The rise of API-ification within the Australian and New Zealand startup ecosystem

- July 6, 2015 4 MIN READ

There are many companies around the globe that attribute some of their growth and success to having a public Application Programming Interface (API). Companies like Facebook, Twitter and Foursquare have all benefited a great deal from their public APIs because the feature is a powerful customer acquisition tool – it also means that these APIs form an important technology framework for companies that utilise them to solve other problems.

In turn, these companies that own the base API become relied upon by hundreds of thousands, if not millions, of businesses and companies that enter the market, which makes the provider of an API a powerful company. A simple change in the ability to access the “mother” company technology can cause a crushing blow to any fast-growth startup. Just look at the destruction Twitter caused to viral application Meerkat when it decided to choke off access to its API.

Companies like Apple and Google that are the foundation partners for millions of companies because of their App Store and Android APIs have become billion dollar businesses because of the popularity of their APIs. Would people be willing to invest in such expensive hardware if apps didn’t exist?

Australian enterprises using APIs

Large companies like Telstra in Australia have begun to realise the importance an API plays in the growth of the local technology ecosystem. In fact, in January 2014, Telstra appointed Frank Arrigo as the company’s API Evangelist, guiding the software group in developing its overall API strategy.

Prior to Telstra, Arrigo held a similar role with Microsoft where he worked for a little over 22 years across various projects both in Australia and the United States. It was in 2001, around the same time as the birth of ‘.net’, when Arrigo began managing Mircosoft’s global evangelism globally. Arrigo told Startup Daily that part of the reason he decided to come on board with Telstra was to help create a strong local ecosystem, showing people how they could plug into Telstra’s various APIs to be more efficient and more competitive.

For those who are unfamiliar with APIs, at its most basic level, an API allows applications to talk to each other – it’s essentially software talking to software. An example is how mobile devices connect to services like Facebook or Twitter; they are using APIs to ‘talk’ to those services. APIs power websites, mobile apps and devices; and today, everyone is using APIs simply by having a smartphone. In fact, we use so many APIs that half the time we don’t even realise that we are doing so.

“APIs are really the digital glue that connects all these different services to one another,” says Arrigo.

In Australia there is no stand out company that is using APIs as a growth mechanism to grow their business. Even Arrigo says Telstra has a way to go before it really begins to hit its stride in this area.

Having said that, there are local companies that are API-driven to a certain extent like REA Group and SEEK; and New Zealand founded accounting software startup Xero is an example of a relatively new company that has been able to scale globally off the back its public API. Over 300 organisations have built entire companies or features off the back of Xero’s API and in turn have been pivotal to driving the platform to attract over 500,000 subscribers.

As far as enterprises like Telstra go, investing in accelerator programs like muru-D which it owns and financially backs is a very important strategy in order for them to win in this space. They are also not the only enterprise to do this; companies like AMP, Qantas and Newscorp conduct their own internal hackathons in order to help create innovative new solutions. NRMA, RACV and even the nation’s large mining companies are now running accelerator programs in a bid to create the next big platform that ‘everyone’ will want to use and ‘every new company’ will want to build something off the back of.

The role evangelists play in Australia’s startup ecosystem

When it comes to the Australian startup ecosystem, evangelists actually play a fairly important role in educating founders on what is available to them and how they can use certain features like an API to help strengthen their startup’s offering.

Companies like Dropbox, Survey Monkey, AOL, Amazon Web Services and even homegrown Canva all have evangelist roles within their workforce. While not all of these roles are API-centric, they are designed to drive users to integrate a particular feature or set of features from their platform into the everyday operations of the companies they have founded.

APIs are kind of where social media was in 2009 in terms of Australian companies firstly understanding it and secondly embracing it.

“A lot of API adoption is change management,” says Arrigo. “It’s about helping an organisation drive change and a lot of Australian corporates are really intrigued to see how Telstra is doing it, so I just talk [to them] about the process as well as explain what the APIs are and how people can use them.”

API Evangelists play an important role when it comes to customer acquisition for a company. This is because companies that have a public API are able to solve a wider range of issues with its underlying technology. When a business has an API, it essentially has two sets of customers: the ones that are loyal to the product or service being sold by that company; and developers who use the company’s API to build brilliant new products.

Those with roles similar to Arrigo mainly focus on the latter in that equation, essentially assisting with the scalability potential of a tech product.

The rise of API-ification

If we go back to 1997, companies having a “www” address or any kind of web presence was not even a thing. However, in less than 20 years, advances in digital technologies have happened so fast that we have gone from not just having domain names for businesses, but also mobile apps.

“In five years time, I believe every organisation will have an API,” says Arrigo. “It’s an inevitable outcome, but I don’t think Australian businesses realise that yet. But it’s inevitable, especially for businesses that are cloud based; if you’re cloud based you have to have an API, because otherwise how are folks going to consume your services?”

This forecast seems logical; it’s the natural progression of future companies, particularly in the technology sector. It is understandable why companies like Telstra, Qantas, Dropbox, AMP, NRMA and others want to start getting this area of growth ingrained into their company infrastructure so immediately. Rather than sit back and allow new businesses to eat away at them, there is a massive opportunity for them to provide these new businesses with underlying software that supports them but on the flip-side continues to grow and strengthen their own operations.