Tinder co-founder Sean Rad, along with nine other plaintiffs, sued Tinder’s parent company IAC / Match Group earlier this month over alleged devaluation. The case centers on stock options and, ultimately, how much the original team deserved to be compensated for their work on Match’s most profitable app.
The Verge reported last week that a source close to Tinder suggested that although Rad claims Tinder was undervalued in July 2017 at $3 billion, he still exercised his options and ended up receiving more than $94 million and around 816,000 shares of IAC stock. This source took these actions as evidence that Rad didn’t believe in Tinder’s future success. Following the private Tinder valuation, the app was merged into Match Group, and Rad and his co-plaintiffs claim in the lawsuit that this effectively canceled all future valuation opportunities for the startup team, meaning their Tinder options turned into Match or IAC options.
Rad says he was forced to exercise his options in August 2017, before he was fired from Tinder in September. He had to exercise them, he says, because they would expire after his dismissal from the company. In a statement to The Verge, he says:
“After Match and IAC cheated us and violated our contracts, they took away our ability to participate in Tinder’s future successes and forced me to accept Match options in place of Tinder options. Those options would expire in 30 days once they fired me. I had no choice but to exercise them, and when I did that, Match gave me IAC stock. IAC is a holding company full of assets I don’t believe in and that stole billions of dollars from its employees. So I sold the stock. Tinder is the company we built and I continue to believe in — not IAC or Match.”
SEC documents indicate that Rad might still own IAC stock. He doesn’t have to publicly report buying or selling these shares because whatever he’s holding represents less than 5 percent of the company.
Meanwhile, Match did indeed fire Rad from his Tinder chairman position on September 14th, 2017 — a fact that wasn’t widely publicized. A source close to the company still suggested that Rad exercised his options prematurely. Had he held on to his stock for 30 days from his firing date, this source says, he would have received millions of dollars more than he actually did, as Match stock went from $18.89 per share when he exercised his options to $25.79 over the 30 days from his firing. Rad’s lawsuit only briefly mentions his dismissal in one line, stating that Match’s general counsel Jared Sine terminated his employment. The lawsuit implies that Rad was let go because he often clashed with former Tinder CEO Greg Blatt, and that Blatt had it out for him, not because of any errors on his part. Match Group spokesperson Justine Sacco says the company “won’t comment on hypotheticals,” regarding Rad’s firing claim.
All that’s clear at this point is that Match and Rad fundamentally disagree about what shares Rad should have owned. Rad wants Tinder stock, even though Tinder was formed out of IAC’s startup accelerator Hatch Labs; instead, he got saddled with IAC shares.