had done over 30 other interviews with enterprise organizations about their priorities when it comes to API operations. I spoke with companies such as 7-Eleven, NBA, Boy Scouts of America, Plaid, and many, many more. The top business priority I heard across these conversations was consistently centered around managing your APIs as a product. These podcast episodes also echoed what I was hearing in the conversations I was having with Postman customers—I was hearing from mainstream companies such as Nationwide, HSBC, Zoom, and others about their investment in API product management as a discipline. I knew at that moment that I needed to hire Deepa and put her in charge of helping me understand this fast-growing dimension of the API economy.

Deepa comes to the table with a deep understanding of what API-as-a-product means in an age where most people just possess a superficial marketing awareness that has been shared by leading API management providers over the last decade. Deepa goes beyond just talking about what it means to treat your APIs as a product and can speak to the details and nuance of what API product managers need to be doing on a daily basis. Deepa has been on the ground floor at leading API providers, doing the work, but then also working with me to understand this API product management bridge that has emerged between enterprise business, IT, and platform groups as part of Postman Open Technologies.

Deepa possesses the blueprints for an essential bridge that has emerged over the last decade between historically divided business and IT groups within enterprises. She has what you need when it comes to building, growing, iterating, and supporting your API operations through the adoption of a healthy product mindset. In this book, Deepa provides you with what you need to bridge between your business and IT groups, but also between producers and consumers, whether that is internally, with your partners, or publicly via third-party consumers. For me, this is the trifecta I’ve been hearing about from leading enterprise organizations who are further along in their API journey—the ability to strike a balance between business and IT, but also across internal and external consumers of your digital products.

I was sold on Deepa’s empathy for consumers, and robust understanding of the API landscape and API products from early on. But it was her pragmatic and detailed approach to not just defining what success looks like in this product realm but actually measuring it in meaningful ways. Deepa’s approach provides the nutrients and purpose that API product managers will need when it comes to measuring both the technical and business dimensions of the APIs they own. This approach provides you with all the metrics and surrounding scaffolding you will need to scale, evolve, and adapt your approach to delivering APIs, standardizing quality and consistency across APIs and teams. She equips us all with what we need to be successful with the API products we own while helping us take care of the bigger-picture strategy that will matter to leadership.

Buckle up—Deepa is going to give you a professionally guided tour across the API landscape. She is going to make sure you understand both the producer and consumer sides of things in such a balanced way you won’t be able to forget about your developers you’ll understand them that well. Then, Deepa will help you bring things home by providing you with the metrics you need to track your progress and quantify success while you develop, iterate, and adapt your strategy for shaping your organization’s digital products. She is going to provide you with what you need to hit the ground running, but then also ensure you are properly investing in the big-picture strategy and storytelling you will need to lead your team in the right direction.

I get APIs—I have been immersed in them since 2010. However, I come from the IT side of things, so I don’t always see the business dimension properly. I also tend to lean toward being an API producer first and an API consumer second. After 6 months of working with Deepa, I find myself regularly reminded of my bias as part of our conversations and her persistent questioning. She is always stopping me and reminding me to talk to customers. She is always shining a light on how entrenched I am when it comes to my API producer mindset. She has opened up the importance of the role that API product managers are playing when it comes to bridging the business and IT divide, increasing the velocity of feedback loops with consumers, and ensuring the APIs we deliver are meeting the needs of the business, but also the customers we serve.

Thanks for writing this book, Deepa—I am confident that I will be working with the material you have provided for the next 5 to 10 years! Or at least until you get the 2nd edition ready. No pressure!

Kin Lane

Chief Evangelist, Postman Inc.

Author of The API-First Transformation

www.APIEvangelist.com

Contributors

About the author

Deepa Goyal is a Silicon Valley veteran with diverse experience in Fortune 500 tech and start-ups. She is currently the lead product management strategist at Postman, where she helps millions of developers build application programming interfaces (APIs). Previously, she worked at PayPal and Twilio, where she grew the companies’ API offerings, which are used by the software developer community for thousands of third-party websites and mobile apps. Deepa is skilled in both product management and data science. She uses the insights she gets from data science in her product management work.

First and foremost, I want to thank my husband, Sushant Thakur, for inspiring me to take on this project. I want to thank my mentor, Kin Lane, for guiding me in shaping this book and providing resources to enrich my understanding of the topics I present. I also want to thank my team at Postman, particularly Kevin Swiber, Pascal Heus, and Arnaud Lauret, for being great sounding boards for ideas and sharing their expertise.

Kevin Swiber was a significant contributor to the book. Here’s a little about him:

Kevin Swiber is an API Lifecycle Integration Specialist at Postman and is a leading voice in open technologies. Kevin is a software engineering, architecture, and developer tools advocate, having focused on distributed systems and APIs for over a decade. Their career has taken them from the enterprise to the API management space. Kevin has worked at a number of API product companies, including Apigee (acquired by Google Cloud Platform) and now Postman, where they collaborate with both industry and enterprise companies on building a platform strategy across the entire API lifecycle. Kevin also serves as the marketing chair for the OpenAPI Initiative.

About the reviewers

Sri Kandikonda is a digital product leader with demonstrated results in leading design and strategy for complex B2B technology products (SaaS, machine learning, APIs, platform products) across fintech and e-commerce.

Sri has successfully managed the complexities of global B2B SaaS products (1B+ transactional volume/day, $15B+ in annual revenue) for Fortune 100 companies as well as high-growth start-ups. Sri operates in the intersection of technology, business, and customer experience to create world-class, scalable products that customers love.

Sri has Led large-scale product rollouts and global marketing strategies across the Americas, the EU, and the AMEA market.

Suvrat Gupta is a product leader with many years of experience leading API products across some of the biggest technology platforms, such as Amazon, BNY Mellon, and Dun & Bradstreet. Suvrat has worked extensively with the challenge of establishing API governance at scale, improving the API developer experience, and establishing API analytics to unlock growth across internal as well as external APIs with millions of users across the world. He has led API-driven digital transformation programs in multiple industries and is passionate about APIs as first-class products.

Table of Contents

Preface

Part 1: The API Landscape

1

API as a Product

Building with APIs

Software-as-a-Service

Establishing APIs as products

Types of APIs

Business models for API products

Who builds APIs and who uses them?

Notable API products that are shaping the API landscape

Twilio

Printful

Twitter API

Plaid

Tealium

IMDB

Amazon Selling Partner API

Postman

Marqeta

Defining success for a product

Summary

2

API Product Management

The role of the product manager

Product thinking

Stakeholder management

Understanding the product life cycle

Market research

User research

Experimentation and hypothesis testing

Agile methodology

Data analytics

Customer feedback channels

Types of product management roles

The responsibilities of an API product manager

Useful terminology for API product managers

The short-term and long-term API strategy

Development and release

API governance and maturity

API experience

API analytics

Summary

3

API Life Cycle and Maturity

The API product life cycle

API development workflow

Stakeholder alignment

Retiring an API

API governance

API governance through the API life cycle

API maturity

Case studies

Summary

4

Building and Managing API Products

APIs in the digital value chain

Leading with the API strategy

The API development team

Managing an API as a product

The API proposal

Designing APIs

Starting with an MVP

Building and releasing APIs in an iterative way

Building long-term and short-term roadmaps

Summary

5

Growth for API Products

Understanding what growth means for APIs

Internal APIs

Partner APIs

Public APIs

Identifying the target audience

Methods to calculate TAM

Marketing strategy

Pricing strategy

Sales strategy

Product-led growth

Community-driven growth

Low-code and no-code integrations

Summary

6

Support Models for API Products

The producer and consumer life cycle

Designing customer feedback loops

Customer feedback at scale

Setting customer expectations of support and SLAs

Scale-based support models

Support metrics

Ticket volume

Customer satisfaction (CSAT) score

First response time

Average resolution time

Ticket volume to active user volume

Segmentation of tickets

Summary

Part 2: Understanding the Developer

7

Walking in the Customer’s Shoes

Prioritizing user research

Establishing user personas

Mapping the developer’s journey

Discovery

Evaluation

Integration

Testing

Deployment

Observability

Determining customer touch points

Identifying the points of friction and conversion

Summary

8

Customer Expectations and Goals

Conducting qualitative and quantitative research

Qualitative research methods

Quantitative research methods

Combination of qualitative and quantitative methods

Creating user empathy maps

Identifying customer use cases

Identifying customer pain points

Aligning stakeholders

Summary

9

Components of API Experience

Industry standards for API experience

Creating API documentation

API references

Developer portal

API credentials

API status

API changelog

Sample code and demos

Integration guides and tutorials

Providing developer tools

Sandbox

Public GitHub repositories

Developer communities

SDKs

CLIs

Postman Collections

Low-code and no-code tooling

Instrumenting support mechanisms

Summary

Part 3: Deep Dive into Key Metrics for API Products

10

Infrastructure Metrics

Key success factors (KSFs) for APIs

Infrastructure as the foundation for API analytics

Performance metrics

Uptime and availability

Errors per minute

Average and maximum latency

90th-percentile latency by customer

Usage metrics

Requests Per Minute (RPM)

CPU usage

Memory usage

Error code distribution

Concurrent connections

Top endpoints

Usage by segments

Reliability metrics

Mean Time to Failure (MTTF)

MTTR

MTBR

The Rate of Occurrence of Failure (ROCOF)

Probability of Failure on Demand (POFOD)

Summary

11

API Product Metrics

Defining product metrics

Discovery

Unique visitors

Page views

Sign-ups by channel

Reading level or text complexity analysis

Link validation

Search keyword Analysis

Engagement

Average time on page

Bounce rate

Engagement with homegrown tools

Customer engagement score (CES)

Acquisition

Daily user sign-ups – new users

Time to first hello world (TTFHW)

Software development kit and version adoption

Activation

Time to first transaction (TFT)

Time to value (TTV)

Cohort analysis

DAU/MAU/WAU

Retention

Recurring daily, weekly, and monthly usage

Customer retention

API calls per business transaction

Experience

Unique API consumers

Top customers by API usage

Conversion rate

Daily support tickets per active users

CSAT

Net Promoter Score (NPS)

Summary

12

Business Metrics

Defining business metrics

Measuring revenue

MRR

Revenue versus forecast

ARPA

Average transaction value (ATV)

Revenue by acquisition channel

Adoption tracking

SDK adoption

Feature adoption

Churn analysis

Churn rate

Cohort retention

Optimizing for growth

Lead response

Growth rate YoY

Quota alignment

Net sales revenue

CAC

Cost per lead (CPL)

CLV/LTV

Measuring operations’ efficiency

Support metrics

Beta versus General Availability (GA)

Paid support subscription rate by tier

Cost of infrastructure

Incidents per month

Cost of outage

Summary

Part 4: Setting a Cohesive Analytics Strategy

13

Drawing the Big Picture with Data

Setting the data strategy

Methods for analyzing data

Cluster analysis

Cohort analysis

Regression analysis

Predictive analysis

Data mining

Text analysis

Time series analysis

Decision trees

Conjoint analysis

Factor analysis

Interpreting data

SWOT analysis

Benchmarking and baselining

Making decisions without data

The Delphi method

Goal setting with data

SMART framework

The OKR framework

Key performance indicators (KPIs)

North Star metrics

The HEART framework

Summary

14

Keeping Metrics Honest

Mixing qualitative and quantitative feedback

Validating your insights

Defining the right product metrics

Leading and lagging indicators

Input and output metrics

Framework for storytelling with data

Identify the audience

Develop a narrative

Choose the right data and visualizations

Draw attention to key information

Engage your audience

Summary

15

Counter Metrics to Avoid Blind Spots

Establishing counter metrics

Avoiding gameable metrics

Avoiding cannibalizing metrics

Aligning incentives

Avoiding cognitive biases

Confirmation bias

Selection bias

Anchoring bias

Framing bias

Overconfidence bias

Status quo bias

Outliers

Recall bias

Confounding bias

Association bias

Summary

16

Decision-Making with Data

Bringing it all together

Short-term goals

Long-term goals

Writing a product one-pager

Sample strategy document

Strategic storytelling

Leading the team to success

Summary

The API Analytics Cheat Sheet

Index

Other Books You May Enjoy

Preface

Application programming interfaces (APIs) have become a ubiquitous part of web technologies because they provide a standard way for different systems and applications to communicate and share data and functionality. This allows for greater flexibility, scalability, innovation, and interoperability in the web ecosystem.

As more and more organizations build APIs for use both inside and outside the company, different areas of design, documentation, governance, and life cycle have become more important. However, until now, APIs have only been viewed as technical components. I want to change the way APIs are thought of by seeing them as fully qualified products.

Because “API as a product” refers to a “product,” we consider an application program to be a standalone product rather than a technical component of a larger system. This means that an API is developed, marketed, and supported in a similar way as other products, with a focus on meeting the needs of specific user groups and delivering value to them.

The “API as a product” approach lets companies sell their data and services, while also giving developers a useful tool for making new apps and services. APIs as products also have revenue-generation potential, as they can be used as products themselves, either by licensing them to a third party or charging for their usage by end users.

I have organized this methodology into four key areas:

How to manage APIs as productsHow to build customer empathy for API productsHow to design metrics for measuring APIs from the infrastructure, product, and business perspectivesHow to identify the right key performance indicators (KPIs) for API products and build a product strategy

This book will guide you through the process of managing APIs as products, building customer empathy, designing metrics for measuring success, and identifying KPIs to inform your product strategy. Whether you are new to the field or a seasoned professional, this book will provide valuable insights and best practices for optimizing the performance and profitability of your API products. Let’s dive in and discover how to unlock the full potential of your APIs.

Who this book is for

This book is written for product managers, business leaders, and developers who are looking to get the most out of their APIs. It gives an in-depth look at the most important ideas and best practices related to API analytics and product management. This makes it an essential resource for anyone who builds, deploys, or manages API products.

Additionally, this book serves as a valuable resource for security teams, sales teams, operations personnel, and user experience researchers who are involved with APIs. These teams will benefit from the book’s detailed guidance on how to design metrics for measuring API performance, as well as the strategies for understanding user behavior and feedback that can inform the design of more scalable, secure, and user-friendly APIs.

What this book covers

Part 1, The API Landscape

The objective of this part is to introduce APIs as products and shed light on how large the market is for API products. You will learn about product management concepts and how they apply to APIs. This part will also explain the life cycle and maturity of an API.

Chapter 1, API as a Product

APIs go beyond web products or mobile apps with the UI. In this chapter, you will be introduced to the idea of an API as a product and how a vast universe of products is built using APIs. This chapter will also look at some of the most well-known API companies and how they’ve made successful API products.

Chapter 2, API Product Management

API product management has evolved into a specialization with some fundamental pieces that a product manager must understand to effectively make product decisions. This chapter will go over various types of products from a product management perspective and how they require different skill sets.

Chapter 3, API Life Cycle and Maturity

This chapter will help you understand why the API product life cycle, methodology for establishing API governance, and use of the API maturity model are important for organizations, as they help them to ensure that their APIs are developed and managed in a consistent, efficient, and effective manner, aligned with the organization’s goals, policies, and standards, and that they can evolve over time to meet changing business needs. This chapter also presents case studies of some of the leading API products and how they present their API maturity to their customers.

Chapter 4, Building and Managing API Products

This chapter will talk about the unique design challenge of defining an API product MVP. As the API product matures, the challenges can get more complicated, and in addition to growth, retention and churn might also become very crucial in product strategy. At each step of API maturity, the stakeholders’ and customers’ needs and expectations change. This chapter explains what we mean by “API maturity” and how it relates to the API life cycle.

Chapter 5, Growth for API Products

Growth for APIs refers to the process of increasing the usage and adoption of an API by different user groups, such as developers, businesses, and consumers. Growth can be achieved by identifying, helping identify, and helping the target audience; developing a marketing, pricing, and sales strategy that effectively communicates the value and benefits of the API to the target audience; and helping to generate interest and awareness. We can utilize product-led growth and community-led growth for API growth.

Chapter 6, Support Models for API Products

The customer support strategy for API products is different from that for other products. This chapter dives into the standard methodologies for creating a robust support model for APIs that scales with the product and delivers value for customers.

Part 2, Understanding the Developer

This part is focused on the primary customer of APIs: the developer. It is evidently important to understand the developer journey in order to establish a growth funnel for your API product. You will also learn about signals for activation, engagement, retention, and scale.

Chapter 7, Walking in the Customer's Shoes

This chapter describes what product funnels are and how they are established for various types of products. You will be introduced to concepts such as activation, retention, engagement, and churn.

Chapter 8, Customer Expectations and Goals

This chapter helps you understand the goals of both the business and the customer to be able to establish roadmaps that build a long-term API strategy for the organization. This chapter will introduce you to tools such as CSAT, NPS, and other user research mechanisms to develop an understanding of customers. You will learn how to understand your customers so you can get them to use your product, and set up a product strategy that gets customers started on a long-term relationship with your product.

Chapter 9, Components of API Experience

In this chapter, you will learn about a few key ingredients for creating a great API experience. It is important to understand how some of these experiences have been designed across the industry to be able to shape any API product. We look at things such as API references, status pages, SDKs, CLIs, and so on that are part of the API experience.

Part 3, A Deep Dive into Key Metrics for API Products

This part will introduce you to the reasoning behind API metrics. You will do a deep dive into all dimensions of the user journey and learn about a vast set of metrics that you can track across the infrastructure, product, and business dimensions of your APIs.

Chapter 10, Infrastructure Metrics

Infrastructure metrics are crucial for APIs that serve a large or a small customer base. It is important that APIs be reliable. In this chapter, you will learn how to measure infrastructure metrics and various tools that provide an easy setup to get them.

Chapter 11, API Product Metrics

In this chapter, you’ll find out about the different metrics you can use to learn more about your customers. The metrics you learn in this chapter can be used across all the stakeholders in your product to align on common goals and priorities.

Chapter 12, Business Metrics

In this chapter, you’ll learn about the business metrics you need to set up and keep track of regularly in order to measure the business impact of your infrastructure and product development projects.

Part 4, Setting a Cohesive Analytics Strategy

It is not sufficient to merely have metrics set up. It is also important to understand how to evaluate the quality of the metrics and how to make sure they are extensive and robust. This part describes the possible ways in which metrics can be analyzed and evaluated. You will learn how to remove blind spots and avoid vanity metrics that may not be true representations of product health.

Chapter 13, Drawing the Big Picture with Data

This chapter dives into the evaluation of metrics once a measurement is done. The first step is to establish a baseline and find ways of benchmarking it. Metrics should not be standalone; they need to be evaluated in the context of other metrics. This chapter also establishes the concept of correlation in metrics and dives into how to set clusters of metrics so that there is a set of metrics that are seen in relation to each other and not all metrics at once.

Chapter 14, Keeping Metrics Honest

This chapter talks about combining qualitative and quantitative data to form hypotheses and drive insights that may not be easily available without combining these two. This chapter also explains what leading and lagging metrics are and how to find them in a set of related metrics.

Chapter 15, Counter Metrics to Avoid Blind Spots

In this chapter, you will learn about counter metrics to remove bias from the metrics-setting process so that blind spots might be addressed. This chapter also introduces the concept of gamaebility with examples and explains the consequences of gameable and vanity metrics.

Chapter 16, Decision-Making with Data

In this chapter, you will learn about how effective product leadership requires setting short-term and long-term goals and strategically communicating those goals to stakeholders through storytelling. This approach helps to establish a clear direction for the product and the team, aligning everyone around a common vision and enabling the team to work together to achieve success.

To get the most out of this book

It is recommended that you have a good understanding of web development, software development, product management, and data analysis to get the most out of this book. The prerequisites include the following:

A basic understanding of what APIs are and how they workFamiliarity with programming concepts and experience with web development would be beneficial, as would an understanding of the software development life cycle and product management conceptsIt would be helpful for you to have some prior experience with data analysis and an understanding of KPIs, as the book covers how to design metrics for measuring APIs from the infrastructure, product, and business perspectives, and how to identify the right KPIs for API products and build a product strategyAdditionally, it would be beneficial for you to have some understanding of user experience research and user-centered design, as the book covers how to build customer empathy for API products and how to use customer research to inform product development

There is no special software installation required for this book.

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Bold: Indicates a new term, an important word, or words that you see onscreen. For instance, words in menus or dialog boxes appear in bold. Here is an example: “Select System info from the Administration panel.”

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Part 1:The API Landscape

Before diving into the details of what API products are and how to build them, you will need to first look at the market landscape of API products to understand the products and services that exist in this space.

The history of the web-based APIs we know today can be traced back to the late 1990s when Salesforce launched a web-based sales automation tool. This application marks the beginning of the Software as a Service (SaaS) revolution. The World Wide Web has strengthened the underlying infrastructure that enables this newly discovered way of delivering software. Before the World Wide Web and the internet, APIs existed. Still, they were a form of proprietary protocol that supported small, distributed computer networks that spanned a limited area most of the time. The purpose of APIs in the pre-internet and post-internet eras is the same. APIs allow API providers to provide services, so external systems can call API providers to take advantage of those services. At the internet level, where developers worldwide create applications and host them on the World Wide Web, APIs are the future of the distributed computing paradigm.

We’ve come a long way since Roy Fielding’s famous REST dissertation, which laid the groundwork for innovation in the API space. A few emerging technology businesses such as Salesforce, eBay, and Amazon paved the path for the current definition of web APIs. We’ve seen how Amazon Web Services laid the groundwork over the years while specific APIs, such as Flickr, have failed.

Once foundational APIs such as payment APIs, SMS, voice, and Google Maps started to come into being, the API economy had the foundation for a lot more to be built using these as building blocks. The 2007 release of the iPhone exponentially increased the speed of the API revolution and resulted in a vast universe of mobile apps that we know today.

In 2012, the then US president, Barack Obama, issued a comprehensive Digital Government Strategy aimed at delivering government data freely in machine-readable formats to enable researchers, innovators, and entrepreneurs to use and generate new products, services, and jobs. This has resulted in several APIs being launched by the US government over the years, such as airport delays, customer complaints, a Census API, HealthData.gov API, Healthcare Finder API, and Mars Weather API.

In 2014, tools such as Postman and GitHub became available, allowing developers to discover, evaluate, explore, and integrate with new APIs faster than ever before.

In 2015, NASA launched API.NASA.gov, where developers can learn to use existing NASA APIs or contribute their APIs to the catalog. In the following figure, you can view the visual timeline of some of the most noteworthy APIs and API tools that have been launched over the years that have shaped the landscape of the API business today.

Figure P1.1 – Visual history of APIs

API products and services have evolved substantially in the last two decades. They are now at a point where various job functions have been established around APIs’ development, maintenance, and support. The developer community is also a big part of the API landscape because developers actively explore new APIs to learn to integrate with them; this community has fueled an area of expertise around developer education such as developer evangelist and developer advocate functions.

Several aspects of API design guide us in building robust and scalable APIs. As multibillion-dollar companies get built on API-first business, an evolving function of API product management, measurement, and analytics for API products enables a methodical and systematic approach to creating successful APIs.

The pandemic effect

The outbreak of coronavirus acted as a forcing function that brought 332 million people online for the first time. This resulted in a digital transformation in shopping, socializing, and communicating. Voice and video APIs provided the infrastructure to build remote healthcare services that helped medical professionals serve their patients remotely. This also allowed children to attend school virtually and a vast population to work from home.

The pandemic fast-forwarded the plans of many businesses to come online by at least five years. Storefronts had to be closed overnight due to public health measures to avoid the spread of coronavirus; social distancing and stay-at-home rules catapulted heavyweights such as Walmart and Amazon to the front of the pack as consumers leaned on online shopping and grocery delivery more than ever before.

Platforms such as Etsy and Shopify allowed small businesses to set up e-commerce sites quickly. Shopify reported a record $2.4 billion in Black Friday sales globally in 2020. Etsy saw a 108% increase in sales from November 2019 to 2020, according to Edison Trends, a digital commerce research company.

APIs have been an integral part of this transformation, with voice and video APIs being the building blocks of all applications used across educators, healthcare, banking, and others. When a customer purchases something online, the transaction triggers a series of payment APIs to complete the transaction, email APIs to send confirmation, and ultimately, deliver shipment updates using package tracking APIs, SMS, and email APIs, to name a few among many APIs that are invoked for each transaction that a user makes.

API providers worked hard to scale their infrastructure considerably during the pandemic to deliver at such a scale. This has increased conversation around the maturity of APIs and usage monitoring and analytics of API products – topics we will be diving into in this book.

Great for business

SaaS has been the fastest-growing segment in the software revolution. According to IDG’s 2018 Cloud Computing Survey, 73% of organizations have at least one application or a portion of their computing infrastructure already in the cloud. SaaS has dramatically lowered the total intrinsic cost of ownership for adopting software, solved scaling challenges, and removed the burden of local hardware issues.

APIs are a critical part of their strategy for fast-moving developers building globally. Instead of dedicating precious resources to recreating something in-house that’s done better elsewhere, it is more time- and cost-effective to focus special developer efforts on creating a differentiated product.

For these and other reasons, APIs are a distinct subset of SaaS. By often exposing complex services as simplified code, API-first products are far more extensible, more accessible for customers to integrate into, and can foster a greater community around potential use cases.

At this point, several multibillion-dollar API-first companies are changing the way software is built.

Stripe is the largest independent API-first firm, with a market capitalization of over $95 billion in 2022. Stripe’s early focus on the developer experience setting up and receiving payments helped it take off. It was even known as /dev/payments at first! Stripe’s attention to creating idiomatic SDKs and beautiful documentation for each language platform allowed them to design the whole business around APIs.

Checkr is another excellent example of an API-first company simplifying the HR workflows of completing background checks on their employees and contractors, involving manual paperwork and the help of third-party services that spent days verifying an individual. This process had to be completed every time an employee had to get a new job or contract, which could be as frequent as every three months in the case of contract employees.

Checkr’s API gives companies immediate access to various disparate verification sources and allows them to plug Checkr into their existing onboarding and HR workflows. It’s used today by more than 10,000 businesses, including Uber, Instacart, Zenefits, and more.

Plaid delivers a similar service in the banking space by abstracting away banking relationships and complexities. Plaid started in 2013 and is currently valued at $13.4 billion as of 2022.

API tools such as Postman and Oracle Apiary have enabled the rapid evolution of the API economy and made working with APIs accessible to low-code/no-code customers by building UI-based tools.

This has given rise to an increasing number of jobs in software development, maintenance, and support of API products. Since APIs are significantly different from web- or mobile-based consumer products, and much of the technology and standards are still evolving, at this point, the most significant opportunity in software is to work on APIs and API-first companies.

This has given rise to an increasing number of jobs in software development, maintenance, and support of API products. Since APIs are significantly different from web- or mobile-based consumer products, and much of the technology and standards are still evolving, at this point, the most significant opportunity in software is to work on APIs and API-first companies.

Through the chapters of Part 1, you will learn about the application of product thinking for API products, which will enable you to build and grow API products. The following chapters will be covered in this part:

Chapter 1, API as a ProductChapter 2, API Product ManagementChapter 3, API Life Cycle and MaturityChapter 4, Building and Managing API ProductsChapter 5, Growth for API ProductsChapter 6, Support Models for API Products

1

API as a Product

Most application programming interfaces (APIs) are sets of rules and protocols that allow different software applications to communicate with each other. They allow different software programs to interact with each other by exposing the functionality and data through a set of defined interfaces.

APIs are important because they allow different software programs to share data and functionality, which can greatly increase efficiency and reduce development time. They also allow for the integration of new technologies and services into existing systems, making it easier to add new features and capabilities.

APIs are becoming increasingly important in today’s digital economy as they allow companies to share data and services with partners and third-party developers to create new products and services. They also allow for the automation of business processes and the creation of new revenue streams.

In this chapter, you will learn how to think about APIs as products. We will cover the following topics:

Building with APIsSoftware-as-a-ServiceEstablishing APIs as productsTypes of APIsBusiness models for API productsWho builds APIs and who uses them?Notable API products that are shaping the API landscapeDefining success for a product

By the end of this chapter, you will have learned about how you can think of APIs as products, how APIs are establishing themselves as a category of products, and some of the most prominent API products.

Building with APIs

APIs can help organizations become more efficient, make better use of data, and create new revenue streams. They can also open up new opportunities for innovation and provide a better customer experience.

Knowing how to work with APIs can be a valuable skill for developers, as more and more companies are looking for people who can integrate their systems with other technologies and services. Additionally, knowing how to use APIs can help developers create new applications that can take advantage of the data and functionality exposed by other systems.

APIs can provide several benefits to an organization, such as the following:

Increased efficiency: APIs can automate business processes, allowing employees to focus on more important tasksImproved data access: APIs can make it easier to access data from different systems, which can be used for reporting, analysis, and decision-makingNew revenue streams: By making data and functionality available through an API, organizations can create new revenue streams by allowing third-party developers to access and use their data and servicesInnovation: APIs can open up new opportunities for innovation by allowing organizations to integrate with new technologies and services, and by enabling third-party developers to build new applications and services on top of an organization’s data and functionalityCost savings: By exposing data and functionality through APIs, organizations can reduce the time and costs associated with developing and maintaining custom integrations between different systemsBetter customer experience: By making data and services available through an API, organizations can provide a more seamless and integrated experience for customers who use multiple channels to interact with them

With benefits such as increasing efficiency, improving data access, unlocking new revenue streams, and so on, APIs have become an exciting category of products. In the next section, you will learn about APIs as products and how they are used across industries such as e-commerce, finance, and so on.

Software-as-a-Service

Software-as-a-Service (SaaS) is a software delivery model in which a software application is hosted by a third-party provider and made available to customers over the internet.

Customers can access software and its functionality through a web browser or a mobile app without having to install or maintain it on their own servers. The SaaS provider is responsible for managing the infrastructure, security, and maintenance of the software.

SaaS is a type of cloud computing that enables customers to pay for the software on a subscription basis, usually on a monthly or annual basis. This allows companies of all sizes to access enterprise-level software without having to invest in expensive infrastructure and maintenance costs. Examples of SaaS include Salesforce, G Suite, Zoom, and Slack. SaaS is widely adopted in many industries, such as Customer Relationship Management (CRM), e-commerce, human resource management, project management, marketing automation, and many more. SaaS and APIs have a close relationship, as SaaS providers often use APIs to make their software available to customers.

APIs allow SaaS providers to expose the functionality of their software to external systems and applications. This allows customers to integrate the SaaS with other systems and automate workflows, such as integrating a SaaS CRM with a marketing automation tool or accounting SaaS with a website e-commerce platform.

APIs also allow SaaS providers to offer customization options to their customers, such as the ability to create custom reports or automate certain business processes. This allows customers to tailor the SaaS to their specific needs. With this understanding of the relationship between SaaS and APIs, you will learn to think about APIs as products in the next section.

Establishing APIs as products

When we say that an API is a product, it means that the API is being offered as a standalone service or offering that can be consumed by external customers or partners. In other words, the API is not just a means to an end but also a revenue-generating product in its own right.

APIs as products typically have their own pricing, service level agreements, and terms of service. They are often monetized through a variety of models, such as a subscription-based, pay-per-use, or revenue-sharing model.

APIs as products can be used to create new revenue streams for a company by allowing third-party developers to access and use their data and services. They also enable companies to access data, functionality, and services from other companies, enabling them to build new products, improve existing ones, and drive new business opportunities.

APIs as products can be used in a variety of industries, such as e-commerce, finance, healthcare, transportation, and more. Companies in these industries can leverage APIs to create new business models and disrupt traditional ones.

An example of how APIs allow companies to offer their products and services is how Uber uses the Google Maps API for mapping, uses PayPal APIs to offer a convenient way of making payments, and uses Twilio APIs to allow drivers and riders to communicate securely.

Uber is a ride-hailing service that allows users to request a ride through a mobile app. In order to provide its service, Uber uses a number of APIs, including Google Maps, PayPal, and Twilio:

Figure 1.1 – Examples of APIs being used during a single ride using a ride-sharing application such as Uber

The Google Maps API allows Uber to access the Google Maps platform and use its functionality within the Uber app. This includes features such as real-time traffic information, an estimated time of arrival, and turn-by-turn navigation. This allows Uber to provide accurate pickup and drop-off locations, an estimated time of arrival, and the best route for the driver to take to the rider’s destination.

The PayPal API allows Uber to offer PayPal as a payment option to its users. By integrating with the PayPal API, Uber can securely process payments made through the app using the user’s PayPal account. This allows riders to easily pay for their rides without having to enter credit card information.

By using these APIs, Uber is able to offer a more seamless and integrated user experience. The Google Maps API allows Uber to provide accurate and up-to-date information about pickup and drop-off locations, while the PayPal API allows for a convenient and secure way for users to pay for their rides.

Twilio is a cloud communication platform that allows businesses to programmatically make and receive phone calls and send and receive text messages using its APIs. Uber uses Twilio to provide a way for drivers and passengers to connect without revealing their phone numbers.

When a driver accepts a ride, the passenger’s phone number is sent to the driver through the Twilio API, allowing the driver to call or text the passenger without ever seeing the passenger’s phone number. Similarly, the driver’s phone number is sent to the passenger through the Twilio API, allowing the passenger to contact the driver without ever seeing the driver’s phone number.

By using Twilio’s APIs, Uber is able to protect the privacy of its users by keeping phone numbers private. The Twilio API allows Uber to handle communication between drivers and passengers securely and efficiently. This way, it can enhance the user experience and help to improve the safety of the service.

To sum up, the use of the Twilio API allows Uber to use a cloud-based communication platform to connect drivers and passengers without revealing their phone numbers. This enables Uber to provide a more secure and efficient way of communication while protecting the privacy of its users.

Overall, the use of APIs such as Google Maps, PayPal, and Twilio allows Uber to access functionality and services provided by other companies, which they can then use to improve their own service and offer more features to their customers. This also saves them the cost of building any of these services by themselves while also reducing the time it takes to develop them.

Now that you have started to learn about how API products are making their mark, you will learn about different types of APIs in the next section.

Types of APIs

The Google Maps API is probably one that is most often used by people without realizing it because it is used via an interface, such as Uber or Lyft. APIs allow products to use capabilities from another product or company in a seamless way. This dramatically reduces the complexity of building software, as these capabilities are often so extensive that it is not possible to develop them from scratch.

There are three major types of API protocols and architectures:

Representational State Transfer (REST): The most popular approach to building APIs is the REST architecture. REST is based on a client/server model and separates the frontend and backend of the API. This model allows for a great deal of flexibility in development and implementation. REST is stateless, which means that the API does not store any data or statuses between requests. For slow or non-time-sensitive APIs, REST supports caching, which stores responses. REST APIs, also known as RESTful APIs, can communicate directly or via intermediary systems, such as API gateways and load balancers.Remote Procedural Call (RPC): The RPC protocol is a straightforward way to send and receive multiple parameters and results. RPC APIs are used to perform actions or processes, while REST APIs are mostly used to share information or resources, such as documents. For coding, RPC can use two languages: JSON and XML; these APIs are known as JSON-RPC and XML-RPC, respectively.Simple Object Access Protocol (SOAP): SOAP is a messaging standard defined by the World Wide Web Consortium and is widely used to create web APIs, typically with XML. SOAP supports many internet communication protocols, including HTTP, SMTP, and TCP. SOAP is also expandable and doesn’t have a specific style. This means that developers can write SOAP APIs in different ways and quickly add new features and functions. The SOAP approach defines how the message is processed, including features and modules, the communication protocol(s), and the construction of the SOAP message.

Software architects will make the selection of the protocol depending on the use case that you are trying to serve with your APIs. There are various users and purposes for APIs, and you should be monitoring and managing them to verify that they are being used correctly. API products can fall into one of four categories:

Public APIs: This is available for anybody to use. Good examples of public APIs are the APIs published by the US government, such as the Census API, which makes census data available to the public. The Google Books API also makes its entire database of books available via its public APIs. Public APIs may not always be free to use. Public APIs that are available for no cost are also referred to as open APIs.Partner APIs: APIs exposed by/to strategic business partners are known as partner APIs. They are not accessible to the general public and require specific authorization. While open APIs are entirely open, access to partner APIs requires an onboarding process that includes a particular authentication workflow.Internal APIs: Internal APIs, also known as private APIs, are accessible only through internal systems and are hidden from external users. Internal APIs are not intended for use outside of a company. They are limited to internal development teams to improve productivity and the reuse of services.Composite APIs: Multiple data or service APIs are combined to form composite APIs. They allow developers to make a single call to numerous endpoints. Composite APIs are useful in microservices architecture patterns where information from multiple services is required to complete a single task.

The type of API determines the user base that the API is targeted toward. You will need to identify and understand the unique needs of the audience and design the product in such a way that the customers are able to discover and use the right APIs for the desired use case.

Now that you have learned about the types of APIs, you will learn about various business models for APIs.

Business models for API products

In the context of APIs, the types of products across different business models are as follows:

Business-to-business (B2B) APIs: These are APIs that are designed for use by other businesses. B2B APIs can provide access to a wide range of services, such as data analytics, financial services, and logistics management.Business-to-consumer (B2C) APIs: These are APIs that are designed for use by consumers. B2C APIs can provide access to services, such as weather forecasts, news updates, and social media platforms.Business-to-business-to-consumer (B2B2C) APIs: These are APIs that are designed for use by other businesses, but ultimately benefit consumers. An example of a B2B2C API would be an e-commerce platform API, which allows businesses to access inventory and customer data, but ultimately benefits consumers by providing them with a seamless shopping experience.Consumer-to-business (C2B) APIs: These are APIs that allow consumers to access and manipulate data and services provided by businesses. An example of a C2B API is a bank API that allows customers to check their account balances, view transaction history, and make payments.Consumer-to-consumer (C2C) APIs: These are APIs that allow consumers to access and manipulate data and services provided by other consumers. An example of a C2C API is a peer-to-peer marketplace API that allows users to buy and sell goods and services.

Overall, APIs can be used across different business models to provide access to data and services securely and efficiently and to enable new business opportunities and revenue streams.

As you begin to understand the types of APIs and the variety of business models for APIs, it is also important to understand the customers for APIs. In the next section, you will learn about API producers, API consumers, and the relationship between the two.

Who builds APIs and who uses them?

The entity that creates an API and makes it available for others to use is known as an API producer. The API producer is responsible for designing, building, and maintaining the API.

API consumer refers to the entity that uses or consumes the API provided by the API producer. The API consumer can be a developer, an organization, or another system that accesses the API to retrieve or update data or perform other operations. API consumers use the API created by API producers. You will learn more about the different life cycles of the API consumer and API producer in later chapters.

APIs are typically built by software developers who work for a company or organization that wants to expose certain functionality or data to other systems or applications. These developers create the rules and protocols that define how the API works, and they also create the code that implements the API.

APIs can be used by a wide range of people and organizations, depending on the purpose of the API. The customers for an API, also known as API consumers, can be broadly categorized into the following groups:

Internal developers: These are the developers within the same organization that built the API, who use the API to access the data and functionality within the organization’s systems. They may use the API to automate business processes, integrate systems, or access data for reporting and analysis.External developers: These are the developers outside of the organization who use the API to access the data and functionality provided by the organization. They may be third-party developers building applications that integrate with the organization’s systems, or they may be partners or customers who access the organization’s services through the API.Business users: These are the people within the organization who use the data and functionality exposed by the API to make decisions and run the business. They may use the data for reporting, analysis, and decision-making.End users: These are the users of the final product that uses the data and functionality exposed by the API.

APIs can be used by a wide range of people and organizations, depending on the purpose of the API. They can be used to automate business processes, integrate systems, access data, create new revenue streams, and improve the customer experience. APIs can also have different types of customers, such as developers, B2B customers, B2C customers, and so on, depending on the business model of the company providing the API.

The main goal of an API is to provide a way for different systems and applications to communicate and share data and functionality, and the customers of an API are the people and organizations that use that data and functionality to achieve their goals.

Now that you have developed an understanding of what API products are, their types, and the business models associated with them, we will take a look at some of the industry’s most prominent API products in the next section.

Notable API products that are shaping the API landscape

Most ride-sharing companies use the Google Maps API in the background. E-commerce stores use APIs to update tracking information on orders and send shipping notifications to their customers. Services such as Shopify are built on a layer further abstracted where sellers don’t have to make API integrations themselves but are offered the Shopify marketplace platform for e-commerce, which comes with nearly all the e-commerce-related integrations pre-built. Shopify integrates with PayPal using APIs, so the seller needs to provide their credentials for Shopify to connect with a PayPal account for their Shopify store.

These are some prominent API-first companies:

TwilioPrintfulTwitterTealiumPlaidIMDBAmazon Selling Partner APIPostmanMarqeta

Let’s take a look at each one of them and see how they position and support their products.

Twilio

Twilio is a cloud communications platform that enables developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs. Twilio has revolutionize authentication, two-factor authentication (2FA), as more users know what SMS and email codes are. Twilio has had a significant impact on the API industry by making it easy for developers to integrate communication functionality into their applications without having to build and maintain the underlying infrastructure. This has led to the creation of a wide variety of innovative communication-enabled apps and services. Additionally, Twilio’s pay-as-you-go pricing model has made it accessible to small and large businesses alike.

Twilio uses web service APIs for programmable communication, such as making and receiving phone calls, sending and receiving text messages, and performing other communication operations. Twilio’s API offerings across SMS, WhatsApp, voice, video, and email provide the building blocks to design highly customized and sophisticated customer interaction workflows. More than a million developers use Twilio, along with countless large brands.

Twilio’s voice and video APIs were instrumental in enabling developers to build video applications that supported thousands of businesses that came online during the pandemic. The healthcare industry benefited the most by building secure voice and video applications to serve the community.

User verification is one of Twilio’s most comprehensive services. Businesses can use SMS codes and programmable voice flows to verify user’s identity.

Before Twilio disrupted contact center technology, most companies were using custom-built software that was hard to scale and maintain. Twilio is more advanced in contact centers compared to other domains in the same niche. It enables moving offline contact centers to the cloud quickly, all with built-in security, fraud prevention, 24/7 uptime, and so on.

Twilio is a favorite among the developer community, as it has one of the best-designed developer experiences. It has invested heavily in building a community that is innovative and engaged.

Printful

Printful is an innovative service that brings