Tapzo was India's first all-in-one app

Economic Times dated 29 August 2018 - the actual deal value was lower than reported 🤷

The details...

Before I talk about the Amazon deal, I want to mention that I was lucky to have true missionaries as my co-founders: Avinash Vandadaru, Vishal Pal Chaudhary, Vishrut Chalsani, who were supported by kickass guys like Edul Patel (Mudrex), Ankur Joshi (Nuclie), Viraj Shah (Distil), Deena Jacob (Open), Kali Shukla (Neuu), Ankit Agarwal (Jio), Anurag Jain (Gameberry) - and many others.

We were very fortunate to have the backing of top investors like Sequoia, Ru-Net and American Express Ventures and angels like Kunal Shah (Cred), Ajay Agrawal (SirionLabs) and Sandeep Tandon (WhiteBoard Capital). Shailendra (Sequoia) and Galina (RTP Global), at various times, took courageous bets on a company which had gone through two pivots (Akosha > Helpchat > Tapzo). These pivots were tough on the team (the second one was especially hard because we were so wrong about chat being good for transactions), led to layoffs, and invited harsh media coverage (though most of it was the usual, glib, schadenfreude-laden, long-form, but ultimately incorrect narratives written by The Ken). We also got a more balanced summary of our journey by TechCrunch). But in the startup world, this is par for the course. Apart from Tapzo, we also built OneDirect, a B2B software (pretty much under the radar), which was sold to SMSGupshup in 2022.

The first call from Amazon

In January 2018, I received a call from someone at Amazon Pay inquiring, tentatively, about how we were building an all-in-one app.

At the time (before APIs became so common), we had 35+ transactional API integrations live with Uber, Ola, Zomato, Swiggy, Foodpanda, travel portals etc. Apart from the travel APIs (which are commoditised), I doubt that today these guys would be okay to give out APIs like that, but back then, traffic on 3rd party apps was seen as a potentially scalable way to get more customers (e.g. Uber and Ola had integrated with Google Maps).

In our UI, you could compare, choose and more importantly, complete the transaction without leaving the Tapzo app. This last bit was a crucial factor in terms of user experience. An app that redirects to the underlying app (Uber/Zomato) to complete the transaction just feels like a search engine, rather than a transactional app. We were the biggest API partner for all our key partners because of this UX decision (e.g. we drove 4X transactions to Ola / Uber compared to Google Maps). Another important reason for this was that we had high-intent customers, while Google Maps was simply showing cabs to self-driving directions-seekers.

Back to the call. I told them that we had met the Amazon Corp Dev team six months earlier to raise a round but they hadn’t shown any interest.

But things had changed now it seemed.

How?

PayTM.

Back in 2017, PayTM felt like a fast-moving, aggressive, Alibaba-backed competitor that had used high-frequency transactions (mobile recharge, wallet payments etc.) to build a very large customer base. With PayTM Mall (its e-commerce bet), it was now likely to get those customers to start shopping there as well. Amazon had lost to Alibaba in China and PayTM seemed to be following the Alibaba playbook very closely.

Flipkart had already given sufficient autonomy to PhonePe and they were executing furiously and growing too.

Amazon was stuck from both sides - a behemoth trying to compete with aggressive founders and unlimited funding (Walmart <> Flipkart deal was already in the offing).

Right place, right time

Hence, we were in the right place at the right time. From our perspective, we had done 2 pivots (Akosha > Helpchat > Tapzo) to finally land in a large PMF area only to discover that this game needed hundreds of millions of dollars rather than tens. And it was always going to be a big boys club - Amazon + Amazon Pay, Flipkart + PhonePe, JioMart + MyJio, Google Pay, and PayTM + PayTM Mall.

For all our faults, we did have a lot of customer love and an insane pace of execution, but a short runway. Hence, we were interested in talking.

Why was Amazon interested in buying?

Again, this is way before the 2022 layoffs and tightening in the tech sector. In 2018, things were pretty relaxed - what a tiny startup of 50 engineers could do in 1 month, Amazon took 1 year to do. It was a factor of 12x, not 3x or 5x. This, of course, we discovered only later, once we joined Amazon. From the outside, Amazon felt like the epitome of a tech company - formidable, executing relentlessly and in the habit of winning.

But the world’s (then) second-largest company (by market cap) understandably had so many processes, approvals, legacy systems, and technical debt that made launching something new at scale very time-consuming. We had already built out what would take Amazon another 3-4 years to build - travel categories (flight booking, hotel booking, train booking etc.), recharges and bill payments in all categories (pre-BBPS), food ordering, cab-hailing etc.

Amazon guys think really long term and hence the compounding effect of those 3 years worth of time savings was sufficiently large. Launch these categories within 6-8 months, and the additional share of customer wallet (transacting on Amazon Pay, rather than on competitors) + cross benefit to the shopping flywheel (what really matters to Amazon) was compelling enough for them to make an offer for Tapzo.

We had conversations with Google Pay, Jio, Paypal etc. but Amazon's was the most serious.

M&A blues (and we thought a pivot was tough)

The deal was, obviously, not smooth. For a company of Amazon’s size, any decision takes a lot of convincing, internal buy-in, sometimes all the way to Seattle HQ for M&A decisions. And, as we later found out, Amazon is shockingly democratic - in a meeting, a junior engineer can ask a senior VP about the logic of a deal. This, after the VP may have spent weeks writing the famous 6-page memo on why the deal should be done. And this repeats at various levels of management as the sponsor of the deal (our main champion, God bless him!) tries to convince all stakeholders (Amazon Pay business teams, tech teams, IT security, shopping teams, legal, finance, international expansion teams etc.). Each time someone has a problem, you have to go back to the drawing board and tweak the memo to address the concern and position the deal better.

Someone told me Bezos did the Whole Foods deal in 30 days flat - because the Amazon juggernaut danced only for him. For the rest, the process was excruciatingly slow. While our sponsor had the patience for the system, we, first-timers, were tilting at the windmills.

The deal finally got done (in only 7 months!).

Instead of running Tapzo as a separate app, the tech was integrated into Amazon Pay. Today, most of Tapzo tech we built lives on in the Amazon Pay code base. Many ex-Tapzo employees have stayed on at Amazon and built different things.

All in all, I felt proud that we found a great home like Amazon for Tapzo.

- Ankur Singla, founder and CEO, Tapzo

PS: If you are a venture-backed founder stuck in the middle of a tough M&A, feel free to ping me. I'll try my best to help. :)

Post-acquisition party at UB City, Bangalore - paid for by Amazon :) - we had run out of cash by then.

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