Fifteen months back, The Ken published a story about a startup called Tapzo (known earlier as Helpchat). At the time, Tapzo was a well-funded company backed by over Rs 200 crore ($30 million) of venture capital money from marquee firms such as Sequoia India. Tapzo was valued at approximately Rs 600 crore ($90 million). The problem though was that Tapzo’s tale was one of what we then called “incondite pivots”—morphing from one form to another, changing business models and markets constantly over each avatar.

We had called this Tapzo’s Ouroboros Imperative.

Ouroboros. The mythical snake eating its own tail constantly destroying and re-creating itself and representing the infinite cycle of nature’s endless creation and destruction; life and death.

While the mythical Ouroboros might be immortal and be able to recycle itself infinitely, our startup Ouroboros might have finally devoured itself.

First, what exactly does Tapzo do?

Tapzo describes itself as an “all-in-one bundled mobile app” to help Indians “recharge prepaid mobile & DTH, pay postpaid mobile, electricity & other utility bills, book cabs/taxis & autos, order food, find best offers, deals & coupons, read news, follow trending, funny & viral stories and check live cricket scores and daily horoscope”.

Quite a mouthful. But the basic premise is that mobile users in India need not download multiple apps for cabs, food-ordering and other services. Instead, Tapzo provides access to all these services within a single app. The value proposition is that this will help users save space on their phones and will enable them to compare services to choose the cheapest/best offering at any point in time.

At the time of our last story on Tapzo, the company’s CEO and founder, Ankur Singla had claimed that “close to 140,00 users use our app daily and we do close to 55,000 transactions a day with an annual run rate (ARR) of Rs 210 crore (around $30 million)  in GMV/bookings. And we plan on growing 2X in the next six months.” The company also claims to have more than 5 million app downloads. But behind these seemingly wonderful numbers lie two problems.

First, the value proposition itself has an “adverse selection” issue. As mobile phones get cheaper and more powerful, the problem of saving storage space is a progressively shrinking pain-point. The users to whom such things still matter significantly are more likely to be those with lower purchasing power and therefore less likely to spend money on things like hailing cabs or ordering food home. Therefore, Tapzo’s target user base is a “disappearing demographic”.

The second problem relates to the business model itself. Tapzo makes money by charging their app partners (the likes of Zomato, Swiggy, Ola and Uber) a commission or affiliate fee for driving business to them.