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Ross Mason was recently a guest on a podcast called The Near Futurist, hosted by Guy Clapperton, where they discussed the API economy and how that is changing the way businesses exchange value. Here is a preview of some of their chat.

Guy Clapperton:  Tell us a bit about MuleSoft and your background for people who don’t know what exactly you’re trying to achieve.

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Ross Mason: The focus of MuleSoft was always around helping people connect applications, data, and devices. While my background is in banking and finance, I quickly realized that actually, every organization on the planet is dealing with the problem of connecting things together. Whether it’s customer information, whether it’s their products and services that they offer through mobile apps, through kiosks, or back office systems. And so the idea of Mule was really to make it much easier to connect these things together in a standardized way so people could get out of of the plumbing of data and access to information and build more value on top.

Guy: So how did you go about this? You’ve mentioned “the API economy.” Perhaps, in case people who don’t actually know, you could explain a bit about what they are and why that matters in the economy.

Ross: APIs are really interesting because they are the fundamental building blocks for innovation. So if you think about the digital innovations that happened over the last 10 years, the iPhone and Android, the apps that we use every day, all of those apps are stuck together using API. So the APIs are really the building blocks to grab payment information or grab maps or embed telephony inside an application. So the idea of an API is a digital building block for building new products and services and new processes.

Guy: So why are API is changing things? In what way is it creating a new economy?

Ross: Well, what’s interesting about APIs is they’re not just pieces of software, but they actually represent new ways of thinking about business models and new ways of interacting with different groups of people. So what we saw with the rise of smartphones was that these APIs were being embedded into new products and services that we all use. So for example, 15 years ago, if you wanted to build Uber, you’d have to build a mapping technology, build a payments gateway, and you’d need telephony services built into the Uber application. The way they did it was they just took the services from Google, Stripe who provide payments, and from Twilio that provides telephony services and they just stick those things together.

This allowed Uber to try out a new business model and scale it very quickly because they are outsourcing their services. And Uber itself became part of an API economy, became it is a consumer of those services, but Uber then also provided new services for other people to build on top of. So Uber Eats is a great example of this; while Uber Eats is a food delivery app, but it’s opened the API up to everyone. So McDonald’s sits on the top of Uber Eats for delivery. So there’s an exchange of value between all these different companies and that’s what comprises the sort of API economy.

Guy: In many ways, APIs prevent companies from having to reinvent the wheel every time?

Ross: Yeah, they do that and also they improve over time. If a million people using the same mapping technology from Google, it’s going to improve over time as well. So not only do you get a better product from the outset, but it’s also productization of a digital capability.

Guy: If you’ve got all these various components that are continually being updated, this could make for much easier innovation. Is this actually going to accelerate the pace of change yet again?

Ross: So I always look at the world into halves. When it comes to digital, I think about what the consumer space is doing and then what the enterprise is doing. And what we’ve seen in the consumer space is that we’ve hit a period of “app saturation.” There hasn’t been a ton of innovation on our smartphones over the last few years. There haven’t been any breakout apps, because we’ve got the bulk of what we need to run our digital lives on these phones already. But the enterprise still has a long way to go. The next wave of digital innovation will be where enterprises start to unlock their own data sets their own capabilities and offer much better products and services to consumers.

So, if you look at InsureTech, there’s actually a lot of innovation happening in insurance right now to give products and services to consumers. So if you look at a company like MetroMile, its service shows you every mile you drive. So if you’re an infrequent driver, then being insured by-the-mile makes a lot more sense. So we were getting these iterations of products that help a more niche part of the market, but there’s lots more of these products helping different niches. So I think the innovation is not going to be big bang anymore. It’s going to be gradual and just affecting different parts of the population at different times.

To listen to the full podcast, check out The Near Futurist episode