Tinder owner slashed app value even as revenue grew, founder says
Match Group, Barry Diller’s dating app giant, downplayed Tinder’s value as it negotiated with the login app’s founders over their release packages in 2017, causing them to lose billions of dollars over the course of of the process, co-founder Sean Rad said in court.
Specifically, Rad said on Friday that Match – which also owns OKCupid, Hinge and PlentyOfFish – attributed the same $ 3 billion value to Tinder that it gave internally two years earlier, despite revenue that had since quadrupled. .
Rad has made the dramatic allegation in support of a lawsuit he and other early Tinder employees have filed against Match and its parent company IAC, the Diller-controlled media conglomerate. They say Diller’s companies intentionally prepared the books to value Tinder at just $ 3 billion in 2017, when it should have been worth at least $ 13.2 billion.
They are suing companies for $ 2 billion, which they claim to be their fair share of the proceeds. Match Group has denied the charges.
On Thursday, Rad described a 2015 review process in which some Tinder employees were allowed to sell stock options. In order to determine how much employees would be paid for options, Rad said Match executive chairman Greg Blatt, who later became the CEO of Match and Tinder, had to sign a number for the Tinder review.
“It was Greg Blatt and the Match Group [who] set the valuation at $ 3 billion for Tinder in 2015, ”Rad said, adding that he had“ no doubt ”that Blatt personally approved the dollar amount.
Tinder was then valued again at $ 3 billion in 2017 – a decision jurors may question as Rad testified that Tinder’s revenue increased 400% between reviews, according to Susquehanna’s litigation analyst. Thomas Claps.
“This new evidence at trial raises the obvious / logical question for the jury as to how Tinder could only have been worth $ 3 billion two years later,” Claps said in an investor memo shared with The Post.
An IAC spokesperson told The Post that Tinder did not deserve the $ 3 billion prize in 2015, but that the company made payments based on a higher valuation to retain talent, as they believed. that Tinder employees were misled about the company’s valuation.
“In 2015, some Tinder employees were given the opportunity to participate in a liquidity event where IAC offered and then bought Tinder options at a premium price,” the spokesperson added. “IAC covered some accounting fees because the price we bought the Tinder options at was much higher than Tinder’s market value at the time. All accounts show that Tinder was not valued at $ 3 billion in 2015. “
While the Match team have yet to cross-examine Rad on the request, Claps said he expects the argument to play heavily in Rad’s team’s closing arguments, which are scheduled for the week after Thanksgiving.
Blatt himself spoke on Friday afternoon, where he was questioned by attorney for Rad Orin Snyder about previous statements he had made on the outlook for Tinder, including a call from investors in May 2017, where Blatt declared that Tinder was an “amazing company” and said that new features would continue to “drive our continued growth”.
Before Blatt’s testimony, Friday morning’s session saw testimony in favor of Rad from Jonathan Badeen, an early Tinder executive who is still with the company.
Badeen, who was initially a plaintiff in Rad’s lawsuit but was forced to drop out because he signed an arbitration agreement, said he felt pressure from Blatt to downplay Tinder’s prospects in 2017 Blatt did not respond to the allegation on Friday but is expected to do so early next week when his testimony continues.
Match’s lawyers have sought to question Badeen’s credibility by claiming that he has signed a litigation finance agreement under which he should receive an undisclosed sum of money if the jury decides in favor of the camp. Rad.
Rad’s attorneys say Badeen and two other witnesses with litigation finance deals – former Tinder executives James Kim and Rosette Pambakian – signed the deals to help offset stock options that Tinder withdrew when they initially joined the trial. They say the money has nothing to do with their testimony.
Manhattan Supreme Court Judge Joel Cohen declined to expel witnesses with litigation funding deals, but said the defense was allowed to raise the issue before jurors.
Rad’s team asked whether a juror in the trial broke rules prohibiting discussing or watching media coverage of the trial outside the courtroom on Friday, telling Judge Cohen that a juror “enters court with the New York Post under each day. ”
Justice Cohen subsequently reminded jurors not to watch any media coverage of the trial.
Rad spokeswoman Brandy Bergman did not respond to a request for comment.