Monday, 18 February 2013

Why I'm changing the @datownia business model

We launched @datownia last year after rapidly developing it for 9 months, working closely with several small companies to iterate through product (and customer) development cycles. Our objective was to create a self-service API creation platform that any company could operate without the need for an API expert. 

This month we're going to change the model and pricing structure of datownia: taking it from a low cost, self-serve, pay-as-you-go model to a relatively higher price point with further fees for setting up and operating an API-as-a-Service for our customers.

This blog explains the 2 reasons behind this change.

The first reason is that it was always necessary to prepare data for an API, but the required data skills didn't exist in our target market. Our client's needed access to a skill set they don't have themselves.

The companies we worked with to trial datownia didn't ever really understand data, data structures and APIs. There's nothing wrong with that because that's the market we wanted to help bring API technology to. But it did mean our team had to help them structure, clean and present their data so that other Developers would be able to use it (via our APIs). 

In our new model we're offering data preparation and API creation services to our customers as part of an "API Creation" service. Then we offer "API management" services as part of our API-as-a-Service strategy. 

The second reason is that couldn't devise an effective marketing and sales strategy to sell APIS to SMEs, based on a self-service model. 

Our self-serve pricing offering started with a free trial for 3 months, then pricing tiers starting as low as £16/month to create and run simple data APIs. Our challenge was to market our API creation platform to SMEs, who (a) didn't understand APIs and (b) didn't understand that they needed APIs. We believed that Developers would advocate datownia to their clients and in so doing delegate down to their clients the job of maintaining the data. The trouble is that this gave us a very difficult market space to operate in for a small company. Did we market to Developers? or to their clients? or both? And how much could we really afford to spend on marketing when our products price was so low.

By restructuring our pricing and our services we have clearly defined (a) what we do for our customers and (b) who are customers are. 
(a) We build and run APIs-as-a-Service
(b) For companies who don't need the time and expense of doing it themselves

A footnote on Eric Ries' "Lean Start-up".
In early 2012 I'd read and been influenced by Eric Ries' "Lean Start-up". Yet even though I followed many of the recommendations in that book I ended up building something that our customers didn't exactly want. They never really wanted to create and operate their own API. Instead they wanted to solve business problems (which I thought could be solved by APIs).  Looking back at my early "customer development" meetings I can see that when I asked my prospective pilot partners the question "wouldn't it be great if you could open up your data and connect it to apps without spending tens of thousands of pounds and months of work" I kept on hearing the answer "Yes". What I failed to realise was that they really meant "Yes, but only if you did that for me so I don't have to".