First of all, this is a non-technical approach to API’s, so if you want in-depth tech insights, I recommend you get in touch with Hitch — the API experts.

However, if you’re looking to get insight in why you should use API’s to strengthen and grow your business, and what metrics you should be aware of when taking advantage of an application programming interface (API), you’ve come to the right place.

A whole or core product?

To really understand how your company can utilize API’s we need to understand the concept of the core product and what many call the whole product.

Famous marketer Regis Mckenna that helped launch the first microprocessor for Intel and the first computer for Apple said it like this:

(…) A whole product is a generic product augmented by everything that is needed for the customer to have a compelling reason to buy.

So for example a computer is a core product, and the mouse, the software, the screen and any other necessity being part of the whole product.

It’s very important to understand these definitions, because having insight here will help you know how to approach your customers, potential partners and competitors.

Hacking partnership agreements

As your startup grow, you’ll probably be looking to form partnership agreements with other complementary products and companies.

This can be super valuable, but often takes a lot of time and effort, in other words, it’s often very expensive.

So to hack this time-demanding and expensive process of partnering up with other companies, and API can provide this kind of partnership without all the hassle, often at a fraction of the cost.

Bruno Pedro is the CTO of Barcelona-based API startup Hitch. He explain that many underestimates the cost connected with taking use of an API, especially the cost of support.

The thing with building or using an API is that it doesn’t matter if you consider yourself as a part of a whole or a core product. If you’re able to see through your customers (or potential customers) eyes, you’ll probably discover how your product can transmit value both as an integration into a bigger product, or as an integration to enrich smaller products.

The cost of integration

Integrating your product with other businesses through an API offers many possibilities, but also new costs related to integration.

Development costs start out high, but turns to zero as the product finishes. The maintenance costs remains low but stable with a few peaks around new releases with bugs attached. The big cost related to support which will be higher as your API becomes more popular.

Development costs: very high at first, but becomes zero when the API is launched.

Maintenance costs: high after the launch because of bugs, and for every iteration you do you’ll have peaks with your maintenance costs, as well as routinely maintaining the API itself.

Support costs: This will depend on how well your API is performing, but the more users you have, the bigger the support cost will be, so this is the really expensive one.

And remember, these costs need comes with each separate integration.

So, is your API worth the effort?

In other words, we need to understand the life time value (LTV) of our integration.

First you need to measure where your customers come from, then you need to identify the new customers that are using one of your integrations within a specific timeframe and estimate the lifetime value (LTV) of those customers.

Then, when you know the LTV of each particular integration, you can easily know which is giving you growth, and which that are only causing costs to rise.

The last thing you need to figure out to see if your integration is worth doing is the payback period (PBP), i.e if your integration or your API is earning you more money than what you’re spending on it.

To find this number you have to take all of your costs (as mentioned above) and divide it by your monthly recurring revenue (MRR), and again, you have to do this for each integration.

https://upscri.be/285782-2

Getting to the good stuff — growth!

Your product can be the core product which is the big one in the middle, or part of the whole product which is one of the smaller ones on the side. No matter where you are in the ecosystem, you’ll have costs related to the integration.

To be clear, with growth we don’t mean a profitable company, but a business that is multiplying their growth month over month, or year over year. It can even be unprofitable.

So what is growth for an integration?

  • In most companies it’s considered growth if the lifetime value of the integration is three times higher than the cost of integration. If not you’re loosing money. Some experts say that 4 times higher LTV than costs is the number to aim at.
  • And not enough with with a high LTV, it also considered necessary to have a payback period of less than 12 months. If not, you’re also loosing money.

So remember, if you think about how your company is used in a broader context, and not only how its used as intended, there may be many possibilities with using API’s.


This post was written by media manager itnig, Sindre Hopland based on the presentation of Hitch CTO Bruno Pedro.

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T.

The new time and attendance law will kill innovation in Spain and Europe

Simple solutions or “one fits all” policies are easy to market by populist governments but they are sometimes at the expense of certain sectors and their people. This time the affected party is innovation and value added services, to a point that puts in jeopardy our (already weak) spot in the global competitiveness landscape.

I’ve always told my teams that I do not hire their time, but rather their talent and potential: their brains, their energy and passion and their willing to make a difference and impact our clients and the world through them. Innovative companies try to get in existing markets and solve things in complete different ways, some go as far as creating new markets from scratch. They all have in common that their mission is extremely hard, sometimes impossible (thus most fail along the way). The key for their success is how they manage to convince their teams that everything they do is not a job, but a religion. They are changing the world and that is something worth spending time and making history.

I can tell if somebody is motivated by their job by looking at their eyes while they talk about their challenges and ideas. Best people don’t work, they play. They make their challenges their hobbies. I’ve had many conversations at 1 am in the office, after some beers and sushi, before even realizing what time it is. Only when a job makes this kind of conditions happen, the wheel of significant value creation really stirs and great things come from it.

It is very hard to create a culture in which people feel so empowered that they are capable of anything. In my experience, it helps granting absolute flexibility. I don’t remember the last time I approved vacations to my team, or I paid attention to their schedules, or the days in which they worked from home or the office. This is not the kind of conversations I want to have with them. My relationship with my team is based on trust, and it is based on one single (often repetitive) conversation: how can we do more and better, how can we grow faster, how can we raise the bar. Little it matters to me whether they contribute to this questions from the beach in Canary Islands or spending many hours in the office.

However, the government today decided that it is a great idea in the 21th century that all companies like ours should make everybody clock in and clock out by law. I’m now obliged to add people’s time and attendance into our conversation. We now have to treat all jobs like production lines in factories (amidst the era of hyper automation and robotization). They go as far as having us registering accurate pauses for lunch. Unfortunately they don’t include how should we manage the time spent in the chill-out area, or when having long coffees in the outside terrace, or spending the afternoon in ping pong championships. Should we clock-in and clock-out every time we do that too?

When I travel I always get asked how is the Spanish ecosystem for entrepreneurship and innovation developing, I always defend our potential to become a leading actor in science and technology,  besides our current reputation for tapas, toros and siesta. We previously analysed the many initiatives taking place in the city of Barcelona. But my question is: is there anybody in the government actually helping us to make this happen?

The new law will come to place the next 12th of May. At Factorial we developed a free feature, so companies can instantly become compliant with the law. Interestingly enough, almost immediately after launching this feature people started developing tools using our API to automate clocking or connecting it with Slack and other interfaces. It looks like after all there will always be people willing to work on relevant things and not waste their energy in bureaucratic traps.

PD: You can find more information about the law in this article.