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Tinder founders sue parent companies Match and IAC for at least $2B

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Re: Tinder founders sue parent companies Match and IAC for at least $2B

#121

Post by thirdsun »

larkeith wrote: post #18
hello_asdf wrote: post #3

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

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.

Unrelated thought, but I couldn't help but think that it would be nice if we could hold government officials, like...well...the president of the United States, to the same standards.

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#122

Post by spaceflunky »

geofft wrote: post #22

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…

Does anyone else find poetic justice in the fact that all these dating apps have hilariously dramatic business relationships that aren't working out?

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#124

Post by nextweek2 »

Kiro wrote: post #113
JumpCrisscross wrote: post #2

> 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 laun…

> Wait, they didn't exercise their options into the sale? What does this mean exactly?

If you’re given share options they can be worthless after the acquisition is complete. I’m not sure exactly how because it’s legal and accounting practice. Hence the lawsuits.

If you have share options and you catch wind of a buyout, exercise (buy) the shares. That’s when you have a stake in the game.

You have to remember that the company that issued the options won’t exist (in the same form) once acquired, the options become worthless. Sometimes they’ll throw you a bone but that’s usually the bare minimum of what they can get away with.

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#125

Post by nautilus12 »

vqc wrote: post #90
mindfulhack wrote: post #87

Earlier quoted context omitted.

If I were a judge, I'd only have a slightly more negative or skeptical attitude towards IAC/Match as a result of that PR statement, at best. I'm not buying the wisdom yet. Anyone have something more convincing? Or am I wrong about most judge's mindsets? Don't judges 'see through' PR? Isn't their job about facts, not being influenced by rhetoric? Are our judges crap? BTW, this is one reason why AI ought to assist judg…

Can you give an example of how AI might help judges/lawyers/etc discern facts and avoid the influence of rhetoric? Isn't it a bigger issue that even if people agree on the facts, the law can be mushy with concepts like "reasonable" such that two people can reasonably disagree on what is reasonable given the same facts?

Was reading this comment chain and did a double take on “Can you give an example of how AI might help...” coming out of the blue.

Yep this is hacker news.

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#127

Post by krn »

beaner wrote: post #100
modells wrote: post #94

Earlier quoted context omitted.

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.

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

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

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#128

Post by krn »

ArtWomb wrote: post #30

$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.

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.

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#129

Post by chronolitus »

themagician wrote: post #33
JumpCrisscross wrote: post #2

> 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 laun…

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

I just read the plaintiff's complaint, here's my summary (IANAL):

- Match gave Tinder founders Tinder stock options, ~20% of Tinder's total worth.

- Since Tinder is private, Tinder founders could only sell options to Match. Match would then have to pay 20% of Tinder's 'Worth' to the founders.

- The founders could only sell at specific points in time, called "scheduled puts".

- Since Tinder is private, 'Worth' is not easy to objectively determine. They have to bring in an external party, give the party information on how the company is doing, and the external party then gives an estimate of valuation.

Obviously, Match has an incentive for valuation to be as low as possible. Tinder founders have the opposite incentive. thus,

- Valuation was agreed to be supervised by Tinder, to prevent Match interfering.

So Tinder founders alledge:

- Match removed some Tinder higher-ups and replaced them with their own loyal people.

- They then had the loyal higher-ups systematically devalue the company (give pessimistic outlooks, earning forcasts, etc) right before a Scheduled put, to influence the third party into estimating as low a valuation as possible

- Once the third party estimated a value of $3 billion, they merged Tinder into match. Since Tinder didn't exist anymore, the Tinder options transformed into $3 billion's worth of Match options.

At this point, any crazy future growth in Tinder would not directly translate into crazy growth in the payout Match has to give to the Founders if the cash out.

Essentially, beforehand the founders were holding on to X billion dollars of options, set to increase proportionally to Tinder's value. After Match's 'scheming' they found themselves holding on to $3 billion of Match options, no longer set to increase proportionally to Tinder's value, but to Match's value.

The founders argue that X > 3, and Tinder's value is set to increase much more than Match in the future, that Match also knows this and cheated for that purpose.

-----

Extra details are included, such as the fact that Match stood behind one if it's 'infiltrated' loyalists when he was accused of sexual misconduct, just long enough for him to execute the low valuation, then had him fired with a golden parachute. The defendants claim this is further proof that there was intentional foul play at hand.

Re: Tinder founders sue parent companies Match and IAC for at least $2B

#130

Post by pjc50 »

nextweek2 wrote: post #124
Kiro wrote: post #113

Earlier quoted context omitted.

> Wait, they didn't exercise their options into the sale? What does this mean exactly?

If you’re given share options they can be worthless after the acquisition is complete. I’m not sure exactly how because it’s legal and accounting practice. Hence the lawsuits. If you have share options and you catch wind of a buyout, exercise (buy) the shares. That’s when you have a stake in the game. You have to remember that the company that issued the options won’t exist (in the same form) once acquired, the optio…

Yes, but the options may be out-of-the-money at this time, and it costs real money to exercise them and may have tax implications.
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