An API is a Competitive Advantage

In this increasingly inter-connected world, APIs are becoming more and more important as time goes on. This is especially true if you have a business that requires integration of some sort, like metrics, notifications, integrated access to other systems (like telephony), payments, etc.

Companies like Stripe, Amazon, and Twilio have embraced the API-first approach, and in many ways embody and epitomize this movement as a whole.

Beyond Just Having An API

Just having an API is the obvious requirement for basic integrations. Going further than that, however, is the thought that your API can actually be a key point of differentiation from your competitors. Using this strategy (creating a robust, easy-to-use API) can be especially effective when you are going up against entrenched competitors, or when you are trying to make something that is traditionally very hard, easy.

Stripe And The Payments Industry

Ask any developer about online payment gateways, and they are likely to mention Stripe. Why? Because it was clear from the start that they really cared about devleopers, and put high priority in their API. Not only just creating an API – because every online payment system has an API – but in creating a very good API that is robust, simple, well-documented, and easy to use.

In contrast, many of Stripe’s competitors are using SOAP APIs or an emulation of the API. The API documentation typically exists only in PDF form, and it’s something that is mailed to you by the sales department. You’re lucky if you can find it on the website. Sales first and developers second is pretty much the exact opposite approach that Stripe took by focusing on developers and integrations first.

Here an example from the Stripe documentation – it’s just a simple cURL call to charge a card, and returns a simple JSON response:

curl \
    -u sk_test_BQokikJOvBiI2HlWgH4olfQ2: \
    -d amount=400 \
    -d currency=usd \
    -d card=tok_14i9vP2eZvKYlo2Cdr4h0oHs \
    -d "description=Charge for"

Stripe did several things right here:

  • Provide a simple API with good documentation
  • Provide a fast on-boarding process with no red tape (rare for credit card processors)
  • Support subscription charges with no additional fees (also rare)
  • Target and market to developers
  • Good design and nice, clean merchant interface

Stripe’s success is a combination of the above reasons as well as many other factors, but without a doubt their core product and main competitive advantage is their API. It shows in their overall developer experience, and has played a large role in their success in stealing market share from entrenched competitors like

Amazon and the Public Cloud

For many, Amazon is synonymous with cloud computing. Many web hosts selling vitrualized servers came and went before Amazon got into the game, but no one besides maybe DigitalOcean has had a similar level of success doing so.

From the start of Amazon Web Services, Amazon made it clear that they were a platform for developers to build on top of, and provided an API from day one. So while many other virtual hosting providers existed, Amazon EC2 was one of the only ones that developers could use to provision whole new servers with automated scripts and zero manual intervention. The availability of APIs to provision servers lead to the creation of businesses built on top of Amazon’s infrastructure, like Heroku – who probably wouldn’t exist without Amazon’s APIs.

Rackspace, a much larger web host and significant competitor, didn’t launch a public API until years after Amazon did, but it was already too late, and they gave up significant market share to Amazon and Google Cloud Engine. Amazon’s API was its killer feature, and key differentiator. And we all know how well that has gone for them.

Twilio And Telecommunications

Twilio is a good example of a company using APIs to make something that is normally really difficult very easy. Now you don’t have to worry about which cell phone network the number you are texting belongs to, what country it is in, etc. Just integrate with the Twilio API, and you know it’s going to work.

For Twilio, their API is their entire business. There is no Twilio without an API, because if Twilio was just a web form that sent a text message to any given number – even if it still smoothed over all the carrier and location differences – it would not acheive the goal of automation, and thus would defeat the purpose.

In the years since Twilio launched, countless companies have relied on it for things like 2-factor authentication and phone number verification via SMS. Twilio can even power your entire phone system through tools like OpenVBX, all with a collection of REST APIs.

The Bottom Line

If you don’t have an open REST API that is easy to use, you will lose market share to a competitor who does. It’s time to start taking your API very seriously. An API is a competitive advantage.