APIs All the Way Down

Users. Many people in a company interact with a typical SaaS product (like Slack, Salesforce, Airtable, Asana), whereas only the engineers typically work with API-first companies.

Chris Sperandio, now at Stripe, wrote a piece while at Segment arguing that there needs to be a new, more dynamic model of a firm: the “Request/Response” model.

API-first companies are a subset of Software-as-a-Service (SaaS) companies, with a few key distinguishing features:

Business Model. The most common SaaS business model is to charge per seat, while most API-first companies charge customers by usage of the product, either based on Pay Per Call (each time the API is pinged, say if you’re sending an SMS via Twilio) or as a percentage of transaction size (Stripe charges 2.9% plus $0.30 for each transaction).

Use Case. Traditional SaaS products help employees get things done, APIs automatically do those things themselves.

Applications are just a bunch of functions that get things done: APIs wrap those functions in easy to use interfaces so you can work with them without being an expert.

In the press release, Stripe highlighted its partnership with Shopify, which is using Treasury to build Shopify Balance.

Purchasing Decision. Traditional SaaS is a department-head, IT, or exec purchasing decision, while API-first is typically a product and engineering purchasing decision.

They allow customers to focus on the one or two things that differentiate their businesses, while plugging in best-in-class solutions everywhere else.