
Tinder founders sue parent companies Match and IAC for at least $2B - hvo
https://techcrunch.com/2018/08/14/tinder-match-lawsuit/
======
JumpCrisscross
> _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_

Wait, they didn't exercise their options into the sale? Did the founders hire
a team of squirrels as their bankers? This is M&A 101 when switching to
majority control.

EDIT: Ah, Tinder was launched as an internal project at Match. Taking options
in a majority-owned entity is...odd. There is no proper way to value a
majority-owned entity without discounting for the majority ownership. Issuing
options for the parent would have been a better offer and better ask.

~~~
themagician
Can you ELI5 for me, because I don't understand this at all.

~~~
sjg007
Tinder was a match.com spinoff startup and they gave the founders some stock
and money... tinder did well and then when they re-acquired the company they
did so at a valuation that allegedly improperly compensated some of the
shareholders.

~~~
thesausageking
Note: they weren't really founders. Tinder was created by Hatch Labs, which
they worked for and was owned by IAC.

I thought it was important to point that out as that's at the core of this
lawsuit. The team was given options, but it was majority owned and controlled
by Hatch Labs / IAC. When IAC acquired it, they're arguing IAC should've paid
more.

------
geofft
In 2014, former Tinder VP Whitney Wolfe, who previously had a "cofounder"
title (and would later go on to found Bumble), sued IAC and Match over sexual
harassment from another Tinder "cofounder" Justin Mateen, who is one of the
plaintiffs in _this_ lawsuit. (I put "cofounder" in quotation marks because it
was an internal project at IAC and the history is a complicated.) Mateen was
suspended and the lawsuit was settled for $1M.

[https://www.washingtonpost.com/news/the-
switch/wp/2014/07/01...](https://www.washingtonpost.com/news/the-
switch/wp/2014/07/01/read-the-most-surprising-allegations-from-the-tinder-
sexual-harassment-lawsuit/)

[https://techcrunch.com/2014/07/09/whitney-wolfe-vs-
tinder/](https://techcrunch.com/2014/07/09/whitney-wolfe-vs-tinder/)

[http://valleywag.gawker.com/every-fucked-up-text-from-the-
ti...](http://valleywag.gawker.com/every-fucked-up-text-from-the-tinder-
sexual-harassment-1598642609)

Earlier this year Match and Bumble both sued each other in the midst of an
attempt from Match to acquire Bumble. I am a little lost but I think Match /
Tinder sued for $450M for patent infringement and Bumble countersued for $400M
for using the lawsuit to make them look less attractive to potential (non-
Match) acquirers?

~~~
jessaustin
Match might have to find a model besides "buy the latest popular matchmaking
firm"?

~~~
fatjokes
IIRC, they own one of the few online dating sites that actually generates a
profit: match.com. All of their other properties, particularly Tinder and
OkCupid, are basically meant to get younger people hooked so that they will
eventually convert to paying for Match.com.

~~~
modells
OkCupid started as a free, alternative, non-traditional dating site based on a
full-spectrum of interests compatibility. Unfortunately, post-acquisition,
it’s becoming yet another Tinder/Match pics-first shallow hookup site.

~~~
beaner
OkCupid began monetizing before being acquired and that's part of what made
them attractive.

~~~
krn
OkCupid sounds exactly like PlentyOfFish, also acquired by The Match Group.

------
hello_asdf
That is a brutal response from Match and IAC. Their statement also mentions
that two separate banks were part of the valuation. I'd be curious what their
proof is. A couple fun phrases from the statement:

> _his merry band of plaintiffs_

> _but sour grapes alone do not a lawsuit make_

~~~
larkeith
Honestly, this makes me lose any respect I might have had for them - while the
lawsuit seems odd, resorting to ad hominem attacks is extremely
unprofessional, and especially so in a PR statement. Civility and basic
courtesy is not copyrighted, use it in your public statements.

~~~
craftyguy
> Civility and basic courtesy is not copyrighted, use it in your public
> statements.

POTUS would disagree. Civility and basic courtesy are no longer popular. Such
is the world we now live in.

Edit: Anyone care to dispute this? I don't agree with it, but I'm also not
willing to ignore it.

~~~
dang
Please don't take HN threads on generic tangents and certainly not political
ones.

~~~
Bjartr
Some of the best HN has to offer in terms of interesting and thought provoking
discussion is on generic tangents, and so long as the discussion remains civil
and contained to those threads concerning it I see no reason to discourage it
for being discussed.

~~~
dang
I know how unsatisfying this is going to sound, but: this is a point on which
we just have to pull rank. It's our job to foster the kind of site where
signal/noise ratio doesn't completely suck, and many years of experience have
taught us that generic tangents lead to low-quality discussions that grow like
weeds.

~~~
maxerickson
Do you think tedious or blatantly illiterate comments get as many flags as
vaguely tangential or vaguely controversial comments?

(I really think there are lots of comments that are "blatantly illiterate", in
that they respond to a meaning that is just obviously not in the parent. I
guess that only kind of breaks the assume good faith guideline, as they are
missing the meaning rather than mischaracterizing it.)

The point of the question is whether the userbase has been trained to respond
aggressively to only a subset of low signal comments.

~~~
dang
I'm not sure about tedious—there's an awful lot of tediousness in internet
forum comments—but we certainly see many flags on blatantly unsubstantive
posts.

------
nlh
Random semi-tangential question: It seems that when companies/PR
people/lawyers respond to lawsuits, they always use some version of this EXACT
phrase:

"The allegations in the complaint are meritless, and ____ intends to
vigorously defend against them."

Responses almost always use the word "meritless" (or "baseless") and almost
always describe their forthcoming response to be "vigorous".

Is there a legal reason why these responses always use the same language? Or
is this like an inside joke in legal circles?

~~~
eberkund
Because when people hear a word they like, they like to try and use it every
chance they get. They want to show off their large vocabulary. I remember
thinking something similar when the election cycle rolls around and every
pundit and news anchor is talking about how an issue "resonates" with voters.
An otherwise rarely used word that becomes used to describe something specific
becomes almost like a brand name.

~~~
PhasmaFelis
Or because it's a carefully-chosen legalism that _appears_ to say "I am
innocent" while _actually_ only saying "the case against me will fail."

------
forkLding
For those who don't know, Tinder was launched by Sean Rad and his team out of
IAC's incubator Hatch Labs and IAC owns most of Tinder since launch.

More detailed link here: [https://www.hollywoodreporter.com/news/barry-
dillers-iac-sue...](https://www.hollywoodreporter.com/news/barry-dillers-iac-
sued-by-tinder-founders-2-billion-1134767)

------
msmith10101
Glad to see founders get the employee treatment ;-)

~~~
spaceflunky
Except its more like employees getting the employee treatment.

~~~
msmith10101
I'm playing the smallest violin in the world for these guys, a la Reservoir
Dogs :-). I hope they can find a new job :-( if they can't suss out this 2b
:-(((

------
ArtWomb
$3B valuation sounds quite reasonable for Tinder. Even with Tinder Gold
"resetting the metrics" with per transaction monetization.

$IAC total revenues last quarter was approx $1B. At market valuation ~$16B. I
could be very wrong, but valuing Tinder at $10B seems upper bound optimistic
to me. Match probably enjoys 10x engagement.

~~~
krn
Market valuation in tech is all about growth, not revenue. The rest of the
companies in The Match Group (Match, OkCupid, PlentyOfFish) are nowhere near
as attractive to the younger generation.

------
mistrial9
I suspect that Tinder came from the Hot-or-Not Mashup Camp contest entry years
ago .. Can anyone confirm that ?

~~~
DeonPenny
No it was an internal startup made from Match.

~~~
bogomipz
Why did a dating site launch a dating app as a separate startup? What was the
logic there?

~~~
ajcodez
It’s actually a well researched business case study and in the case of Tinder
carried out perfectly. It’s too hard for existing company to disrupt itself
because it takes too long for the new venture to make a significant difference
to the bottom line, the value chain and company structure is too entrenched,
the standard for excellence is too high for a nascent product or service. In
business literature to avoid getting disrupted you’re supposed to set up a
independent office far away and incentivize the “founding” team with upside
and full autonomy and credit for success.

~~~
bogomipz
Thanks, yeah that makes sense. They weren't spawned from Match which was the
source of my confusion they were wholly incubated under IAC Hatch, which makes
a lot more sense.

------
bradbatt
"Mr. Rad and his merry band of plaintiffs"

I sometimes really love legalese.

------
pssflops
Mom always said if you play with match.com, you're going to get burned.

------
CryoLogic
tl;dr

match.com: we would like to buy tinder.

tinder: for how much?

match.com: we will offer you our stock in exchange for yours at a fair
valuation.

tinder: okay!

match: alrighty accountants, round down on everything and use the
methodologies that provide tinder with the lowest valuation.

tinder: not fair!

------
rajacombinator
If you had this obviously brilliant app idea why would you launch it as an
internal project? Something about the founding story here has never added up.

~~~
bing_dai
There might be clauses in those Tinder founders' employment contracts with
Match.com that any intellectual property that they came up with during their
employment belongs to Match.com.

There's a similar plot in the Silicon Valley TV show (Piped Piper v.s. Hooli).

~~~
ralston
Only if there was a Gavin Belson in this version

------
mandeepj
using their domain terminology, just for fun -

Match, Tinder and Bumble are in a weird relationship. Match tried to make an
inappropriate pass atTinder, but she is not interested, so considers it as a
sexual harassment. Same goes for Bumble.

This is a relationship 101. If they can't settle internally then they should
leave this dating business :-)

~~~
Retra
Unsurprisingly, if you start treating a personal relationship like a legal
agreement, you'll probably suffer the situation just as badly as if you treat
a legal agreement like a personal relationship. They're entirely different
creatures. There's no "relationship 101" that covers them both.

