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TechnologyTinder's co-founders, along with eight other current and former executives, have slapped the popular dating app's owners with a massive lawsuit. In the suit filed Tuesday in New York, the Tinder employees past and present say the companies that own the app deliberately undervalued it to swindle them out of the money they were owed.
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And that is no small sum, according to founders Sean Rad, Justin Mateen, Jonathan Badeen and their fellow plaintiffs. They are seeking at least $2 billion in damages from IAC/InterActiveCorp and its subsidiary Match Group, the company that owns Tinder and dating sites such as OkCupid and Match.com.
The suit claims the pair of companies carried out a multipronged scheme. First, according to the complaint, they stifled the value of the stock options held by early employees as part of agreements signed in 2014, exaggerating expenses, downplaying growth and delaying the launch of features to cook up a pessimistic projection of Tinder's fortunes. Then IAC merged Tinder and IAC's subsidiary, Match — in a bid to ensure stockholders wouldn't benefit from Tinder's significantly rosier outlook going forward, according to the complaint.
That 'lowball' estimate valued Tinder at $3 billion. The plaintiffs do not offer a number for what they believe to be the real value, though they say they 'owned options representing more than 20% of the value of Tinder.' That percentage, coupled with their requested damages, suggests their estimate of Tinder's real value at the time was north of $10 billion.
What's more, the 55-page complaint lodges a particularly incendiary claim, this one specifically about Match CEO Greg Blatt, who replaced Rad as Tinder's chief executive in December 2016. That same month, at Tinder's holiday party, Blatt allegedly 'groped and sexually harassed' the company's vice president of marketing and communications, Rosette Pambakian, who has joined the suit as a plaintiff.
'Because a credible investigation — let alone a firing in public view — would have derailed their scheme, Defendants whitewashed Blatt's misconduct. Defendants kept Blatt in place as Tinder's 'interim' CEO long enough to complete the private valuation and secret merger of Tinder,' Rad and his fellow plaintiffs say.
'But just two weeks after their scheme concluded, Defendants publicly announced Blatt's 'retirement' — rewarding him with a lucrative golden parachute and a glowing farewell message from [IAC Chairman Barry] Diller praising Blatt's 'integrity.' '
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The suit does not personally name Blatt as a defendant, however.
IAC, for its part, blasted the allegations as 'meritless.'
'With respect to the matters alleged in the complaint, the facts are simple: 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,' the media conglomerate said in a statement to NPR.
'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,' the company added. 'Mr. Rad has a rich history of outlandish public statements, and this lawsuit contains just another series of them.'
Justin Mateen, a co-founder and plaintiff in the suit, was himself pushed out of the company after a former Tinder vice president leveled sexual harassment and discrimination claims against him, allegations she sued over and settled in 2014. Rad was demoted briefly in the wake of that scandal, only to resume his post as CEO — only to step down again, shifting to a role as chairman when Blatt stepped in.
It was just half a year after Blatt's ascension that the disputed valuation at the heart of the complaint was determined, and just two weeks after that valuation, Blatt left the company. And not long after that, Rad left as well — but not before Blatt threatened to ' 'take [Rad] down' with him,' according to the complaint.
'We were always concerned about IAC's reputation for ignoring their contractual commitments and acting like the rules don't apply to them,' Rad said in a statement released Tuesday. 'But we never imagined the lengths they would go to cheat all the people who built Tinder.'