Last year I was part of a hackathon called AngelHack. It was the first time that AngelHack made it out to Toronto and I joined a group of friends to participate. We developed an API meta-layer over cloud storage. By using us you could integrate every cloud storage system we supported into your application. Not being content with just that we built a few tools that ran on top of our API that would allow someone who wasn’t very technical to add some cloud-capabilities to their website. We allowed them (with a couple lines of code) to modify every file upload button on their website to our interface that would let them select any service we supported and select files from there. We could also do the reverse – allow a website to push files down to the cloud storage account that a user selected.
But we were an API company. The tools were provided were meant to allow for mass adoption of our API’s but unless you wanted something vanilla you would need to dive into our API.
After a lot of market research, and even some successful pilots we decided to stop playing in the API space. See the problem is that our market segment was very niche. We thought it was a lot bigger than it was. Our market segment was really programmers who were building something that was technical enough that they needed this functionality, but non technical enough that they were able to waste time building it all themselves. We required that a company be working on a consumer facing application, wanted to tie in to various cloud storage services but didn’t want to do it themselves. Oh, and the company couldn’t be TOO big because then they’d do it themselves, and they couldn’t be too small or then they would HAVE to do it themselves.
But see, that’s the problem with API companies. They tend to be niche products that will have some success in their niche, and that’s it.
I wondered why for some time – why aren’t there any big API companies? What stops that from happening? And then I realized – As an API company, what we are selling are some awesome made Lego bricks. We even sell them in a pastic bag, so you can take a look at our bricks and see how awesome they are. We provide you instructions on how to use the bricks. We even show you how some bricks work. But you’re not trying to create something from it. You buy our bag of bricks because you saw a brick that you needed and you figured it’s easier to get it from us than actually making your own bricks. We missed the whole point of the bricks.
See Lego doesn’t sell the bricks. They sell the picture on the box. The bricks are just a mechanism to achieving what you want – the picture.
API companies, because of the nature of what they do, don’t provide this picture. That’s not what they do. Instead API company founders tend to be very smart, technical people who see the true beauty of the bricks. They revel in the bricks. In their minds eye that can twist and contort any number of the bricks. They can fit them together and build any number of amazing things. They get caught up in the bricks themselves. They never sell the amazing things that you can build with the bricks – they sell to other programmers and leave it to them to build the products.
