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Lessons learned from building the best API marketplace in the world

#1
A while back I worked for an [b]amazing[/b] company known for having the largest API marketplace on earth! I’ve learned how hard it can be to grow a marketplace business and be successful! Acquiring users is tough, especially when they’re [b]developers[/b]!

Creating a great playground for API developers to[i] find, consume and publish APIs [/i][b]isn’t a simple feat[i]. [/i][/b]It requires a really strong and dedicated team, focused on developer experience.

This blog post is based on personal experiences, learned through lots of life lessons & hard work! If you want to hear specifics on a certain aspect of the marketplace, feel free to reach out to me on Twitter

Initially…
When I joined the company the objective had been to [b]scale [/b]the API marketplace to infinity and beyond (!!). To become the largest single hub for API developers.
A lot of challenges and successful moments later, today the company works on the world’s most popular open source API gateway. Built [b]in the open[/b] on Github as a developer-first product. They did really good in the microservice enterprise scene.


Source: konghq.com


Working Marketplace Magic In A Developer-First Market
Hold on! What’s an API marketplace? What’s a marketplace business model?
In a marketplace you have:
  • people selling some kind of goods (or services)

  • people looking for these goods (or services)
As the provider of the marketplace you need to make sure sellers and buyers respect the rules of the marketplace and are satisfied with all aspect of the transactional experience.
These two groups need to be [b]mutually interested[/b] in each other for the marketplace to thrive.
You, as in the entity who runs the marketplace, are trying to provide the best possible experience to both sides. The most old-school example of a two sided marketplace is [b]eBay[/b].
The more traditional marketplaces are:
  • Amazon, Etsy, AliBaba
and some companies that deal directly in the b2c space, like:
  • Uber

  • Lyft

  • Tinder

  • Doordash

  • Postmates
and many other..
A little background on how the API marketplace was born…

[Image: 1*T8jN0el-4h0knlczPjK90Q.png?q=20]
[Image: 1*T8jN0el-4h0knlczPjK90Q.png]

REST APIs interest over time, courtesy of Google Trends

Around [b]2010[/b] everyone started [b]dreaming[/b] about connecting Apps with APIs.
The web had just stopped talking about widgets, mashups, HTML5 was at this stage *hot*, APIs were definitely the new cool thing.

Around [b]2011[/b] the initial concept of an API marketplace was born. Initially as a mere index of public APIs — developers could push their API to the platform and provide documentation for others, “API consumers”, to learn and use it.
The early days
In the first iteration of the API marketplace, all you could do was track the amount of developers using an API, think of like [i]ProductHunt for APIs [/i]? — a list of people who would up-vote an API as they made request to it.
The more developers using an API, the highest the popularity of that API on the global marketplace index.
At this stage the marketplace’s sole service was authentication. You would make a request through the marketplace server with your API-key, you would get a token and then you could use this one-time [b][i](!!!)[/i][/b] valid token to request any of the API’s hosted (or rather proxied) by the Marketplace. What a mess!
Golden API Adoption Days
Then suddenly around [b]2013–2014[/b] [b]everyone, [/b]literally[b], [/b]jumped on the API wagon, just as predicted. Hackathons were huge, people were living off pizza and beer and API meetups and conferences started popping up!
On Mashape things had to scale up on all fronts, as API usage would become more popular, and API requests too. Re-writing the marketplace and making everything work better was the core priority of the team.
[b]Relaunching and completely rewriting the marketplace was a huge feat. [/b]The platform was reshipped as Mashape 5 with an improved design, a better user experience and more services for the end-users.
This came at a price, the engineering team spent countless nights sleepless after the launch to ensure a smooth transition.

Scaling the marketplace throughout the years took a [b]HUGE[/b] amount of work. Luckily our team was young, full of passion and very energetic!
There were monitors held around the office focused on the KPIs. We noticed people were looking at the monitors when walking in but weren’t stopping by them as much as we would have liked it.
We then decided to send daily reports via email which we would discuss during our stand up meetings.

Looking at where users would get stuck and the feedback coming in through our customer support account had helped us immensely [b]re-shape [/b]some rough edges of the marketplace diamond.
Changing/adding features that were requested by customers had to be prioritized (using a huge Trello board) properly. We had so much stuff we wanted to do. It quickly became our obsession.
We also focused on creating a lot of documentation, videos and FAQs for on-boarding.
This tough time have ultimately shaped the company — picking up pace, switching gears and moving into a leading microservices-first enterprise software position.
Scaling up the marketplace operations
Scaling up the marketplace required a lot of work: platform features, developer outreach, clever “startup-py hacks”, open source contribution and sweating. By the end of 2012 the platform only hosted around a thousand public APIs.
Meanwhile…
While other platforms like [b]ProgrammableWeb [/b]were focusing on the indexing issue — this marketplace was focusing [b]on adding useful services[/b] that would allow service providers to benefit from having their API on the Marketplace.

Quote:The idea was simple:
[b]Create value for providers (sellers), the harder demographic to onboard and the consumers (buyers) will come.[/b]

As an API provider you needed things like:
  • Caching
  • Throttling
  • Authentication
  • Customer support
  • Analytics
  • Documentation

These tools would ensure your API would become useful to developers world-wide, but at the same time you had to focus on the quality of the results returned by your API.

Quote:API service providers learned the hard way that being developer-centric would set them aside from competitors and give them a bigger chunk of the market.

By providing these layers of services to API providers it meant that developers could spend more time writing good code and good documentation!
Throughout the years of 2013, 2014 and 2015 the marketplace reached critical mass, there were over 10000 APIs a large part of which were private and used by small businesses (digital agencies, small dev shops etc) that would sell access to their home-grown API to select third parties.
The benefit of using the [b]Marketplace[/b] was that all the extra services were free, they would come out of the box — as a consumer you’d have the fastest way to find, use and implement APIs. As a provider you we were holding your hand to launch your API.
Dawn to Dusk In The Marketplace
After 2010… APIs exploded. That’s also what changed the marketplace.
APIs were driving businesses from garage startups to IPO-bound — [b]Twilio [/b]had started just 2 years prior — similar companies as them, pioneers of API-driven businesses were pretty huge, already reached millions of dollars of annual revenue. SendGrid was another one.

Quote:These kind of businesses were getting huge and were never going to move to the Marketplace model.

⚡ Dissecting what could‘ve been done differently
Most if not all marketplaces follow this path of growth:
  • They expand into new markets and locations
  • They start to add new features, products for buyers and sellers
  • They make it super simple to buy and sell API
  • They grow and scale both on the supply and demand side

The API marketplace managed to do a lot of this, yet, not enough of it.
#1. Never Fail. Provide Options Instead.
[b]Realize you are the biggest point of failure of someone’s stack.[/b]
Just like AWS/Cloudflare/Google, when their services go down everyone suffers. When the main API proxy went down, every single API would also suffer. In our world when your infrastructure powers thousands of applications and their customers (free and paid) getting even 10 minutes of downtime means everyone and their cousins will suffer. As a silly example think of weather APIs, traffic APIs, mapping APIs hosted on the marketplace powering mobile apps and more going down — think of the effect a little downtime produced on all the apps that rely on these.

#2. Trust and SLAs — Business Criticality
[b]Businesses don’t mess around[/b].
Big API consumers are large businesses. They have both internal and external APIs and as they scale, you scale.
The earlier reason, a marketplace being the biggest possible point of failure, means that you need to have a resilient API proxy. When your customer is a big enterprise you will have to guarantee a certain level of service. The best way to do that is to have the proxy deployed as close as your customer’s heart as possible. This was however not what the marketplace was all about.

Years later it became apparent that something had to change and centralizing things wasn’t going to work for everyone. Therefore with the creation of Kong this vision became more and more clear and eventually took over.
#3. Monetize Fast, Monetize A Large Demographic & Monetize’em Good
As an API marketplace owner you need to monetize all the services that you provide. There are many revenue models you can go after but the best one is providing a set of tools to the users of the marketplace and charging [b]them[/b] a premium for access.
In the API marketplace a lot of the service were built and [b]offered for free[/b] while they could’ve been monetized into chunks. Analytics, documentation, etc.
At the same time because of the way the API marketplace was built and because of problems #1 and #2, developers would never be able to trust a platform that handled billions of API calls. The demographic the marketplace was going after was too niche — small and medium groups of developers.

#4. Maintain & Update A Lot Of Community Code
Part of what made Mashape successful was the ability to consume API using own wrappers and libraries. This made consuming simple: A lot of copy paste and a few terminal commands and you would be consuming API like a boss. This clever trick alongside with the explosion in adoption of open-source libraries such as Unirest, available for most programming languages, made it so that anyone with little effort could consume an API from the marketplace. However as things grew and got out of control it became increasingly hard to maintain all the Unirest libraries, this is apparent by just visiting the “issues” section on Github that keep accumulating.
The future for API marketplaces
Today, there are a lot of new marketplaces that are developer focused.
Personally, I don’t think developer centric API marketplaces will take off [i]among developers[/i].
I love the idea that Zapier has built. The vision [b]#3[/b] (monetize the largest demographic — people who want to get sh!t done) and [b]#4 [/b](tools to scale) perfectly, while they’re probably still working hard on [b]#1[/b] and [b]#2.[/b]
They truly delivered on the vision of 2-sided marketplace, not only developers (providers and consumers) but also non-developers!
That is:
[b]Monetizing a platform that allows non-developers to use APIs (n.b. without technical expertise) in the tools they use every day. Monetizing API providers by allowing them to enter the marketplace to reach these non-developers.[/b]

[b]Zapier[/b] has a lot of competitors such as [i]StamPlay[/i] and [i]Tray[/i].io, clearly so they must be doing something right — especially across organizations that are pretty large and need to empower their marketing, operations and other teams that don’t necessarily write code.
In my opinion the reason the original API marketplace is no more, is a direct evolution of the demand of its own users. That is — with the creation of a open-sourced self-hosted software for developers there’s no need to centralize anything anymore. This allows any developer (or team of)to manage their own API [b]on their own terms[/b]. As opposed to a big closed-source platform, you give the power back to the people!
It turns out it’s a winning strategy and as time has shown — API gateways are now a common thing.


Next time you start thinking to build a marketplace for developers, make sure you evaluate very carefully your business model — think far and further!

I love marketplaces. The concept is intriguing. I’ve spent the last couple of years working on 2-sided marketplace businesses. Heck I’m working on a marketplace business right now.

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