Twilio and Stripe are seeing explosive growth in 2020, highlighting a major software industry trend that’s getting gobs of VC investment (TWLO, SHOP)

Twilio co-founder and CEO Jeff Lawson

Summary List Placement

Whether you know it or not, you probably use apps built with application programming interfaces every day. 

APIs are tools that link together data and features from multiple different apps to allow them to essentially “talk” to each other. People can make payments on DoorDash or Postmates thanks to Stripe’s APIs, make calls directly from Airbnb and Yelp’s apps thanks to Twilio’s APIs, and get location updates on Uber thanks to Google Maps’ APIs. 

API use has become has become so critical for companies, that there’s been an outcropping of firms that specialize in building APIs specific to categories like security, payments, feature management, search, shipping, content management, databases, and more. And many of those companies are seeing strong growth. 

For instance, the e-commerce platform Shopify’s stock price has more than doubled since the beginning of the year, while the cloud communications platform Twilio has seen its stock nearly triple. And in April, the payments platform Stripe raised $600 million in funding at a whopping $36 billion valuation. 

Experts don’t see this growth slowing down either, citing the need for companies to use APIs to build more effective products faster as they move to a cloud-based software model. And as companies move their businesses online during the coronavirus pandemic, the growth of API companies has accelerated, too.  

“[Using APIs] unleashes flexibility – the ability for you to take code and help you innovate,” Chee Chew, chief product officer at Twilio, told Business Insider. “It also allows you to take code and change it and adapt readily.”

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The value of using an API 

Developers love APIs because they allow them to build better products, more quickly. They essentially offer developers a prepackaged solution for a given capability that they can easily customize. Sure, developers could build those same functionalities themselves, but they would be starting from scratch on something that has already been created by domain experts.

Using APIs built by companies that specialize in them, like Twilio and Stripe, allows developers to cut out some steps, which speeds up the app-building process, comes with built in reliability, and still allows plenty of flexibility. 

“They become building blocks for developers to build on it faster,” the CEO of API development platform Postman, Abhinav Asthana, told Business Insider. “Developers are driven by consumer and business needs. Consumers want broader functionality. [APIs are] the fastest way to build it and focus on what the company is good at.”

Why API startups are so hot right now

About 20 years ago, integrating APIs into your project was a much more complex process, according to Gartner research analyst Mark O’Neill, but it’s become a “hot area” because that has changed. 

“APIs as a concept are not new, but what is new is what skills are there, and there’s a lower barrier of entry and more usage for APIs,” O’Neill told Business Insider. As companies like Stripe and Twilio have seen such success, “investor interest” has risen as well, he said. 

For instance, startups like Auth0, MessageBird, Netlify, Postman, RapidAPI,, …read more

Source:: Businessinsider – Tech


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