Dating sites sued
The suit alleges that when Rad notified IAC officials of Blatt's conduct, they covered it up and kept Blatt as CEO specifically because he was central to their plan to downplay the valuation. Rad said Pambakian told him about the incident shortly after it happened, and that when he confronted Blatt about it, the CEO threatened him. 'If you take me down, I'm going to take you down with me,'" he told CNN.
IAC's statement did not respond to the lawsuit's allegations of sexual harassment against Blatt.
"By the time we had anything in contract, Tinder was already big," Rad said. The share of the company to which the early employees are entitled is not at issue in the suit; they ultimately agreed to the roughly 20% they were given.
"The early team gave it their all, and they sacrificed like any founder of any company does, or early employees of any company does. The question in the lawsuit is the value of that stake.
The statement said that Rad and other former executives who left the company a year or more ago "may not like the fact that Tinder has experienced enormous success following their respective departures, but sour grapes alone do not a lawsuit make." Tinder's 2017 valuation was set at billion, unchanged from a valuation that had been done two years earlier, despite rapid growth in revenue and subscribers.
The suit charges that executives with Match and IAC deliberately manipulated the data given to the banks, overestimating expenses and underestimating potential revenue growth, in order to keep the 2017 valuation artificially low.
Rad told CNN that employees were told they'd be fired if they provided the correct information.
IAC overall, which is controlled by media magnate Barry Diller and which also includes brands such as Angie's List and The Daily Beast in addition to the services that make up Match, has a market cap of about billion.On an investor call about the earnings report, Match's CFO told investors it now expects Tinder to generate 0 million in revenue this year, which he called a "phenomenal achievement." The suit says that is 75% higher than the 2018 estimate used in the 2017 valuation.The suit provides a fascinating look behind the scenes not only at the operations of Tinder, but also of the kinds of battles that can happen between technology innovators who create new companies and the investors who help to finance their early operations.The price of both stocks slumped immediately after the suit was filed. Last week, shares of Match shot up 17% in a single day and shares of IAC jumped nearly 8% after Match reported huge gains from Tinder.Revenue from Tinder alone was up 136% over the last year, coupled with an 81% increase in the number of subscribers.