Tinder Employees Sue Match Group for $2 Billion

  • Tuesday, August 21 2018 @ 08:23 am
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Sean Rad, Co-founder of Tinder
Sean Rad, Co-founder of Tinder

Former and current Tinder employees slapped a lawsuit against parent company Match Group, claiming the popular dating app was purposefully devalued at the time Match Group was valuating stock options. The Tinder employees suing Match Group were placed on administrative leave, according to a report by MSN.

The ten former and current Tinder employees initiating the lawsuit include founder and ex-CEO Sean Rad along with co-founders Justin Mateen and Jonathan Badeen. Tinder’s VP of Communications Rosette Pambakian has also joined the lawsuit, and claims that IAC/ Match Group executive Greg Blatt sexually harassed her at a company party. (IAC changed its name to Match Group, but the company is still owned by media mogul Barry Diller.)

Pambakian wrote an email to Tinder employees explaining her decision, as reported by Fortune Magazine:

“I am very proud of Tinder and the work that our amazing team is doing here,” Pambakian wrote. “I joined this suit because I believe that it is important to shine a light on the terrible practices I have witnessed from Match, including covering up sexual misconduct by senior executives and depriving talented employees of hard-earned compensation.”

According to The Verge, the lawsuit alleges that Match Group purposefully merged Tinder into Match Group in 2017 to avoid valuating Tinder stock separately at later dates when employees would have a chance to exercise their stock options. By doing this, the company intentionally undervalued Tinder because the stock options were converted into Match stock, which devalued their options.

In addition, the lawsuit says that when Greg Blatt was reported for his behavior, Match executives did nothing about it until the Match merger was complete, after which he resigned. The suit alleges he was key in the plan to minimize Tinder’s valuation and deny early employees billions of dollars in stock options, which is why he was kept on board. Today, he is still on the Match Group Board of Directors though he is no longer an employee.

The Verge says the lawsuit contains other damning information against Match Group, including that IAC/ Match Group lied about Tinder’s growth, falsified financial information, and delayed the launch of its paid service Tinder Gold, which was a big part of Tinder’s substantial revenue gains. According to the lawsuit, IAC continued to value Tinder at $3 billion despite the increased revenue.

For the second quarter of 2018, Tinder revenue contributed significantly to Match Group’s total revenue of $428 million, which was above analyst expectations. This news came just before news broke of the lawsuit Tinder filed.

In a statement to Recode, Match Group said of the lawsuit: “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...We look forward to defending our position in court.”

On behalf of Tinder, Rad said in a statement: “We were always concerned about IAC’s reputation for ignoring their contractual commitments and acting like the rules don’t apply to them. But we never imagined the lengths they would go to cheat all the people who built Tinder.”