The Digital Economy Is The API Economy And Kong Is King – Forbes

In recent years, exponential growth in the volume of data and the speed of data integration and management processes has unleashed an explosion of innovation, enabling companies to deliver goods and services that are increasingly responsive, customized and sophisticated in an ever-evolving digital economy.

This kind of data movement would be impossible without APIs application programming interfaces. APIs, forms of modern middleware that plug into various data sources and software services to pipe information to the desired destination, are a critical part of the plumbing of the digital economy. Many of the conveniences of our digitally connected, modern lives like using Amazons Alexa to play music over your home speakers from your Spotify account, or asking your cars navigation system to find a less congested route recommended by Google Maps would be impossible without the APIs that connect companies with their partners, vendors and customers. Indeed, it would not be much of a stretch to say that under the hood, APIs are the engine powering the digital economy.

Kong, the cloud connectivity company with the worlds premier microservices API gateway, is at the head of the pack of a new generation of companies that have emerged in recent years to help organizations optimize their use of APIs. If APIs are the engine behind the digital economy, API gateways are the control panels that determine what goes in and out of this network. Like a smart grid for the cloud, it ensures the flow of data is stable and secure, even at a massive scale. No surprise that API gateways are among the most popular open source technologies, according to new research from Kong/Vanson Bourne.

Advanced API gateways are capable not only of moving data between organizations (e.g., connecting Alexa to Spotify), but also of managing the constant flow of business-critical information within individual companies in a smart way, delivering automated, faster and reliable connectivity among APIs and humans. Demand for this capability is growing rapidly as organizations replace rigid, legacy IT infrastructure (called monolithic) with the more dynamic type of information architecture known as microservices, which leverages APIs to connect discrete software programs and data sources. In this way, microservices API gateways work much like the operating system of a car coordinating the functions of separate but related systems like the transmission, axle and fuel tank in order to keep the engine running and the car moving in the right direction.

Marco Palladino and Augusto Marietti

Led by co-founders Augusto Marietti and Marco Palladino, Kongs mission is to make the digital world reliable. The companys end-to-end platform powers trillions of API transactions for leading organizations around the globe, including AppDynamics, Cargill, Just Eat, Santander, SoulCycle, WeWork and Yahoo! Japan. These companies and many others (Kongs open source software has been downloaded more than 100 million times) use Kong to accelerate the construction of smart connections between hundreds of software services and data sources, reduce latency and downtime, automate workflows, improve data governance and security, and monitor the traffic running through all of the companys APIs.

Were building the nervous system of the cloud to power all of the enterprises in the world, explains Marietti. In this analogy, he says, Kong is the brain and the spine. We want to be the one intelligent broker that can request and respond to data, moving all that information in and out of the company, both within and between teams. As a microservices API gateway, Kong is not only the brain and spine of an organization, but also its peripheral nervous system connecting and coordinating the organizations multitude of internal functions and operations, thus supporting the limbs and organs of the business.

EVOLUTION FROM MASHAPE TO KONG

Kongs impressive journey which has seen it grow and evolve rapidly, turn a profit, and raise $71 million to-date from investors like Andreessen Horowitz, CRV, Index Ventures, and Jeff Bezos has been ten years in the making. Marietti and Palladino founded the company in 2009 as Mashape, an API marketplace that provided tens of thousands of ready-made APIs for the developer community to build into their own IT infrastructure. In 2015, the co-founders launched Kong as an open source project and in 2017 decided to shift the companys focus completely to Kong after they saw the huge opportunity and demand for the service and thus, the company was reborn as Kong.

Weve changed our execution over the years, but the vision has stayed the same, says Marietti. We knew that there would be a massive explosion in APIs, software and services as companies moved to the cloud, and that every company in the world would need a simple, secure API layer to manage and move all that data. We were ahead of the market when we made the bet that this would be the future of software communications.

Devdutt Yellukar is a General Partner at CRV and a lead investor from Kongs earliest days, supporting the company through its most recent $43 million Series C fundraising round in March 2019. Yellukar agrees that Marietti and Palladinos early recognition of this transformational shift, and their quick steps to capitalize on it, have been critical to the companys success. Kong timed it perfectly, explains Yellukar. Every company in the world is becoming digital, but to provide digital services, they need APIs that allow their machines to talk to other companies machines. And on both ends of those conversations, theres going to be a product like Kong. You can see that the market opportunity is incredibly large.

As any entrepreneur would agree, however, timing is not enough success hinges on the details of execution. In this respect, Kong has also excelled and differentiated itself in the marketplace through two very important strategic decisions: the choice to open source its platform and to expand into API development.

OPEN SOURCE AS SELLING POINT AND GO-TO-MARKET STRATEGY

Although open sourcing software in other words, making the code for building software publicly accessible for anyone to copy and adapt was once seen by some as purely academic or even altruistic, today open source is increasingly regarded as a must-have feature by customers, and as a compelling go-to-market strategy by entrepreneurs. Kong was born first and foremost as an open source company, and that crucial early decision has powered its rapid adoption by marquee customers.

For Kong customer AppDynamics, Kongs status as an open source provider was a crucial selling point, with this level of transparency increasing their trust in the underlying technology and giving them greater confidence to deeply integrate Kongs tools throughout the organization. I frankly wouldnt even consider buying a closed source API gateway, the tasks are just too critical, says AppDynamics Senior Director Ty Amell. API gateways are fairly sticky, so it is important that those types of platforms have an open sourced component.

Open sourcing its product is also an important part of Kongs go-to-market strategy, lending itself to effortless adoption by developers, who then serve as product advocates within their organizations and push for paid enterprise services, creating a flywheel.

Because it was open sourced, people could just download it and start to appreciate how scalable and secure it was, and how neat and clean the interfaces were, Yellukar says. When the team open sourced Kong, there was a giant sucking sound in the market for this. Thats what happens with successful open source companies theres humongous love for this type of technology from the community, and that allows you to build the company.

EVOLUTION FROM API GATEWAY TO END-TO-END API AND SERVICE LIFECYCLE MANAGEMENT SOLUTION

Kongs latest strategic move that is already gaining promising traction is its recent entry into the lifecycle management of APIs and new role in the development of APIs from the ground up. Kongs $43 million Series C round helped finance the companys acquisition of Insomnia, an API testing platform. Insomnia in turn provided the foundation for Kong Studio, a suite of software for developers to design and collaborate on APIs.

AppDynamics Amell says that Kongs entry into the API development space was another key selling point that elevated the service beyond just an API gateway and into a full lifecycle management platform capable of solving multiple pain points for APIs along the path from creation to testing to management. We had a conversation with Kong early on about where they were going with lifecycle management. If I project out to the future, I think API gateways become part of lifecycle management, so that you can design, test, and manage all from the same platform.

This strategy is also compelling for Kong because providing developers with the tools and raw materials for building APIs will add greater value to customers. We realized that by offering a way to design, build, and test services, we can further streamline processes for our customers and enable them to be more productive, says Marietti. Once enterprises have done that, then they can use Kongs API gateway to manage these services. Were building a full lifecycle platform that helps you end-to-end, like the circle of life youre born, you build, design, test, and manage. Eventually you retire some functions you dont need anymore, and then you start all over again.

RIDING THE TAILWINDS

While Kong is already transforming the industry, Marietti says the company is just scratching the surface and that the pace of innovation will only continue to accelerate from here on out. Investments in artificial intelligence will be a key driver of this continued innovation as we are now seeing with Kong Brain, the companys first major step to automate API management and transform what is effectively a system of dumb pipes into a true nervous system. The company continues to drive open source innovation as well, launching its latest open source project, Kuma, this past September.

Underneath it all, the fundamental shift of enterprises moving into the cloud and putting more and more data in motion, both within and between organizations, is driving Kongs success. Backed by these promising tailwinds, its hard to put an upper bound on Kongs future prospects for growth.

Companies are going to be migrating to the cloud and facing the challenge of how to move more and more data for the next 100 years, says Marietti. Theres a long way to go, and I think companies are only 1% of the way there. Theres a real need, and thats how Kong is growing so quickly the market is pulling it.

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The Digital Economy Is The API Economy And Kong Is King - Forbes