The best way to go about making money from APIs is by keeping it free
Disclaimer: YourStory.in was a media partner for the event on Emerging Cloud Trends & Leveraging the Cloud API Economy
Cloud and APIs are two of the most buzzing words in the technology product space. Hordes of businesses are being based in and around the area and the whole ecosystem is still taking shape. Amidst this, there are some players who have cracked the nut and St. Mark’s Hotel in Bangalore was witness to some highly engaging discussion demystifying the subject.
The event organized by TiE Bangalore had Sendgrid and Twilio which are two of the most popular success stories in the startup space globally along with Bessemer Venture Partners, a VC firm who knows the area well (10 laws of cloud computing) on the panel. The representatives from the three were present to discuss some of the teething problems in the space and ways in which they have tackled them.
SendGrid entered and sorted out a space that many people shied away from: emails. SendGrid is the company that provides APIs to companies that send out auto emails. Say, the mail you get when you become a mayor at some hotel on FourSquare or sign up for Pinterest. SendGrid manages monstrous amounts of data and shared some of their learnings from the years. Twilio, on the other hand is into cloud communications and provides APIs for voice, VoIP and Text Messaging. They have some of the biggies like Airbnb, Intuit and Hulu as their customers.
The best way to go about making money from APIs is by keeping it free. Yes. Sharing their story, SendGrid CEO Jim Franklin informed the audience about how they keep their APIs free for all but charge only after a company reaches bigger volumes. That way, you’re telling the company that you’re not there to loot them because the API provider will earn only if the customer grows. A key adoption tactic is to reduce friction for using the service by providing complete functionality, but limited number of accesses to the API for free. Once companies start using the free APIs, they realize that the process is simple, and lets them focus on their other core competencies and trust the API. Many graduate to paid users after tasting this convenience. This is usually the best way to build a customer base.
Focusing on enterprises and drawing from their experience, the panelists had some deep insights on the topic for the early stage entrepreneurs in the crowd. For a developing ecosystem like India, the participation of global players is a huge thing and Bessemer Venture Partners is also conducting the hackathon focused on APIs which will further invigorate the system.
