The Big Story

API is the sauce

During a pivotal year, the business world finally got the message: No company, in any segment, can afford to employ outdated software in service of its mission. Investment in software designed with a remote, distributed world in mind is just getting started, and as always in a building boom, the toolmakers are sitting pretty.

Interest in cloud-based enterprise software this year has been evident through high-profile IPOs and booming revenue at larger players. But another trend is taking hold as companies realize that they really need differentiated applications built around the unique needs of their business, without requiring their developers to reinvent the wheel.

On Monday Twilio announced plans to buy Segment for $3.2 billion in stock, a deal made easier thanks to the more than 200% increase in Twilio's stock since the beginning of the year. The deal is likely a harbinger of similar activity as the opportunity in enterprise software shifts from end users to the developers.

• Twilio has built several APIs that developers use to add communications features to their own applications, allowing them to easily add text, voice or video to those apps.
• APIs are connective tissue, specific methods for implementing features into applications that developers don't have to write themselves: Your favorite food delivery app probably uses the Google Maps API to show you how late the pizza will be.
• SaaS applications freed corporate software developers from having to create unique billing systems, inventory management and the other back-end software products — essential but undifferentiated parts of running a modern business.
• However, those developers are under increasing pressure to build well-designed and reliable customer-facing applications as purchasing activity shifts online, and that's where APIs come in; why should they spend time building custom voice software?

Segment expands Twilio's range of APIs. Twilio's been best known for its communications APIs, and more recently for ones that help build call centers and email marketing tools. Segment, which had raised $283 million in funding, offers an API that allows developers to connect sources of customer data, like web or mobile apps, with analytics tools.

• Without an API to do that, developers would need to write new code for their existing applications to connect new data analytics tools. At a lot of companies that can cause more problems than it solves.
• "It's actually pretty insane that typically in business, you have to change your business to meet the software you bought to run that business," Twilio CEO Jeff Lawson told Forbes. "Instead, we want to change our software to meet the business we're trying to build."

Businesses that survive and thrive over the next decade will have figured out how to stand out from their competitors on the web or on mobile platforms. Even businesses geared around in-person services, like restaurants or retail stores, now need a modern digital strategy.

• SaaS was a revolution in its own way for business productivity, but companies just now making this shift will need tools that help their developers quickly respond to shifts in demand or market conditions.
• Expect the giants of enterprise application software to take a closer look at API-driven startups like Segment as companies like Twilio start to offer services that rival their own business tools.
• This wave of activity also puts Stripe — one of the earliest API-forward developer companies, now valued at $36 billion — in a very interesting position to expand into other areas of enterprise software.

And if you needed another reason to care about the outcome of the Google-Oracle API case sitting before the Supreme Court, consider that by the time a decision is released next year about the copyright status of APIs, all of these trends are likely to have accelerated.

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This Week On Protocol

Market data: Bloomberg's products and services released in the early 1980s kicked off a wave of tech innovation on Wall Street, forcing the company to build compute and networking infrastructure that predated the cloud giants. Fast forward nearly 40 years, and Bloomberg is still running its core products and services on its own gear, picking modern tech — like machine learning and Kubernetes — to layer on top where it makes most sense.

Platform-esque: Slack is at a unique stage of its evolution as an enterprise software tool, trying to expand its capabilities without losing focus or competing head-on with office productivity juggernauts such as Microsoft Office and Google Workspace. Protocol's David Pierce talked to Slack's new head of Platform, Steve Wood, about how the company intends to strike this balance.

Native tribes: Google Cloud's attitudes toward open-source organizations continue to evolve under CEO Thomas Kurian, and while it appears to remain skeptical of foundations for its newest projects, it does intend to share power over Knative, Protocol reported last week. Knative is an interesting project that makes serverless computing principles work with Kubernetes, and now employs a governance structure in which no single corporation can control its future.

Five Questions For...

Donald Fischer, co-founder and CEO, Tidelift

What was your first tech job?

I graduated from college into the dot-com bubble and joined high-flyer startup Inktomi as a software developer. It was instructive as I lived through an entire boom-and-bust business cycle in the first 12 months of my career.

What's the best piece of advice you could give to someone starting their first tech job?

Optimize for learning. In recent years there's been a lot of energy pushing folks [who are] new to tech right into a startup. I tend to think most early career folks are better suited to starting off at a larger organization that has more formal mentorship opportunities to set the table for learning. Or for the autodidacts, a rapidly scaling startup where you can take on more responsibility earlier than might seem reasonable in your career.

Pick one piece of consumer or business software (that isn't sold by your company) that you can't live without.

The Linux kernel. There are dozens of instances running in devices of all shapes and sizes in my life, from the phone in my pocket to the laptop on my desk to the thermostat on the wall. A testament to the power and flexibility of open-source software.

What will be the biggest challenge for cloud computing over the coming decade?

Developers are the nervous system of a business, yet we continue to disrupt their flow with operational tasks, maintenance, compliance and so on. Our collective challenge is to reduce the amount of accidental complexity that gets in the way of innovation.

Will the pandemic usher in a new era of remote working, or will we all come back together when it is safe to do so?

I absolutely believe that remote work is here to stay. Tidelift has been remote-first from the start, and we were reaping the benefits even before COVID-19 hit. Remote work allows organizations to recruit the best talent from anywhere, not just a specific geographic location, and it is just a more humane way of working, giving people commute time back in their lives and allowing them to live wherever they choose.

Around the Cloud

• What's to make of IBM's plan to spin off its IT management arm? "We are only 20% to 25% of our way into the cloud journey," IBM CEO Arvind Krishna told The Wall Street Journal, underscoring just how far the storied tech company has to go to remain relevant.
• Spinnaker is an interesting open-source project developed by Netflix that helps companies deploy software across different environments, and Armory, a startup built around the technology, just raised a $40 million Series C round.
• Could AMD pull off a $30 billion acquisition of Xilinx in hopes of duplicating Nvidia's strategy? The Next Platform weighs in on the reported deal.
• Cloudflare unveiled a new cloud security platform based around the "zero-trust" concept that works with identity management and malware detection tools from several vendors, including Okta and VMware's Carbon Black.
• Are Arm-powered cloud instances worth switching to? Well, Honeycomb, which makes observability tools that help companies monitor their cloud infrastructure, experimented with switching its workloads from Intel chips to AWS's Arm-based Graviton2 processors and saw a noticeable reduction in cost.
• Along the same lines, SmugMug CEO Don MacAskill announced that his company had switched Flickr's computing workloads to Graviton2, with plans to get the whole company running on the Arm chips by the end of the year.
• German vendor Software AG was struck by a ransomware attack over the weekend, and is still struggling to recover after some sensitive data was accessed and released.
• Apparently this is going to be an ongoing series: The Air Force put Kubernetes on another one of its jets, this time the famed U-2 spy plane.
• Thinking of learning Rust?Oxide co-founder and CTO Bryan Cantrill was excited about the potential of the language, which we wrote about earlier this year, but has some real-world advice after a few trials and errors.
• Remember how Robinhood drew the ire of its users earlier this year when it went down during some of the biggest trading days of 2020? One of the reasons behind that outage might be a multiyear struggle to integrate Kubernetes.