When Chad Dickerson started working as the chief technology officer at Etsy, a website at which artisans sell handmade goods, he noticed something curious about the company's Internet traffic. One of the top sources of traffic was a website called Heartomatic, which makes it easy for Etsy fans to tout their favorite items and sellers. It was all the rage -- receiving some 35,000 hits a day -- and sellers praised it on Etsy's forums. "Beware: once you start checking it will be hard to stop," posted one user. But Etsy had nothing to do with Heartomatic. It was designed by Julian Lievano, an Etsy user who spent two months building it as a labor of love.
The rise of Heartomatic inspired Dickerson to move on an idea Etsy had long been considering: creating an open application programming interface, or API -- a set of programming tools that makes it easier for outside developers to build new applications using Etsy's code. "Feature requests rise up that we aren't always able to build as quickly as we'd like," says Dickerson. With an API, it would be even easier for Etsy fanatics like Lievano to create new features.
Large tech companies such as eBay and Salesforce.com have long offered such tools to third-party developers. But use of these programming tools has accelerated recently, says John Musser, who runs ProgrammableWeb.com, a website that tracks the use of APIs. More than 500 were launched in 2008, about as many as were built in the prior seven years combined, according to Musser. The microblogging site Twitter, for example, receives twice as much traffic from third-party applications as it does from its own website.
To create Etsy's API, Dickerson hired Mashery, a San Francisco start-up that has developed similar tools for The New York Times, Netflix, and Best Buy. Mashery charges $499 a month or more for businesses with fewer than 500 employees. (Larger companies can pay upward of $100,000 a year, plus an initial fee of $10,000 to $50,000.) Mashery completed Etsy's project in a few weeks for a cost Dickerson says was well below the annual salary of one midlevel developer.
Etsy launched the API in March. By April, hundreds of programmers had registered to use it, and some 50 were working on new applications. By May, a developer, Daniel Dickison, had created an iPhone application called Etsy Addict. Customers downloaded Etsy Addict 1,600 times in its first month. The 99-cent fee is shared between Dickison and Apple, but Etsy's CEO, Maria Thomas, says the company has no problem with developers reaping the rewards of their work.
Creating an API isn't for every company. Unless your site can attract the attention of enthusiastic developers, your tools could go unused. There are other drawbacks, too. As Twitter can attest, popular third-party applications can bog down company servers with increased traffic. Oren Michels, CEO of Mashery, says companies can opt to limit the number of times an outside application can access the server each day. Business owners also can restrict developers from gaining access to certain data sets.
Giving outsiders too much control is always a risk. Before launching Etsy's API, Thomas worried about what might happen if a developer were to release something that the company was working on. "There may be times when our goals aren't aligned," she says. "But we're embracing the idea that by opening up, we're going to get a lot more done, a lot faster."