With around eight million users, Bengaluru-based Postman, which helps organize APIs, has become a category leader
Software developers across the world faced the problem of managing a host of APIs and collaborating seamlessly
During the gold rush, sell shovels," goes the saying, or put simply, instead of joining the queue of miners, make money by building tools for them. And that’s what the founders of Bengaluru-based startup, Postman, did when they set up in 2014.
One of the biggest disruptors of the last decade has been the rise of the API (application programming interface) economy. Uber wouldn’t work without API access to Google Maps. Booking a flight on a travel portal triggers API calls to airline sites. WhatsApp messages from your phone run via APIs. It’s a piece of code written to certain definitions and protocols that allows different systems to communicate with one another and share data. This is where Bengaluru-based Postman, now headquartered in San Francisco, saw an opportunity to sell a shovel for the API gold rush.
Postman helps users develop APIs and manage them. Designing, testing, debugging, publishing and monitoring APIs on one platform is vital because a team or organization could be working with hundreds of APIs. With eight million developers in 400,000 organizations worldwide using it, Postman is a category leader among tools for API development, a rarity for a software product originating in India.
PROJECT ON THE SIDE
It all began as a side project for Abhinav Asthana, co-founder and CEO of Postman, when he was frustrated with testing and monitoring APIs. “In the API world, you have requests you send to the server and responses you get back. So I wrote a very simple tool to help me manage these. It just made the process a lot easier and I could document the APIs I was using to share with co-workers," recalls Asthana, who was the CTO of a startup in Bengaluru at the time after graduating from BITS Pilani.
“I was pretty content with what I had built, but I found that this use case was universal across all developers who were coming in contact with APIs, whether they were in startups, big companies, non-profit organizations or the government."
That’s when he got together with fellow BITSian Abhijit Kane and Ankit Sobti, who had worked with him at Yahoo!, to launch Postman in 2014. The first version solved a collection of pain points, but it became apparent that others, like project managers not just developers, needed to use the platform. It expanded to address the life-cycle, including documentation, automated testing, prototyping and collaboration.
A project manager, for example, needs to stay on top of what’s being created, how fast it’s done, and whether it’s working. A 2019 survey by Postman found that for the first time, non-developers constituted a majority of those using the platform to work with APIs.
Networking conglomerate Cisco has all its API documentation on Postman to help its staff and external entities. Image hosting sites post their public APIs on Postman for third party developers to use. Use cases have multiplied.
For about a year, Postman was free and adopted widely without any marketing push. Early adopters sent donations on their own. That’s when the size of the API development opportunity began to sink in.
“I was amazed that people were sending money. It wasn’t much, but enough to see that people found value in this. They wanted the product to stay alive and help them solve more problems," says Asthana. “Google decided to feature it on the Chrome Web Store. And I was like, ‘Oh my God, they like this app’."
Postman raised $1 million in seed funding from Nexus Venture Partners in 2015 to expand the product. It switched to a subscription service as its business model evolved from serving developers to larger organizations. Typically, the development team or quality assurance team adopts it first and then it spreads across other functions in the organization.
It’s a freemium model whose subscription hook is collaboration. As users invite others to the platform to collaborate on APIs, they have to switch to a paid plan. Nexus followed up with a $7 million series A round in 2016 and last year participated in a much larger $50 million Series B led by San Francisco-based Charles River Ventures. Asthana also moved to the Bay Area to be closer to his largest base of customers and understand their growing needs.
A key learning in the US was the pricing. “People outside India valued efficiency much more than the people I was in touch with in India. What we were charging was very little compared to what people were used to paying. And actually if you undervalue the product to that extent, it kind of looks like a cheap product which doesn’t solve a real problem," says Asthana. “It helped us realize we need to think in terms of comparable category-leading SaaS products like GitHub and Slack."
Going from creating a free product for developers to building a business that provides value to global organizations has already been a storied journey for Asthana. But it’s still early days in the sense that the opportunity to grow is expanding exponentially as more and more organizations digitize their functions and adopt APIs.
“We have the opportunity to build a large, enduring company. It’s one of the few I’d say that has come out of India to be a category leader and not something that’s following someone else has lead. We effectively created a new category of software that’s a fundamental need."
The company has grown from three people in 2015 to 180 spread across offices in six countries. Back when it started, APIs were spreading across the software development fabric. Developers all over the world, and especially in the US where the largest API development was happening in Google and Facebook, faced the problem of managing them and collaborating seamlessly.
Yet it was a team of three techies from Bengaluru that came up with a solution for this pain-point. It’s something like the need for browser-based email was staring everyone in the face, but one Sabeer Bhatia, who also happens to be a BITSian, came up with Hotmail.
“When Postman started and I was asking developers to try it, there was no intention to charge people, create a business model, or think about a company. As a developer, I was intrigued by solving a problem for other developers," says Asthana. “When I look back at Postman now, for every product there’s a problem space and a solution space. If you find the right set of problems to solve, your product has to expand to fill those needs or somebody else will. So what I found out in the early stages was that we had built a very small solution to a very large set of problems."
Keeping an ear to the ground is also what differentiated Postman from a plethora of other API development tools that came up. The early call to focus on collaboration and a broad-based platform that could serve large user-bases in global organizations made what it is.
Malavika Velayanikal is a consulting editor with Mint. She tweets @vmalu.