Tinder Founders Sue Dating App's Owners For At Least $2 Billion (techcrunch.com)

An anonymous reader quotes a report from TechCrunch: A group of Tinder founders and executives has filed a lawsuit against parent company Match Group and its controlling shareholder IAC. The plaintiffs in the suit include Tinder co-founders Sean Rad, Justin Mateen and Jonathan Badeen -- Badeen still works at Tinder, as do plaintiffs James Kim (the company's vice president of finance) and Rosette Pambakian (its vice president of marketing and communications). The suit alleges that IAC and Match Group manipulated financial data in order to create "a fake lowball valuation" (to quote the plaintiffs' press release), then stripped Rad, Mateen, Badeen and others of their stock options. It points to the removal of Rad as CEO, as well as other management changes, as moves designed "to allow Defendants to control the valuation of Tinder and deprive Tinder optionholders of their right to participate in the company's future success."

The lawsuit also alleges that Greg Blatt, the Match CEO who became CEO of Tinder, groped and sexually harassed Pambakian at the company's 2016 holiday party, supposedly leading the company to "whitewash" his actions long enough for him to complete the valuation of Tinder and its merger with Match Group, and then to announce his departure. In response, the plaintiffs are asking for "compensatory damages in an amount to be determined at trial, but not less than $2,000,000,000." IAC and Match Group issued a statement denying the allegations: "...Match Group and the plaintiffs went through a rigorous, contractually-defined valuation process involving two independent global investment banks, and Mr. Rad and his merry band of plaintiffs did not like the outcome. Mr. Rad (who was dismissed from the Company a year ago) and Mr. Mateen (who has not been with the Company in years) may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make. Mr. Rad has a rich history of outlandish public statements, and this lawsuit contains just another series of them. We look forward to defending our position in court."

Comments

TWO BEELLION DOLLARS

[RickyShade]

Does anyone really think a bunch of camgirls sending out kik invites are worth that much?

This article?

[Anonymous Coward]

I swiped left.

Why did they sell out?

[ZorinLynx]

Whenever I see a smaller company sell out to a massive one, then the founders of the small company bitch about being screwed over and losing control, I ask myself that.

If you sell out, you're being paid for your company, and are no longer going to be in charge.

If you want to stay in charge, don't sell out.

I find it absurd that Match pretty much owns all online dating now. I realize that it can be hard to say no to a lot of money, but if you created something cool and want to stay in control of it, why sell?

Re:Why did they sell out?

[93 Escort Wagon]

I find it absurd that Match pretty much owns all online dating now. I realize that it can be hard to say no to a lot of money, but if you created something cool and want to stay in control of it, why sell?

I didn't realize this, but - apparently Match's parent IAC has owned Tinder since day one.

https://www.quora.com/How-much...

Re:Why did they sell out?

[Anonymous Coward]

You generally don't get to the valuation that Tinder had with a single majority share holder, thus many people need to agree to sell. It is possible that the people in the lawsuit never wanted to sell.

Also, the way those things work (having seen it somewhat up close once), is that Match agreed to pay $100M for Tinder, with an additional 4 extra payments of $50M if certain milestones are met. (I am making numbers up of course).

It is thus in the interest of Match that the Tinder subsidiary does not meet those milestones, and with the amount of money involved having Tinder perform a bit worse for a couple of years might be worth it to Match. This can be achieved in many ways - shady accounting, put executives in charge who are not a good fit, move engineers around etc. No idea what actually happened in this case of course, but I do not think it is particularly rare for buyers/sellers to end up in court.

Re:Why did they sell out?

[Actually, I do RTFA]

but if you created something cool and want to stay in control of it, why sell?

Two reasons. One is obviously for the money. The other is because otherwise you're facing a sustained competition with a huge company. Which is pretty hard, and can easily leave you with nothing (or a lot less than selling out.) I mean, a case study is to look at Snapchat vs. Instagram.

Not that Snapchat's founders seem upset to have lost ? billions in return for staying independent, but it was a real choice.

Re:Why did they sell out?

[rtb61]

Huge company, you are kidding right, your joking I know it, they are a nothing company, another social fad company. All those social media companies are nothing but their users, lose the users and their is nothing there, they cease to exist and like all fads it is just a matter of time because INFINITE GREED. Shareholders will demand they monetise those users because the company is making fuck all money compared to the stock valuations, so when growth dies, either the monetise those users or the company dies.

Monetising users, means abusing those users, squeezing as much money as possible out of them by what ever means with psychological manipulation and identity slavery and eventually borderline credit card fraud and this of course pisses off the users and they start leaving, slow at first but the avalanche of users that follows is inevitable, just a march of statistical group behavioural pattern numbers.

Valuations for those companies is bullshit and the main thing that keeps them going is turning their stock once they IPO into basically junk bonds to buy other companies with actually good economic metrics, they pay too much of course, which turns those metrics to shit with excessive debt, but it looks better in their balance sheet and they can bury their debt in their wildly overinflated stock valuation, which ignores debt and lack of returns but focus on growth and what, losing even more money, woo hoo (google makes a lot of money but no where near enough to match it's valuation and YouTube loses because of the debt Google dumped in it by buying it hence the underlying reality of why they were cheating the content creating partners (haw, haw, haw) but cutting them out of ad payments by one excuse or another, yeah they want to sell ads on your content for free because greed.

Re:Why did they sell out?

[thegarbz]

If you sell out, you're being paid for your company, and are no longer going to be in charge.

Congratulations. You have distilled hundreds of pages of contracts with thousands of man hours of lawyer negotiations into own woefully inadequate sentence.

Re:Why did they sell out?

[Actually, I do RTFA]

Facebook is the fifth-most-valuable company in the world. While that may seem dumb to you, it means they could absorb, say, Disney and Ford and give up half of Facebook (numbers guesses, but probably accurate enough).

Yeah, FB could fail as a network, which is why FB as a company is so intent on buying the next hot thing: Instagram, WhatsApp, Snapchat(failed there). And investing in whatever else seems like the future: Oculus.

Re:Why did they sell out?

[kdubb1]

Somebody bought somebody.... you don't go

through a rigorous, contractually-defined valuation process involving two independent global investment banks

if you already own the other entity.

I mean... the whole point of this article is that they are in dispute of the previously established purchase valuation.

Re:Allow Me To Paraphrase

[Fly Swatter]

Kind of ironic that they got cheated.

Re:Now inter-corporate lawsuits?

[TheReaperD]

Yes, since, at least, 1936.

Don't sell out, you jackasses

[macraig]

The lesson to be learned here is not to get impatient and greedy when you have a promising company; don't sell out to the first bastard who dangles a big wad of acquisition (or IPO) cash in your face.

Re: Don't sell out, you jackasses

[macraig]

The point was that they never should have had another "owner" in the first place. They had to sell the original company in the first place to get into the current mess.

Re:no end to the greed of some people

[war4peace]

I met my wife on a dating website.
(I regret it now, but it has nothing to do with the website, the website was fine, my choices were shit)

Re:An employment contract

[war4peace]

Did someone say "SCROTUS"?