NB: This is a guest post by Alex Kremer, co-founder at Flextrip.
Jeff Lawson, CEO of app software firm Twilio, gave a great talk at last week’s Gluecon conference about enabling so-called "DOers" in large organizations.
His primary thesis is that easy-to-use, self-service APIs that are clearly documented, clearly priced and allow instant sign-up enable innovation actually work and benefit industries.
By this standard, is the travel industry focused on enabling innovation? Not really.
There are dozens of APIs and data feeds offered by large and small travel organizations sitting on mountains of data, but many of these APIs share significant problems.
The most common are:
- No self-service signup -- must talk to a sales/BD person
- Data constraints -- only serving part of a larger dataset. Frequently the most useful/valuable data is locked away.
- Lock-in -- the sole purpose of the API is to generate transactions and customer ownership for the API provider.
- Pricing -- frequently a huge problem for startups, especially in Air (see Ashley Raiteri’s recent Tnooz post on Why is the travel industry so unfriendly to startups?)
All of the above represents myopic thinking and severely limits innovation.
Existing gatekeepers in the travel industry love it, of course: barriers to entry are kept high, and attempts to revolutionize inefficient markets from within are next to impossible. The sleeping at the wheel can continue.
What needs to happen?
The practical case for open, easily accessible APIs is clear. The most popular APIs have spurred not only innovation, but entire ecosystems (eg. Twitter).
However, these cases didn’t have the entrenched business model issues plaguing travel. Lets tackle the above points individually:
1. Self-service signup
This should be the easiest issue to solve. Enabling self-service doesn’t threaten business models.
Enabling a DOer to sign up and start hacking away makes sense. Putting a layer of sales-person in between the DOer makes him a lot less likely to DO.
Shaival Shah wrote a great blog post, Cannibalize Business Development by Popularizing your API, which expands on this topic.
2. Data constraints
The openness and availability of data is the single biggest enabler of innovation. Big companies that hoard data are doing themselves a disservice in the long run.
If the data is essential to opening up a market, an innovative startup will eventually find a way to gather it without said big company and render the company irrelevant.
A great example are APIs such as SimpleGeo, Foursquare Places, Google Places, and Facebook Places.
Does a bootstrapping startup need a $20,000+ business listings database anymore? Nope.
The big players who for years priced startups out of the market thinking their data acquisition efforts would pay off in eternity are busy refocusing their models right now.
In travel, provider-specific databases (think air pricing data) are less open to being crowd-sourced, but this problem will also solve itself over time: all it takes is for one airline to take a leap of faith in opening this data up to foster more direct-connect relationships.
When (not if) this happens, expect the days of extravagantly expensive airfare feeds to quickly fade. The mantra is simple: be open yourself, or someone will eventually do it for you.
3. Lock-in
There are tons of examples of creative uses of data opening up entire markets. Locking users of an API into a single, specific use is short-sighted and detrimental to the core existence of said API.
Yes, many APIs are built in furtherance of a business case but it’s frequently the non-traditional uses of an API that create great products.
Being as liberal as possible with usage restrictions has clear value in the long run. Allowing DOers to DO more with API data also enables the API provider to monetize more of said data.
4. Pricing
It’s pretty obvious that $50,000 API costs stifle innovation. Many data-dependent startups won’t make that in their entire first year of operation.
APIs don’t need to be free, but they need to be reasonable. There are startups in the API market that allow companies to monetize their API efficiently and on a per-request basis.
While this model isn’t universally applicable, it makes a ton of sense in travel.
What enables innovation more? A $50,000 up-front cost? Or $0.01 per call to allow a small, scrappy startup to invent a great product that will eventually use millions of API calls per year?
The answer, I hope, is obvious.
Conclusion
Opening up data is scary for anyone. But the thing to remember is that enablers of innovation do not automatically enable their own competition.
The focus for current gatekeepers should be to find new ways to monetize the ecosystem by allowing DOers to DO. This will undoubtedly create hundreds of new, amazing services and products that sell more travel.
What are you waiting for? Let’s get started.
NB: This is a guest post by Alex Kremer, co-founder at Flextrip.
NB2: TLabs Showcase - Flextrip.