Posted on

What you need to know before building an API for your product

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.

Posted on

Factorial Will Change The Way Your Company Deals With HR

Co-founders of Factorial Pau Ramon Revilla (CTO) and Jordi Romero (CEO).

There’s a new startup in town, and we’re lucky to say it’s an itnig company.

Factorial wants to make the HR role both easier and less time consuming through their cloud-based HR platform.

Factorial has already started on-boarding several Barcelona companies to their platform.

Many small and medium businesses don’t have a budget for a full-time HR person, so managing employees, their contracts, pay slips, time off, benefits, insurance and much more, is left to the CEO, the office manager or someone else.

All of these tasks, and more, are automated through Factorial, explains CTO and co-founder Pau Ramon Revilla.

Our customer interviews shows that HR managers use 80 percent of their time on cumbersome chores, and only 20 percent on building culture and boosting productivity. We want to flip those numbers.

Bringing the Zenefits model to Europe (and the world..)

Even though there’s several HR management platforms in Europe, they are not designed for the needs of small and medium businesses (payroll, benefits, time-management, etc.) that Factorial offers, says CEO and co-founder Jordi Romero:

The initial seed idea was to bring the Zenefits model to Europe.

Zenefits was born from newly introduced regulations that forced American companies to provide certain benefits for their employees, but European markets work very differently, and this is where Factorial comes in. They’re currently exploring what to offer in the different markets, and they’ll start in a few European countries, according to CEO Romero.

Usually all companies reinvent their own way of dealing with HR processes, using forms and excel sheets, which is very time consuming. We’ll change that.

Moving fast

Only three months ago Jordi and Pau didn’t have a product, but they’ve been building non-stop and have recently started on-boarding companies into their platform, according to CTO Ramon:

We’re testing what’s basically our MVP with 5–6 companies in Barcelona now, and so far the feedback has been good.

They’re currently raising their first round of funding, and will be using the next 6 months to build an international product, and then establish partnerships for benefits around Europe.

“The initial seed idea was to bring the Zenefits model to Europe” — Jordi Romero

Both Romero and Ramon are coming from executive positions in SaaS company Redbooth, where they worked as VP of business development and CTO.

We’re bringing a lot of valuable knowledge and experience from Redbooth on how to run a SaaS company, the metrics, how to convert users in to actual customers, and much more.

Targeting startups

Factorial is meant for all small and medium businesses, but the first months their targeting startups, says CEO and co-founder Romero.

The co-founders in talks with the itnig design and business development team.

Tech startups usually have higher salaries, and are more creative in ways to compensate their employees. At the same time, they’re often very depending on efficiency and productivity, so it’s a very good fit for Factorial.

Factorial is one of six companies currently being built in itnig’s venture builder in Poble Nou, and all the other startups in the ecosystem are using Factorial.

Now the race to build a great team has begun, says Ramon:

We’re looking for great developers to help us build Factorial. As the CTO of Redbooth I’ve learned a lot about how to grow a team, create a good culture and to foster productivity and creativity. I’m looking forward to applying this knowledge in Factorial.

This post was written by Sindre Hopland, media manager at itnig.