The barriers to entry for API development are reduced thanks to the use of these programming building blocks. A new wave of young shoots is positioning itself on the subject with very profitable models.

Among the greatest successes of high-tech start-ups in 2016, several of them are based on the same technology: the API. Behind these three letters lies a major component of the success of the Silicon Valley giants since the turn of the 2000s, which has evolved over the last five years into a full-fledged product revolutionizing the creation of start-ups. This transformation is the subject of APIDays, a conference organized this Tuesday and Wednesday in Paris, accompanied by a report describing this new part of the economy.

Facebook and Google

The API is an  interface that allows two companies to communicate their applications in an automated  and programmable way. Their existence is not new: Facebook and Google have built much of their success on opening their APIs to developers from other companies. In 2006, the Menlo Park social network decided to allow them to "plug into" its "social graph", which gave them access to a user's entire network of friends.

Video game companies like Zynga are taking off thanks to this choice, which  allows Facebook to transform itself into a platform aggregating services  that would have been costly for it to build alone and recover valuable data. “  The integration of the Facebook button  – which is an API –  on all online media articles gives it, for example, access to the reader's journey on the site ,” explains Romain Huet, the start-up's developer relations manager. Stripe payment system.  This allows it to better target its advertisements: if you have read an article on virtual reality, you risk seeing an ad for this type of product appear in your feed  . Same principle for Google Maps, which by integrating with VTC applications like Uber, increases the number of trips on its platform and can thus improve its algorithm. “  APIs are the new patents: an asset that we decide to license under certain conditions  ,” summarizes Mehdi Medjaoui, the organizer of this conference created in 2011.

New wave of nuggets

It was at this time that a new wave of start-ups, whose only product was an API, began to appear. “  Until now, APIs were created as an additional functionality allowing a B2C company to extend the empire of an already existing product, social network or e-commerce ,” summarizes Romain Huet.  Now they are  created to allow other companies to get started . »  Stripe with payment , Twilio for voice and SMS communications, Mailjet with targeted email campaigns, DocuSign for electronic signature, Algolia for the site's internal search engine, Checkr for verification of employee qualifications a candidate… All these companies offer bricks which, stacked on top of each other, allow entrepreneurs to automate the fundamentals of a business .

“  Developers no longer need to code everything from A to Z and can thus concentrate on the heart of the product they are developing  ,” believes Romain Huet. They just have to  pay for the API as a service  - by paying a commission on each transaction for Stripe, or by taking out a monthly subscription for Algolia... So, while Uber had to hire dozens of employees to take care of payments In its early days, Lyft, which arrived a few years later in the same market, only had a team of 2 people dedicated to payments.

Highly profitable businesses

These APIs contribute to a considerable reduction in entry barriers for start-ups. According to CB Insights, the cost of arriving at a minimum viable product was $350,000 in 2005, compared to… $4,000 in 2011! The time it takes to grow has also decreased, according to data from London-based venture capital fund Atomico. Thus, to reach 100 million users, companies created between 2003 and 2009 needed seventy-two months, compared to twenty-five for those born after 2009.

According to a survey of 311 UK start-ups in June by Stripe and Tech City UK, entrepreneurs still lament the lack of quality APIs in the cybersecurity and regulatory sectors . But it shouldn't take long, given the interest of investors in these companies: "  These are very profitable companies, because they can  "scale"  at zero marginal cost: it's self-service, all you need is a well-made documentation and word of mouth for developers to use your API  ,” concludes Mehdi Medjaoui.