THE BLOG
10/28/2014 11:52 am ET Updated Dec 06, 2017

Proprietary APIs: A New Tool in the Age of the Platform

For a long time now, apps like FlightAware have helped millions of air travelers track the location and status of their flights. If you're picking up your friend at the airport, it seems odd these days not to know the time at which he or she will arrive--even with inevitable delays.

But how does this magic happen behind the scenes?

The Age of APIs

Non-techies are probably oblivious to today's almost-pervasive usage of application programming interfaces. (At a high level, APIs make it very easy for developers to connect networks, individual devices, and information streams.) And that's kind of the point. Most of us aren't developers; we just want to easily use the cool stuff that developers create without jailbreaking our devices.

APIs have been a boon for companies like Amazon, Apple, Facebook, Google, Twitter, and others, a point I make in The Age of the Platform. Without robust ways to build apps and services, developers wouldn't be able to do what they do (read: create apps that improve our lives--and, of course, allow us to easily waste time). Brass tacks: Each company would not be nearly as successful without APIs and their cousins, software development kit (SDKs).

Foolish is the executive, though, who ignores the downsides of platforms and, specifically, APIs. Case in point: Howard Lindzon.

A few years ago, the founder of StockTwits learned this lesson the hard way. His company relied on the Twitter API to generate cashtags. When a user clicked on $AAPL, for instance, he or she would see financial information about Apple's stock price, financials, and the like.

Pretty snazzy, right?

Lindzon woke up one morning in July of 2012 to find that Twitter loved Lindzon's idea. In fact, Twitter decided to implement it, obviating the need for its users to visit Stocktwits at all. Aside from "old-fashioned" hashtags, Twitter now supported these very same cashtags. Thanks for the idea, Howard. Your check is not in the mail.

Lindzon was incensed. In his view, Twitter had hijacked his idea. Perhaps, but sans Twitter, it's very doubtful that StockTwits would have done nearly as well in the first place.

Brass tacks: in the Age of the Platform, frenemies abound. The same companies that let startups quickly blossom can quickly become scourges.

All of this begs the question: What's the solution to the platform dilemma?

More Tools Than Ever


Ah, if it were only that simple. Those looking for easy answers will continue to be unsatisfied; there is no one right way to crack this nut. Interestingly, though, some companies have taken to building proprietary APIs as a means of avoiding StockTwits-like situations. They understand all too well that it's incredibly risky to rely so heavily on powerful organizations and their APIs.

It's high time that organizations begin grappling with the costs of inaction.

For instance, a few years ago, third parties were scraping valuable flight data and metadata from WestJet Airlines' website. This was causing a number of problems, including increasing its site load time, a critical consideration for increasingly impatient consumers and search engines alike.

There wasn't much that WestJet could do about it circa 2012. Omitting this information from its site would curtail if not destroy its business. Without the data, how could a customer book a flight? WestJet would just have to grin and bear it.

Well, it's no longer 2012. Organizations today can put more arrows than ever in their quivers, a point underscored at this year's IBM Insights. In the case of WestJet, the company effectively built its own bridge via the IBM API Management solution. The technical details aren't terribly important here, but now apps like FlightAware can easily--and automatically--pull real-time data from WestJet (and other airlines) without any scrambling behind the scenes. Perhaps even more important, WestJet was able to exert greater control over one of its key business assets: its own data.

What's more, custom APIs are no longer the sole purview of very large corporations. It's never been more affordable for small businesses and mid-market organizations to do these types of things, a trend that shows no signs of abating. I'd also argue that these types of considerations have become more essential than ever. Every company is becoming a tech company; some just haven't realized it yet.

Simon Says: Stasis Is Not an Option


Two years is an eternity today. Organizations that refuse to embrace new tools, data, and ways of doing things run the risk of irrelevance. Far too often, execs focus on the cost of action. It's high time that they begin grappling with the costs of inaction.

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