External API

Definition:

External APIs are APIs that developers use to integrate their applications with a third-party resource, such as a public cloud service or a SaaS application. This type of API is probably what you think of first and foremost when you think about APIs.

Analogy:

An External API is the system a restaurant would use to order from their distributor.

When a restaurant needs to order more food, they tend to order it from a large distributor. Internally, an employee from a restaurant may notice that their potato storage is below proper levels.

When they notice this, they will mark on a system that says they are in need of potatoes, and this system will communicate with their distributor to make the purchase, so that on the next food shipment, the distributor brings more potatoes.

In other words...

An External API is one that allows one organization to communicate with another organization.

Why is an external API important?

It's one thing to know what a term means, but that is worthless if you don't know why you should know what an external API is in the first place. Let's break down the importance of this tech term based on two high level categories. We'll walk through an explanation as well as provide a score, 1-10, that shows you how much you should care about external APIs.

Pre-Product: 3/10

The first will be if you do not have a product yet. This means that you don't have a physical product. Maybe you're in the ideation phase, or maybe you're almost ready to start development. Whichever it is, we'll get into why an external API is important and why you should or shouldn't care about it if you do not have a product.

As a founder, an External API is not too relevant if you don't have a product yet. You should learn about the functionality of an API, but the actual type of APIs is more relevant once you actually have a product and need to understand how your site should function most effectively.

Live Product: 6/10

The second category is if you do have a live product. Maybe you just launched your business or maybe it's been live for years and you're continuing to improve its quality. Regardless of the scenario, if your product is live, external APIs carries a different weight.

As a founder, an External API is somewhat relevant if your business model requires you to interact, via software, with 3rd parties. As long as you know whether you will or will not need an External API, as well as how it is functioning, then you should be all set.

Examples of external APIs

So you know what an external API is, by definition. You know if you should care about it or not depending on your situation as a business/company/product. To dig in deeper, we will walk through some examples so we can make sure you really have a solid grasp on external APIs.

Two types of external APIs:

An external API broadly encompasses both open APIs (free to use) and partner APIs (exclusive to select partners).

1. Open APIs
   
   An open API is one that is publicly available to anyone in the world. All data that the publisher has exposed is free to use, with no restrictions. A common example of an open API is Google Maps. Google Maps allows users to pull a plethora of information, such as timezones, directions, street views, etc. In all of these functions, you will notice that the site directly states it is powered by Google Maps.
   
2. Partner APIs
   
   A partner API is one that is exclusive to paying or approved partners. This means that it is not publicly available to anyone, you have to have authorization in order to access this data. A common example of a partner API is Statista. As an aggregator of big data, Statista offers a wide variety of useful statistics. In order to leverage this data, you need to pay them for access.

Key Takeaways:

1. An External API is one that allows one organization to communicate with another organization.
   
2. If you don't have a product, this term is not too relevant just yet.
   
3. If you do have a product, you should be aware as to how an external API can influence your business.
   
4. There are two main categories of external APIs: Open (free) and Public (paid).