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Hiring via API

It is easy for a team of developers to start a startup right now. Indeed, many are. There are now over a hundred developers in each new Y Combinator class! These are people that could otherwise be working at your company.

Why would someone start their own company rather than joining yours?  It isn’t because they are likely to make more money.   A developer has a much higher expected return going to work for Google, Dropbox or Square than doing their own thing. I believe it is culture, not money that is driving their behavior.

“Do my own thing.”  
I speak with lots of developers every week. If they are good I try to hire them. If I fail it is rarely because they choose another startup. Usually they say “I want to do my own thing.”  This translates to “I want to decide with who, how much, and on what I work.” This is a culture decision. This may be working only 20 hours a week. This may be working from 8pm-8am wearing PJs.  This may be working while traveling in Asia.

If there is all this talent out there “doing their own thing,” how does a company capture their value?
The simple answer is to become their customer. And no, i’m not talking about contract work.

I’ve never met a talented person who said “I’d rather do contract work.”  Developers don’t like equating their time to dollars.  They don’t like working on someone else’s stuff.  Good developers want to be as close to their customer as possible.

Partnerships written in code
Luckily APIs are an innovation that allow developers to create meterable value for a company without being employed by said company.  A developer gets paid for the value they create not the hours they put in.

Instead of building a notification system for your iPhone app (requiring an additional engineer and $150k in total costs), it is easier to pay Urban Airship a fraction of a penny every time you send a notification.

I encourage developer teams to make a meterable service that many companies need but don’t want to build themselves.

As a company scales they may end these API partnerships and vertically integrate – building every piece of their service and value chain. At 2M notifications per day, it might make sense to build your own Urban Airship. But maybe you don’t ever want to get into the business of sending notifications, and you don’t have to.

It is often said the best path to success is focusing on what you are good at. Everything else you should outsource to a partner.

APIs are partnerships written in code

Case Study: Sincerely Inc.
At Sincerely, many aspects of our service and business have been written by people who don’t work for us:
Postmark – instead of running our own SMTP server.
Appirater – instead of writing our own app review notification system
Hoptoad – instead of building our own crash reporting system
Urban Airship – instead of buildling our own notification system
Geckoboard – instead of making our own dashboard
Linode – instead of owning and running our own servers
Flurry – instead of writing our own analytics
Instagram – instead of creating our own community of photo content
Github – instead of hosting our own repositories

How you can hire us
Sincerely’s focus is making it easy to send real photos in the mail from a mobile phone.  We’ve gotten good at collecting physical addresses from users. We’ve learned how to bill users for small transactions.  We’ve set up relationships with print centers around the world.  We’ve built powerful customer support systems that address the challenges of sending real things in the real world.

There seems to be a new photo app launching every week. It would be a huge undertaking for each of them to recreate what Sincerely has built.  Our Ship Library for iOS makes it easy for any app to add photo print & delivery functionality in less than 30 minutes.
I believe we’ll see a pattern of more companies launching APIs and launching them earlier in their life.  It is the first step of a biz dev strategy – and it is a step that developers are comfortable with.  We get to talk to each other with snippets of code.  We don’t have go through a big legal process to work together. We can even create value together without having money change hands.  Heck, you can scale to hundreds of partners without having a biz dev guy – sounds like something a lot of developers I know would really like to hear.

What services do you wish developers “doing their own thing” would build?

*There is a good discussion going on over at Hacker News – join in

  • Frank Neulichedl

    While I like the idea of outsourcing (that's basically what you are talking about) is great it has a major downfall – you don't have control over the future feature set of the products you integrate.

    Example Mailchimp: It's one of the best newsletter systems out there, yet their decision to not support “rule based email addresses” like info, office, etc. made them unusable for many b2b websites.

    So outsourcing makes sense to me for commodities (smtp- and webservers) and additional features (printing services), I would never use it for core functionality like a notification system.

    What is you experience?

  • brezina

    really good points frank.  I think each company needs to decide what will be the core value they create for their customers.  If something is outside of that realm you may be willing to sacrifice features working exactly as you would have built them.  If this decision becomes too painful over time (for you or more importantly your customers) you end up building your own solution. The API partner provides a useful stop gap in the interim.

  • Matt Williamson

    “APIs are partnerships written in code” — That's highly quotable.

  • pius

    Agree completely Matt … now let me into the Ship private beta! 😉

  • RobIsIT

    This is really interesting, Matt and a great way to look at API's and the future of development.

    What about value and reliability though?

    Here's a scenario:

    Lets say that my product has a robust API that has no limits on the way my core systems can be accessed and manipulated.

    I identify a group of customers who are asking for my product to process information in a certain way and output a report.  They're willing to pay for this functionality.

    So, I contact a few developers and tell them that I have a group of people with money they want to give me.  I tell the dev that I they will receive $1 for every query if they create a program that uses my API to process information and output the report.

    In this scenario, someone else controls the code, hosting and even the support for this income generating process.  Wouldn't this open things up to significant reliability problems?

    Also, whenever I build a new system, I consider the real value it has to my company as a whole.  While I would (presumably) be making more money by not hiring a developer full time to program the new functionality, but I wouldn't be adding a lot of value to my company.  I wouldn't “own” that new process and at any time.  Even if I was Twitter and there were 100's of services that completed the same function, the value would exist for them and not for me.

    I'm interested to hear what thoughts you have about this because this is an interesting approach to project management that I've never really thought about.

  • brezina

    I answered a similar question over in the comments on hacker news:

    “You've hit on one big risk
    in this new way of doing business. If Heroku or AWS or Urban Airship
    goes down, we all get pissed. This is why these companies emphasize
    their reliability and customer service.However,
    the better question is “would the service be more reliable if my team
    had written it?” People feel safer when they are in control (people are
    more scared flying than driving a car, yet driving is much more
    dangerous.). Chances are Urban Airship is going to offer a more
    reliable notification system than you would build yourself because this
    is the one thing they do.”In your particular situation, you are talking about outsourcing the whole product. You are just doing the customer discovery and sales.  In that case you aren't building a software company, you are building a sales & marketing organization.  Great software companies need to build great software that solves a problem for their users.  Elements of that system can be outsourced, but not the whole thing

  • Emanuele Rogledi

    this is exactly the description of talented developers

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  • Vincent van der Lubbe

    Question: Let's say I want to build a certain SaaS. How do I quickly find existing API's which make up the modules of my product? Does a good API directory exits which is also comprehensible (as a first layer) for non-techies?

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