The reason why CEOs of large companies are losing sleep
Musk's love story with Twitter, stumbling block for Stripe, APIs in the beauty industry, and more in this week's newsletter!
Do you know of the Bezos API mandate? It is one of the reasons why Amazon is a trillion-dollar company today.
Wait. Don’t go there; save it for later. I have something more interesting for you:
The crazy thing about the mandate is that Bezos issued it in 2002. Amazon was ahead of the curve.
And today, companies from different industries are copying Amazon. They are decoupling their business components into individual digital services. For communication between them, they use APIs.
Meanwhile, companies providing these business components as infrastructure (through APIs) have become unicorns.
Stripe in FinTech. Flexport for International Trade. Quandl with Financial Data. APIs are replacing invoices, freight forwarders, and terminals in these industries.
The good news? It is the beginning.
The bad? Getting ahead of the curve isn’t straightforward.
You need signals. That means reading countless industry reports and hours of market research. And catching up with a lot of news. Like a crazy amount.
And a lot of yawns. It gets boring. Trust me.
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Simple, no jargon, and no bullshit.
So now, like Bezos, you can prepare for the next wave.
Anyway, let's jump right into what Elon is cooking.
Elon and Twitter - can anything save this relationship?!
Elon’s love story with Twitter is getting complicated with every passing day.
First, he stalked them. Then, he publicly asked them for a date. When Twitter accepted, things looked great for a moment. Then, the pair announced an engagement.
But, as they expect a child, Musk wants to call the marriage off.Why? Because he suspects Twitter is cheating on him. But the social media giant doesn’t want to reveal its message history.
Do you follow? Let me break it down for you:
A recent letter from Musk’s lawyers has surfaced from Twitter’s filing against Musk (for pulling out of the acquisition).
In the letter, they blame Twitter for hiding critical information.
They point to Elon's repeated requests for “financial models, a budget for 2022, an updated draft, or budget, and a working copy of Goldman Sachs’ valuation model”. To which Twitter sent a pdf copy of Goldman Sachs’ final Board Presentation instead (College flashbacks! College flashbacks!).
It is not the only thing that irritates Musk.
He blames Twitter for giving his team a low rate limit for accessing their developer APIs (the letter says it was lower than what Twitter offers their largest enterprise customers).
Twitter, on their part, increased the limit on July 6. But by then, for Musk and the team, it was over. A dealbreaker.
For us, it’s a lesson to be flexible with our rate limits. Or we risk giving up a few (44) billion dollars.
“APIs have become as integral as shades for this beauty company.”
Normally, I am wary of beauty companies claiming huge strides in tech.
Everyone wants to be a tech company. It’s a multiples game.
So I dug into what volume of data L'Oréal is storing. It is a good indicator of a business's seriousness towards its tech. Or to their potential.
And L'Oréal is doing well.
They store 100 terabytes of production data and process 20 terabytes of data each month. That’s 10 times more data than what the Hubble Space Telescope produces yearly.
The way they do it is - they have separate digital services for each business component.
This way, a developer (within L'Oréal, their partners, or potentially external as well) can leverage the APIs available to access these digital services and create applications on top of them.
Their app store has 25 branded apps currently, ranging from trying on lipsticks to a learning hub for professional stylists.
It has also enabled them to make integrations with the big boys. You can go into the Amazon Shopping App for virtual try-ons of their products.
Not bad for a Beauty giant, eh?
“I finished that API integration”
— Changelog (@changelog)
Jul 8, 2022
Isn’t this all of us? 😂
A rare downturn for Stripe
Meanwhile, our mother of dragons, the heir to the FinTech throne, the Queen of the Silicon Valley, and the poster boy of YC, Stripe, has hit a stumbling block.
Private fund-raising is running dry, and it has pushed startups to cut their costs.
As much as their founder John Collison doesn’t want to admit it (he said there is no impetus to raise fresh capital for Stripe), things are, hmm, not ideal for Stripe either.
And that has led them to slash the internal value of their shares by 28 percent. It is now $74bn, down from its $95bn valuation in March 2021.
Nothing much to expand here.
Stripe is still the superstar for API-first products. But, a bad economy can wound a great warrior too.
We must pay more attention to security issues in APIs…
This brings us to the elephant in the room - API security.
An impending recession may hit organizations hard, but security (or lack of) is already costing them $41 to $75 billion annually.
And it’s affecting the big boys the most.
According to Imperva, larger organizations (those with more than $100 billion in revenue) are three or four times more likely to experience API insecurity.
This is a big problem. Don’t you trust me? Let me throw you some statistics:
95% of organizations suffered an API security incident in the last 12 months
34% admitted they lack any API security strategy
API attacks more than doubled the overall growth in API traffic in the last 12 months
But as that old saying goes - where there is a problem, there is an opportunity.
API security startups are on the rise.
Salt Security, which leads the pack, raised $140 million at a $1.4 billion valuation earlier this year. Another startup, Noname Security, raised $135 million at a $1 billion valuation.
So maybe, if you want to start a new venture in the API niche, security can be a problem space to work on.
Keep your APIs secure, my API nerds!