{"API Investment"}

My Challenges When Taking Money From Startups As The API Evangelist

It is a hustle to do API Evangelist. I've been lucky to have the support of 3Scale since 2013, without them API Evangelist would not have survived. I'm also thankful for the community stepping up last year to keep the site up and running, keeping it community focused thing, and not just yet another vendor mouthpiece. I make my money providing four ad slots on the site, by selling guides and white papers, and by consulting and creating content for others. It is a hustle that I enjoy much more than having a regular job, even though it is often more precarious, and unpredictable regarding what the future might hold.

Taking money from companies always creates a paradox for me. People read my stories because they tend to be vendor neutral and focus on ideas, and usable API-centric concepts. While I do write about specific companies, products, services, and tooling, I primarily try to talk about the solutions they provide, the ideas and stories behind them, steering clear of just being a cheerleader for specific vendor solutions. It's hard, and something I'm not always successful at, but I have primarily defined my brand by sticking to this theory.

This approach is at odds with what most people want to give me money for. 3Scale has long supported me and invested in me being me, doing what I do--which is rare. Most companies just want me to write about them, even if they understand the API Evangelist brand. They are giving me money, and in exchange, I should write about them, and their products and services. They often have no regard to the fact that this will hurt my brand, and run my readers off, falling short of actually achieving what they are wanting to achieve. I get the desire to advertise and market your warez, but the ability for companies to be their own worst enemy in this process is always fascinating to me.

I get regular waves of folks who want to give me money. I'm talking with and fending off a couple at the moment. So I wanted to think through this paradox (again), and talk about it out loud. It just doesn't make sense for me to take money from a company to write blog posts, white papers, and guides about their products and services. However, I feel like I can take money from companies to write blog posts, white papers, and guides about an industry or topic related to the problems they provide solutions for, or possesses a significant audience that might be interested in their products and services. I consider this underwriting and sponsorship of my API Evangelist research, where they receive branding, references, and other exposure opportunities along the way.

Ideally, all branding, reference, and exposure elements are measurable through the tracking of impressions and links. What was the reach? What is the scope of exposure? It is difficult to sustain any relationship without measuring success and both parties are unable to articulate and justify the financial underwriting and support. In some cases, I get paid a finder's fee for referrals, but this can be very difficult to track on and validate--something that requires a company to be pretty ethical, and truly invested in partnerships with smaller brands like me. I prefer to rely on this, as opposed to any sort of affiliate or reseller style tracking systems. I like companies that ask their customers, "how did you learn about us?", as they tend to actually care about their employees, partners, other stakeholders at a higher level.

Sometimes I take an advisor, or even technology investor role in startups, taking on a larger stake in outcomes, but these are something that is very rare. I have a manila file folder filled with stock options, and stakes I have in companies that never reached an exit, or when they did I was written out of things--when I do get a check from startup founders, I'm always floored. This does happen, but is truly a rare occurrence. I wish there were more decoupled, plug and play opportunities to invest in startups as an advisor, researcher, analyst, and storyteller, but alas the system isn't really set up for this type of thinking--people prefer the big money plays, over smaller, more meaningful contributions--it's about the money man.

Anyways, every time I visit this conversation in my head I come back to the same place. I'm happy to take money from companies to generate short form and long form content about an industry or topic. If there are finder fees for referrals, great! I leave it up to you to track on and come back to me with the details, and any specific event--while I will stay focused on what I do best, the thing you are investing in me to do. I'm mildly interested in opportunities to become more invested in your companies overall success, honestly, I just don't trust that the system will deliver in this area, and is more often just looking to extract value from me. I have seen too much in my 30-year career. However, I always welcome folks who want to prove me wrong! ;-)

In the end, my mission stays the same. I'm interested in studying where the API space has been, where it is at, and where it might be going. Then, I am interested in telling stories from what I learn in this process. If you want to invest in any of this, let me know. I could use your help.

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Open Discussions About Funding API Startups

It made me happy to read the Rise of Non “VC compatible” SaaS Companies, and see that there are more sensible discussions going on around how to develop SaaS business, something that I hope spreads into the specifically API as a product startups and API service providers. I know that many of my readers think I'm anti-VC--I am not. Or may I'm anti-startup--I am not. I'm anti-VC and anti-startup ideology becoming the dominant religion, pushing out a lot of really good people and ideas who can't play that game.

When it comes to Silicon Valley, if you push back, you get excluded from the club, and there are waves of people who step up to tell you "not all startups are bad" or "not all VCs are bad"--I wish I could help you understand how this response makes you look. Of course, they aren't all bad, but there are bad ones, and there is a lot of rhetoric that this is the ONLY way you can build technology when it isn't. There are plenty of ways you can develop technology, and build a business without the VC approach, or the cult of the startup. 

There are more instructions you should follow in the rise of the non-VC compatible SaaS companies story, but the author outlines four types of SaaS companies, which I think applies nicely to APIi companies, as many of them will be SaaS  providers:

  1. Funded SaaS: companies which finance their business with VCs a.k.a equity against money. From early stage startups with no revenue to companies going public with hundreds of millions of dollars of ARR, the range is extremely wide.
  2. Bootstrapped “scaling” SaaS companiesSaaS companies which manage to pass the $10M ARR threshold without VC money. Ex: Mailchimp or Atlassian (which raise VC money but at a very late stage) have reached the hundreds of millions of dollars of ARR without VC money. These “unicorns among unicorns” are very rare.
  3. Bootstrapped SaaS companies: bootstrapped companies which manage to reach the $300k — $10M ARR range without VC money.
  4. Bootstrapped Micro SaaS: “1 to 3” people companies which operate in the $1k — $300k ARR range, without VC money.

There are some ideas that should go VC, but there are even more that should not. I want to see more talk like this about the funding realities of an API startups. A sensible discussion about what the goals are, how fast a company should grow, and whether the company is building a business to develop software solutions that we sell to customers, or a business to sell some large enterprise--hell, maybe even go IPO. These are all viable options for your business, I'm just looking for more discussion about the priorities. One more thing, you should be having this discussion out in the open with the customers you are supposedly selling your products and services to--this is the important part, not just the having of the discussion.

I'm not trying to get in the way of you getting super filthy rich. I'm just trying to strike a balance between you building a company, and the stability and availability of your APIs, and API tools and services, in an industry I depend on to make my living. You see, APIs have gotten a bad wrap for not being stable, and going away at any time. This isn't an API thing, this is a VC funded startup thing. When you are telling your companies that you are building a business, with products and services to purchase, and then everyone bakes your solutions into their solutions, and you go away--that sucks. If you tell people the truth from the beginning and are honest and communicative about what your plans are, people can build and plan accordingly--the problem isn't APIs going away, it is startup founders not caring.

I am just trying to strike a balance between your business aspirations, and those of the people I help convince to use your APIs. Many of them aren't trying to get rich. They are just trying to build a business, and get their work done with your service, tool, and API. Let's start having more honest and open conversation about the variety of business models available to use when building API startups, and remember that not everything is a VC-worthy idea, sometimes you are just a viable feature for regular business owners like me.

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Expressing My Concern About Startup Dependability When I Talk To VCs

I talk to venture capital (VC) folks on a regular basis, answering questions about specific API-centric companies, all the way to general trends regarding where technology is headed. This week I was talking with a firm about the viability of one of the API companies I work with regularly, and the topic of startup dependability came up, as we were talking about the challenges this particular startup is facing.

While I am using this particular startup in my business operations I expressed concern about the viability and stability of the startup in the long run. This concern has less to do with the startup, as I fully trust the team, and the technology they develop, it is more about the nature of how investment works, as well as the looming threats for the 1000lb pound gorillas in the space. I just do not trust that ANY startup will be around in coming months, and I craft my API integrations accordingly--always with a plan b, and hopefully a plan c waiting in the shadows.

This isn't just me. I've had similar conversations with companies of all shapes and sizes, university technology groups, as well as government agencies. After each wave of startups failing or achieving their exits, us end-users who are often in charge of purchasing decisions are suffering from whiplash, and our necks hurt. Every time there is a new tool on the table, we are asking ourselves whether or not it is worth it this time. Should we be investing in yet another software as a service that will likely go away in 12 to 24 months? The burden on us has been too high, and we are left feeling like the startups and their investors really do not give a shit about us--they have their own business model that they are moving forward with, where we are just a number.

There are no guarantees in business, but startups and VCs aren't doing enough to address the dependability of their portfolio companies. At some point, it will catch up with them, if it already isn't. As the API Evangelist, I am already toning down my excitement over new startups because I really do not want to be responsible for helping convince people to adopt a new tool, and then be held accountable when the startup goes away. Each week I have an inbox full of startups asking me to write about them, and most of them are unaware of how much my neck hurts, they are narrowly focused on their vision, with little concern for the rest of us, as long as they get their payout.

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Reconciling How Reliable APIs Are While Also Embracing Tone Set By VC Investment

I have done a lot of reading in the last week, catching up on my monitoring of the API space. I have read a couple of posts about the reliability of APIs, and the overall viability of building applications, and businesses based upon them. A couple of the posts were focusing on the shuttering of ThinkUp, but a couple others were just part of the regular flow of these stories that question whether we can depend on APIs or not--nothing new, as this is a regular staple of bloggers and the wider tech blogosphere.

My official stance on this line of thinking is that I would not want to be building a business, and application that depends on leading API platforms like Twitter, Facebook, Instagram, and others, but I will happily build a business, applications, and system integration on APIs. You see, this isn't an API issue, it is a business and vendor viability issue. As with other sectors, there are badly behaved business, and there are well-behaved businesses--I try to choose to do business with the well-behaved one's (can't always achieve this, but I try).

I find the ongoing desire of the startup culture to point out how unreliable APIs are, while simultaneously supporting the overall business tone set by venture capital investment, often delusionally blind levels of support, is just not reconcilable. I'm not saying all VC investment is bad, so don't even take this down that road. I am saying that the quest for VC investment, and the shift in priorities once VC investment is acquired, then further shift with each additional round, and the final exit is setting a tone that is completely at odds with API reliability. 

The problem really begins when APIs become the front-end for this blame. If I depend on vendors for my brick and mortar store, and the delivery trucks don't reliably bring my products, I don't talk about how you can't depend on trucks--I find new vendors. Of course, I can't find new vendors if they can't be replaced like Twitter and Facebook, but this is a whole other conversation, although it is also one that is a symptom of the tone being set by the VC currents (this is a business conversation). Blaming APIs instead of raising questions about the business ethics bar being set by venture capital shows the blinding power of greed, as the tech community refuses to blame VC $$, and shifts this to being about the viability of APIs, because I will get my VC $$ some day too bro!

I am not saying APIs are always good. I'm just saying they aren't bad. Hell, they aren't neutral. They are a simply a reflection of the business behind them, as well as being a reflection of the industry they operate in. Stop blaming them for businesses not giving a shit about developers, and the end-users. Maybe we could start changing the tone by admitting the #1 priority is always set by VC $$, and not by our API community, or even our end-users and customers, and all this shit is out of whack.

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