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Comment by watty | Hacker News Reader

Why do you think this? It's certainly riskier but there have been many successful companies that start out relying heavily on a 3rd party APIs.

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If you rely on a 3rd party for your business, then the 3rd party is in control of your company future.

In that regard, its not about risk. Yes, using 3rd party API for your business model is risky, but thats a secondary effect. The major issue is than the future of the company, and any promises and investments done is completely dependent on that third-partys' whims. To some degree, your even in less control than if you were employed for the 3rd party company, as there are employment laws to protect employees, but no laws in place to protect you against changes by the 3rd party to the API.

I just started reading "the signal and the noise" [0], and he talks about the difference between "risk" and "uncertainty": "Risk" is a known factor, something you can calculate with. Something might be risky (50% chance of failure) but at least you can calculate and reason about it. "Uncertainty" is "worse" because you can't easily reason about it. We often assign numbers to uncertain events anyway, but they might be off by several orders of magnitude.

He goes on to say something like: Risk fuels capitalism and the marked, uncertainty grinds it to a halt

[0] http://en.wikipedia.org/wiki/Nate_Silver#Book

Edit: I forgot to tie this in to what we where talking about :) As I see it, relying on someone else (with out any guarantees) is not just risky but uncertain. You can't really know how likely it is that they will change down the road. Doesn't mean it can't work out though..

Found a blog-post with that quote in its context:

http://unreasonable.is/opinion/entrepreneurs-are-scientists/ https://news.ycombinator.com/item?id=5042525

It's not the fact that you are using 3rd party APIs. There are plenty of legacy companies that created products based on 3rd party APIs from Microsoft, Oracle, Sun, etc, that did perfectly fine. Microsoft in particular is extremely professional and will bend over backwards to ensure backwards compatibility. You can still install many 20-year old programs on Windows 7 and they will run perfectly.

As I mention in my post, the issue is that these Web 2.0 companies don't offer support contracts, and don't have a formalized API that guarantee backwards compatibility. THAT is the problem. We ALWAYS bought a support contract whenever we integrated with an API. The support contract gave us some legal rights, but these days there are no such legal rights, and that is what is really risky.

If you have a business model that's based on a one sided relationship, then the chances of it going sour is significantly higher. Plenty of companies start out relying on 3rd party APIs and most of the time it's a happy relationship, but see what happened when the 3rd party needs monetise like Twitter did.

The scary thing is that most sites have such vital relationships, e.g. with TLD registries. Can you actually rely on nic.ly or nic.in keeping your domain safe forever?

It's not so much one way with the TLD registers though, there's a formal business relationship where a price is agreed for a level of service (usually). Granted, a lot of the power remains in their court, but there's a two way relationship going on. The problem with the 3rd party API is for the most part it's all free, thus leading to the power remaining solely with the provider.

It's amazing how much businesses often depend on single sources for services, TLD's is a great example.

Because there is no competition. If you decide to build rocket launchers and the company you source, say the warheads for the rockets, starts sending you lemons (rockets without the high yield explosives you used to get for example), you start sourcing your warheads from someone else. Hell build you own and get on with it.

Now if a company patents a specific warhead that only they can make and you decide to make a rocket launcher that is made specifically to launch rockets with those warheads and no other warheads are compatible with your launcher and suddenly the source company decides that their warheads suck anyways, you just lost your business.

My Takarov can fire any type of 7.62×25mm Takarov ammunition, albiet some is better than others. If it could only fire a specific type of surplus ammo that might not longer be available tomorrow, my gun could end up being useless in a blink of an eye.

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