apidays New York 2023 - How to treat your APIs as a Product, Derric Gilling, Moesif

apidays New York 2023
APIs for Embedded Business Models: Finance, Healthcare, Retail, and Media
May 16 & 17, 2023

How to treat your APIs as a Product
Derric Gilling, CEO Moesif

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Transcript

1. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Productizing & Monetizing APIs
2. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Who am I? • Co-founder and CEO of Moesif, the leading API analytics and monetization platform • Focus on API first strategy, growth, and PLG • I love IPAs! derric@moesif.com
3. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 3 Shipping an API Product Business Model Architect Build Publish & Serve Grow & Monetize Measure KPIs Iterate or Deprecate Business Engineering
4. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Each API business is different What to meter usage? Prepaid vs Postpaid Tiered vs Pay As You Go (PAYG) When to invoice 1 3 4 2
5. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Business Model aligned to Customer Value Name Example When to use Transaction volume Number of API Calls, Messages Sent APIs and event-based platforms such as SMS and analytics Revenue/cost share % of revenue, transaction fee Platforms focused on money such as payments or expense reporting Data volume Gigabytes sent, Minutes made Platforms focused on data such as logging or storage User-centric Monthly unique users that are active A modern version of charging per seat or per user Resource Compute Units, active hours Compute infrastructure such as a database or virtual machine
6. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 1. Billing Strategy Prepaid billing: Customer purchase credits / quota ahead of time that is then later consumed Pros: • Better cash flow • More familiar with traditional enterprise Cons: • Friction in onboarding • Harder with PAYG Postpaid billing: Customer only pays for their usage after service is already consumed Pros: • Less onboarding friction • Makes PAYG easier Cons: • Additional credit risk • Can be abused
7. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 2. Packaging Strategy Tiered Pricing: Traditional SaaS pricing with predefined suite of features/capacity for each tier Pros: • Enforces a min spend • Predictable for customer • Easy to implement Cons: • Friction in expansion • Rigid, not aligned to value Pay As You Go: Usage-based or consumption-based pricing based on a unit price Pros: • More efficient for customer • Less friction in expansion • Can “appear” cheaper Cons: • Can upset customers with billing surprises • Complex to implement
8. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 3. Invoicing Strategy Recurring: Customer invoiced on a schedule like each month, quarter, or year Pros: • Easier for revenue recognition/GAAP • More predictable Cons: • Bad unit economics for low cost SaaS • Complex if prepaid Threshold: Customer invoiced only after a credit threshold is met (can be prepaid also) Pros: • Reduced transaction cost • Makes prepaid easier Cons: • Harder for finance to recognize revenue • Company liability
9. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 9 Metrics for API Products Business Model Architect Build Publish & Serve Grow & Monetize Measure KPIs Iterate or Deprecate Business Engineering
10. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Infrastructure metrics align to engineering goals, not product goals. Uptime SLAs Resource Utilization Performance Requests Per Minute Errors 1 2 3 4 5
11. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Product owners should focus on one of three business goals Adoption Engagement Retention
12. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Adoption: Reduce Time to Hello World First Hello World First Working App Sign Up
13. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved What to measure? A developer could stay in a single stage for days. You should track both: Conversion rate for each step Time to reach next step
14. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Engagement: metrics should measure customer value eCommerce SaaS Data API Logistics API Checkout conversion rate Usage of integrations and extensions Match rate/found in database Successful order fulfillment
15. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Retention: Grow long term customers Good product retention curves flatten or look like a “smile”
16. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 1 6 Growing an API Product Business Model Architect Build Publish & Serve Grow & Monetize Measure KPIs Iterate or Deprecate Business Engineering
17. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Selling to developers is hard Individual developers have a lot more autonomy and authority Developers can be skeptical of sales and marketing Buying is much more decentralized than before Not invented here syndrome (NIHS) Developers can build it themselves! 1 3 5 4 2
18. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Sales focus on high ROI opportunities Customer already seen value before sales engages Growing usage, automatic expansion Consultative, how to get more value Help meet certain requirements 1 3 4 2
19. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Developers need buy-in from many stakeholders Legal and Security ROI vs Risk/Cost Finance and Procurement
20. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Self-service reduces friction Legal and Security Product priorities Finance and Procurement Click-through ToS Fast integration Manager’s Credit Card
21. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Then, sell through developers Developer on a self service Enterprise requirements Increase usage Other teams / use cases
22. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved The pitfall of self-service… Account management is not scalable Issues during onboarding Changing business needs Billing surprises and issues
23. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Reduce support time with self-service management • Provide visibility and reports on what's consuming their quota • Provide tools to upgrade and manage their account without involving personal
24. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Avoid surprises with self-service account communication • Automatically notify customers when they approach or breach plan limits • If Pay As You Go, empower customers to set their own usage thresholds
25. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved 2 5 Growing an API Product Business Model Architect Build Publish & Serve Grow & Monetize Measure KPIs Iterate or Deprecate Business Engineering
26. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved Don’t break their stuff. Handle deprecation gracefully Leverage in-app notifications You’re using an outdated SDK
27. Confidential and Proprietary. © 2023 Moesif, Inc. All Rights Reserved API Analytics and Monetization Derric Gilling derric@moesif.com https://www.moesif.com/casestudies