So if you look at apps like Google Map and WhatsApp, these apps are used by billions of people around
the world.
But how do they make money?
Well, the simple answer to that question is that they license their APIs.
Now, before we go deep into how exactly a business or a startup can license their API.
We first have to understand what exactly is an API.
And to answer that, I'm going to give you three simple example.
So whether you book a cab, pay for a product or send an email, you will be using some form of API.
Let's start with booking a cab.
So if you book a cab on Uber, then you are using the Google Map API.
So every time you enter your drop location, you are basically hitting an API request to Google Map.
And Google Map is giving the data back to the Uber, like the distance between two different location
and the time it will take to reach to your destination.
And based on that specific data, Uber is calculating the fear of your ride.
And that's why Uber is using the most trusted Google Maps APIs in their ride hailing service.
We'll talk more about that.
But the second example of API is authentication API in email.
So if you're using a Gmail, in that case, you are using the Google authentication API.
Every time you send a mail to your colleague or to one of your friend.
That's an authentication API in your email.
Then we have a payment Gateway API.
So if you are a seller and you are selling your product online, in that case, you might be accepting
payment from PayPal or Stripe.
And all of these payment gateway provider are a really good example of payment Gateway APIs.
So if I'll give you a small definition of API.
API is also known as your application programming interface.
So API is basically a software intermediary that will allow two different application to talk to each
other.
Now, let me oversimplify this by giving an analogy of a waiter working in a restaurant.
So imagine you go to a pizza place, you check the menu, order through a waiter who will simply take
your order to the kitchen and brings back the pizza.
Now, in this example, the waiter who is taking a request from the user and giving that request to
the kitchen is acting as an API.
And the function of API is that you will simply take a request from your user, give it to the backend
system, which is kitchen over here, and then you will take the response from the kitchen that is the
prepared meal in this case, and then you will show that response to the end user.
And that's the basic function of API.
API.
Normally connect a user with the application.
So it will take a request.
Give it to the backend system and then the backend system will respond and the API will simply take
that response and show it to the user.
That's the only function of an API.
Now let's relate this analogy in case of an Uber.
So every time you put your drop location in Uber, you are simply hitting the Google Map API and Google
is giving back the response to the uber map, like the distance between two different location and the
time it will take to reach to your destination.
And Uber is using that specific data to calculate the fear of your ride.
Now, these APIs are not only used in Uber, so whether you use a food tech platform, a grocery app,
or an online software, there is a very high chance that you will be using hundreds of these different
APIs.
Basically, these APIs are the building blocks of a complex program, and these are defined as an independent
set of functionality with reusable piece of code.
Now, if you look at developers, they got one problem that they don't really want to reinvent the wheel
over and over again, and that's why they use these APIs so that they don't really have to build everything
from scratch.
And these APIs can save their time writing new programs over and over again.
So let's say if you want to integrate SMS service in your mobile app, you can simply use Twilio API.
If you want to send email to your customer, let's say every time they sign up, you can simply send
them an email.
Or let's say if you wanted to do any promotional campaign on a specific occasion, you can also do promotional
email.
But for those email you can simply use MailChimp API or SendGrid API.
Third one is payment.
If you want to accept payment, you don't really have to build your own infrastructure from scratch.
You can simply use the APIs of people and stripe in your app and you can accept payment from the customer.
So that's how a developer can use all these third party APIs in their mobile app so that they can save
a lot of time.
Now, because these APIs are making the job of a developer easy and he's saving a lot of time and that's
why the company have to pay for the number of API requests they are hitting.
So if you are a developer, let's understand how exactly our API work from a techies mind.
So every time you press a button in your mobile app, you're simply sending a request to the remote
server with the help of these APIs.
The server will then collect the data from the database of your request.
Then it will process it and sends back the response to your mobile app.
And that's the function of API.
API will act as an intermediary between the front end system and the back end system.
And you can also understand that with this analogy where a beta is acting as an API, so the waiter
is simply taking the request from the customer, giving that request to the backend system, which is
kitchen over here.
And once the meal is ready, then it will take the response and give it back to the user.
And that's how the API work.
So if I summarize this video for you, API act as a communication bridge between the front end system
and the back end system in your mobile app or in a software.
So if a company have really built some feature in their backend system, they can build an API for that
feature and they can monetize that with different monetization model.
So you simply have to take an authentication token and you will hit an API request and you can utilize
these API.
So to understand the different types of monetization model available for these API.
In the next video, we will understand the different types of APIs.