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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O.

On sales leadership

These are some values that I learned that define a leader:

– A leader is somebody who reaches their goals and achieves beyond their individual abilities aligned with their own values and the organization’s values. A leader without a team is not a leader. A leader works for the team, not the other way around.

– Humbleness. Leaders must get to know themselves first, acknowledge their limitations. Acknowledge they have no recipe for success (no one does). They will succeed only by being curious and trying things faster, testing, changing things again, failing again, learning as fast as possible. In sales, everybody notices when things work well, success is measured in € vs budget. A leader must embrace results with no buts and take action to reach the goals.

– A leader works harder, a leader cares about the goals more than anybody else, they took full ownership of the goals. A leader does about anything to remove bottlenecks away on his team, they assist, train, support everybody, anything it takes. They are always the best resource for their team.

– A leader will always be available for everybody in their team, for personal and professional issues. They go the extra mile. They make sure everybody knows that. They earn the team’s trust.

– A leader makes everyone aware that teamwork is not negotiable. Without a cooperative team, there’s no leader. Lone wolves kill the growing/changing organization. Growth happens only WITH the team, not at their expense.

– Leaders communicate all the time, they don’t keep things to themselves, they are honest with their team. They share good and bad. They share the why’s. They trust their team. Trust precedes process and it is the only path to grow at a scale.

– Leaders learn fast and learn mostly from their team. The team has the most valuable knowledge a leader can get, it doesn’t come from books, blog posts, degrees or mentors. The team gets the real shit from the front line. A leader listens to their teams’ impressions and ideas, they explore them all and give feedback. Leaders generate a culture of idea generation and idea sharing. Leaders stay away from guru preaching.

– It’s important to understand people’s personal and professional ultimate goals and motivations. Leaders spend time asking them on their one on ones and they think about them. They write them down. Everybody is playing the movie of their lives, a leader must find out which one is it, they make sure each team member keeps being the hero of their movie.

– Leaders always lead by example, not by title. They show real bravery. Leaders go first to battle. They call leads and close customers. They apologize to customers when the company screws up. They take the shit first. They don’t leave anyone behind. They don’t show their rank, their status, their difference, their pedigree. Startups are flat meritocratic organizations. Leaders must understand well the company goals and they put them first, they are prepared to step down, or step aside, or leave the company at any moment if needed. Company goals are what matters most. Leaders show this to everyone. Company/collective oriented leaders always thrive.

– Leaders celebrate every victory. They visibly show the pain of every defeat. They take every opportunity to show they care. They analyze why/what/how and find out always changes to be made. Then they go and make the changes. They change anything or everything, but never keep on doing what doesn’t work. They shake the whole company inside out before/when goals are not met.

– Leaders set goals that are both ambitious and achievable. They work along the team to make sure they meet the goals. They are flexible when the goals are set wrong. They are implacable when goals are not met.

Most people will never be a leader. It takes time and patience, it takes survival skills, it takes real personal strength. But after committing to all these things, things start to work. Leaders are such when and only when they brought teams to make things work, nobody becomes a leader just by trying it. True leaders make sure they don’t leave the boat until things work (as they will work, ultimately!). They don’t leave the job undone.

– Bernat Farrero CEO at Itnig