Ankit Sobti is co-founder and CTO for Postman, the world’s leading API Platform. Prior to joining Postman, Ankit worked for Adobe and Yahoo!, where he served as a senior software engineer. In his current role, Ankit focuses on product and development, leading the core technology group at Postman.
A key focus for this Q&A are the findings from a recent global survey Ankit and the Postman team published, tracking the most important trends around API use in large enterprises.
M.R. Rangaswami: APIs are critical tools for enterprise success, but should they also be considered products?
Ankit Sobti: Thinking about APIs as products helps to understand and articulate that APIs, like any other item you’d typically call a product – a website, a mobile app, a physical product – are required to be built with a consumer-driven mindset.
This requires an understanding of who the consumers are, what problems are they trying to solve, why is it a problem in the first place, what else are they doing to solve this problem–and then consciously and deliberately designing a solution to this problem exposed through the interface of an API.
And like any other product, APIs also need to be packaged, positioned, priced, distributed, and iteratively improved to evolving consumer needs.
Postman’s 2023 State of the API Report, which surveyed over 40,000 people found 60% of the API developers and professionals view their APIs as products – which I think is a good signal that this realization is well underway. And it makes sense that APIs are increasingly seen as products, serving both internal and external customers.
But how does this view vary by industry and company size? And how much revenue can APIs generate? It turns out that the larger the company, the likelier it is to view its APIs as products. At companies with over 5,000 developers, 68% of respondents said they considered their APIs to be products. At the other end of the spectrum were companies with fewer than 10 employees. There, just 49% of respondents viewed their APIs as products.
M.R.: Are APIs actual revenue generators now for companies?
Ankit: Yes, APIs are increasingly unlocking new streams of revenue and business opportunities for companies. In some of the more traditional industries with lower margins for example, we are increasingly seeing APIs being used as a high margin revenue stream. And there are numerous examples now of companies where the primary product being sold is the API.
APIs that package insights or key capabilities and can be used to drive strategic partnerships, or allowing companies to become platforms on top of which others can build. We are seeing examples of this ranging from small development shops all the way to large enterprises.
This is something we also saw in our survey, with 65% of the respondents affirming their APIs generate revenue, and almost 10% of companies with money-making APIs said their APIs generated more than three-fourths of total revenue.
M.R.: Does an API-first approach impact revenue?
Ankit: API-first companies are defined as those that use APIs as the building blocks of their software strategy. APIs bind together not only the internal components of an organization, but also pave the way for seamless external collaboration. And thinking in terms of these building blocks, an API-first approach allows for easier externalization of the capabilities that APIs provide, and subsequently create easier paths for revenue.
In addition, we believe that API-first companies have superpowers that foster happier developers and a healthier business ecosystem. In our customer base, we work with companies across a broad range of industries – and APIs generate significant amounts of revenue, unlock new business opportunities, and drive ecosystem expansion through partnerships.
And for companies with APIs, it’s worth weighing how much to invest in them, and adopting an API-first approach. These decisions may have a tangible impact on the bottom line.
M.R. Rangaswami is the Co-Founder of Sandhill.com