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APIs for the the next generation of business

As the CEO of Apigee, a platform for APIs, Chet Kapoor is intimately familiar with the powerful applications of APIs for businesses. He sat down with Quentin Hardy to give his take on how businesses can think about integrating APIs and how it affects modern business models.

Read the transcript and watch the videos below.

Beginning digital transformation

Quentin Hardy: Since, since last November's acquisition, I imagine you've met with several hundred business leaders, CEOs, university professors, government officials. What is the common big issue for many of them?

Chet Kapoor: They all want to change. They see what's happening in the world, and they're looking for direction from us: best practices based on who we are as Google, best practices based on the hundreds of thousands of customers that we talk to, that we can bring across industries because it's not just about what you can do in health care. Right? When Cleveland Clinic talks to its patients, it's the equivalent of a retailer talking to its customers so how do you take the best cross-industry practices and bring that to them? And that's going to happen in two parts, right? One, great technology that's very innovative: machine learning, APIs, whatever else it might be, but the second is the automation part. Making it easier for the people to actually make the transition and working closely with our partners to make that happen, but I think the single-minded focus that we have, or I have, with all our customer interactions is focusing on how can we move them faster?

Hardy: And it seems that often, the sticking point for a business is not so much technology adoption but the fear and uncertainty associated with technology adoption. They can see why the business has to go there — but how can they grow and prosper in this new world?

Kapoor: Start walking the path. The rules are different now. If I talk to a Telco service provider, they would tell you that their planning horizons is to be five years because they would have to put up towers for LTE and things like that. And they still have to do that, but as T-Mobile has proven, customer experiences matter, and so the best thing you can do is, you are not going to have all the answers, and not every rule that you had in the past is going to apply. So, the best thing you can do in this new world is start walking the path, start delivering projects because you will learn more from your customers than you ever have.

Hardy: And you think the best first projects would be?

Kapoor: My recommendation is pick a great team, pick a mission-critical project that is customer-facing. It cannot be a science project. It has to be something that's mission-critical, that's important to you. It can be thin, doesn't have to boil the ocean, but it's got to be something that you can measure, impact that's visible, right? And there is a possibility you'll fail, but that's how you're going to learn as you go forward, and so the concept that I talk to CIOs and CTOs and CEOs about your customers are the best product managers that you have not hired.

Kapoor: Let them help you with your business because customers now participate, right? If they like a brand and they have brand affinity, they'll actually participate and tell you what's right and what's wrong. Right? Learn from them so that you can get better at what you do.

How to think about APIs

So, think of them as a door into

your applications and the data

that you have stored inside your

enterprise. It is how you create

new customer experiences as you go


Hardy: For those who don't know, what are APIs? What does it stand for and what do APIs do?

Kapoor:  It is how you create new customer experiences as you go forward. Think about Google Maps. They took all this functionality that they did with Maps and made it available as an API, so any developer could actually access that API and take the functionality that this rich Maps application had, and embed it into what they were building.

The business case for APIs

Hardy: Why should business leaders care about APIs?

Kapoor: The way customers interact with the institution or the enterprises are very different today than they used to be. Customer experiences are based on the data that enterprises already have. Unlocking that through a front door and making sure that your applications can use them, so you can deliver the right experience to a customer on a mobile device or IoT device — or whatever else it might be — is really, really important. 

But then there's a second part of creating new business models. It's about creating new ecosystems that you couldn't do before, and that's when you start thinking about the API, not as enabling technology, but think of APIs as a product. It becomes a business construct. Great example is Walgreens. Been around for a long time, has a lot of brick-and-mortar stores. They decided that they had this really nice Quick Prints application that you access from the web, and they saw mobile coming about five years ago, and they said, "We have to create a way where you can take a picture on your mobile device, and be able to upload it directly from your mobile device onto Walgreens." So what they did was they took their Quick Prints application, and made it available as an API, and they created mobile applications on that: iOS, Android, things like that, and that was hugely successful. People that used Walgreens mobile apps spent six times as much money as people who didn't, because they printed photos, they went into Walgreens and bought other things, so there was a clear pattern on creating a new customer experience and getting more revenue from that, but they didn't stop there. They took the API and said, "Let's make it available to all the apps that want to print, because printing on a mobile device is not easily accessible," so they now have an entire new business where these photo APIs, this Quick Prints API, is being accessed by partners, by people who are creating apps, and this entire new revenue stream that is coming in from partners. So that's
Walgreens is a great example of somebody that used APIs for enabling the customer experience, but created this entire new business model that they wouldn't have been able to if they'd not exposed it as APIs.

Hardy: So a lot of people can create platforms?

Kapoor: Absolutely. So, a good example of that is Ticketmaster. They actually transact about $1 billion of ticket sales through their internal API. Now, they want to take that and make it available to all their partners. So, think about wherever you want to procure a ticket, right, wherever whatever application it might be, you should now be able to use the Ticketmaster API, and be able to use it and buy your ticket. So, if I want to give a complete experience through my Google device, or my Google app, I should be able to use the Ticketmaster API, go and buy something, and never touch the Ticketmaster website at all, but I should be able to access the API and make that happen. They are on track to create a billion-dollar business on in a B to B context, in the next five years. They're going to double their API business and the second billion is going to come from B to B.

Hardy: APIs are like a, a bridge between your business and all of the services. The simple device that the developer uses to create a relationship between the customer and the cloud without a lot of technical work in the way.

Kapoor: Every CIO, CEO that we have discussions with they all know they need to change. We're not at a point where they need to know that they have to change. They know they don't want to get Uber-ized. They know they don't want to get disrupted. They're well aware of that. Their biggest questions are "What do we need to do" and "How do we do it?" Do they have the right technology and do they have the right people to go off and make that happen? And as a cloud provider and as a multi-cloud provider, right, with Apigee and Google, we focus on both. I mean, these are multi-billion-dollar companies multi-billion-dollar companies that are functioning well. So, how do you leverage the best of what they have and bring them into the future? And that's what we, as Google, have to leverage it through APIs. Leverage it through ML, through machine learning, take all of that, but also make sure that some of the people can actually help make that transition as well.

How APIs create new business models

Hardy: When I think of APIs, one thing I think about is it's a kind of collaboration.

Kapoor: Correct, correct.

Hardy: I'm exposing my data to work with another part of an organization, or a customer, or a developer.

Kapoor: APIs open up business partnerships that you may not have thought of before. I'm a runner, and I use the Nike running app. When I go for a long run, I would love a small alert to come up: "Hydration center, half a mile from now." Right? And I take my phone, and I stick it right by the Coca-Cola machines, and out comes a bottle of water. Normally, you would think, Nike, Coca-Cola, Android pay, not the it doesn't  it's not obvious. But now, it's an entirely new ballgame, or an example is Uber and Spotify. I order an Uber, I get into my Uber, and I have my Spotify playlist, and it's playing in the car through the car's stereo system. All of that is enabled through APIs. It gives you a chance to create business partnerships and business models that you would never have had access to.

Hardy: This is the "software is eating the world" model times 10.

Kapoor: Yeah, absolutely.

Hardy: Basically, the API, you're telling me, is a method by which you can virtualize any experience you can imagine.

Kapoor: The conversations that CIOs and CTOs are having with their CEOs and CMOs are about APIs as a business construct. How do they go off and think about interacting with their customers through APIs — because their customers could be businesses — or interacting with new business partners that they'd never had a chance to. And that's where, I think, the API economy that a lot of people talk about, is going to be around for a long, long time to come, above and beyond APIs as an enabling technology.

The intersection of APIs and artificial intelligence

Kapoor: In a recent conversation with Toby Cosgrove from Cleveland Clinic, this came up. They want to make sure that they can augment human judgment with AI and machine learning. For that, they need to just make sure that they can safely make the data available to things like DeepMind from Google, or whatever else it might be, where we can actually take the best practices for all these great results that we have, and actually come up with it so that everybody can share in it, so we're augmenting what the doctor's perspective might be with data. But the second part is, how do they interact with their patients? Why can't I talk to my Google Home and make an appointment? Right? And actually have a conversation, instead of picking up the phone and saying 1-800-Cleveland Clinic. Those are the two things that they're focused on, and Apigee and Google are well on our way to helping them out.

Hardy: Now, you talk about businesses where there might be thousands of APIs.

Kapoor: Correct.

Hardy: How does thousands of APIs not become a managerial nightmare?

Kapoor: A lot of people, have a view that all APIs need to be in a directory. Google has had this perspective on very large-scale computing. You have to figure out a way to make sure that you can secure them, you can scale them, you can analyze them, or monitor and analyze them, and you make them really easy to use. When you're doing customer-facing apps, it's only a few APIs: 5, 10, 15. The moment you bring that in and you say, a company like Chevron as an example, or a company like T-Mobile, or Verizon, or others, right? Massive enterprises. Then you start seeing thousands of APIs, but the principles remain the same. The principles are, are simple. It's not through traditional governance. You're almost bringing the Web to the enterprise You need heavier governance, but you don't need a heavy, old, classic, "everything needs to go through a committee" perspective.

APIs in business

Hardy: How should I think about APIs and their role inside my business?

Kapoor: This whole concept of APIs, as a business construct, as a way to do business, is something that's catching on in the industry. It used to be something that used to be talked about, but now it's a reality. We as Apigee, have always taken an approach that this is, this is mostly about a strategy, and a business initiative, and then about a product. You can always come to Apigee.com. You can go to Youtube.com and we have an Apigee channel. We have lots of customers' stories there as well, to make that happen.

Hardy: A good API management system provides a lot of customer information as well.

Kapoor: Absolutely.

Hardy: It is a window onto behavior.

Kapoor: It takes what Search does, but takes it to the next level, and when you see those interactions, you can make recommendations, right, based on it, so our there are many of our customers who are in the advanced stages of actually learning from the APIs and changing the behavior of the application based on the interactions that customers are having with the APIs.

Hardy: So, in that sense, the learning is there.

Kapoor: Yes.

Hardy: You just have to harvest it off the management dashboard in a different way.

Kapoor: Absolutely. Absolutely, and the goal is to do it based on rules that humans have set, but you don't actually have to have them in the loop while you are implementing those changes. The interesting thing is, if you look at a simple app, right? I get up in the morning, I come to work. My device now knows, whether it's an iOS device or an Android device. It actually knows I go to work around 8:00. It tells me predictably it's going to take you 52 minutes, or 42 minutes, or 32 minutes, based on traffic. Google has automated that process, and I'm sure Apple has as well. How do enterprises do that for their business, right? And so that they can set the rules and then let the system do all the heavy lifting.

On Apigee and Google

Hardy: I don't understand the Google/Apigee relationship that way.

Kapoor: It's great, it's great.

Hardy: Google bought Apigee, and Apigee stands alone because Apigee is going to bridge to other clouds? Is that what's going on here?

Kapoor: So, every enterprise uses multiple clouds by definition. They have a private cloud, and even if they just use one other public cloud, they are multi-cloud by definition. What are the tools around security, monitoring, APIs, and integration so that people can do multi-cloud successfully? Because they need to see where the data is, they need to make sure it's secure, because they still have to follow compliance, so they have to monitor it, and they have to integrate to all aspects of it. That's what Apigee is evolving to. We're already cloud-agnostic, right? Our first conversation with the customer is, “We do it on-premises, we do AWS, we do GCP, and whatever else you want it to be.”

Hardy: Any iPhone, Android device, whatever the smartphone is, is probably engaging in four or five or more clouds...

Kapoor: Correct.

Hardy: In terms of the different apps you've loaded, in terms of the back-end auctions...

Kapoor: Absolutely. Correct.

Hardy: That are going on around where data is stored or what ad would be placed any number of things.

Kapoor: Correct.

Hardy: And this is just a reality of modern business.

Kapoor: Absolutely. We are creating the framework and the technology to let them do that. Today, it's painful for them, right? And how do we automate that process for them? From a cloud-agnostic or a multi-cloud perspective?

Hardy: Right. So this is a Google product...

Kapoor: Correct.

Hardy: But it's also highly realistic about how the world works.

Kapoor: Absolutely, much like, by the way, Gmail. Gmail's available on the web, it's available on Chrome, on Firefox. It's also available on iOS, and so it's exactly that vein and how do we make sure it's available across multiple clouds? That's where we're heading.