> 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 launched as an internal project at Match. Taking options in a majority-owned entity is...odd. There is no proper way to value a majority-owned entity without discounting for the majority ownership. Issuing options for the parent would have been a better offer and better ask.
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.
Tinder was a match.com spinoff startup and they gave the founders some stock and money... tinder did well and then when they re-acquired the company they did so at a valuation that allegedly improperly compensated some of the shareholders.
Note: they weren't really founders. Tinder was created by Hatch Labs, which they worked for and was owned by IAC.
I thought it was important to point that out as that's at the core of this lawsuit. The team was given options, but it was majority owned and controlled by Hatch Labs / IAC. When IAC acquired it, they're arguing IAC should've paid more.
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.
Simply put, options are an option to buy shares at a specified price sometime in the future.
For example, a company can give you options to purchase X amount of shares at a ridiculously cheap price ( like $0.0005 per share ). Many startups do this. Sometime in the future, you can exercise the option and get X amount of shares. If you don't exercise the option, then you don't get to buy shares at the agreed at price.
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 for $1M.
Earlier this year Match and Bumble both sued each other in the midst of an attempt from Match to acquire Bumble. I am a little lost but I think Match / Tinder sued for $450M for patent infringement and Bumble countersued for $400M for using the lawsuit to make them look less attractive to potential (non-Match) acquirers?
What do you mean not working out? Millions of dollars have been gained by many employees, and many millions added to company valuations. That is all winning the lottery in my book.
IIRC, they own one of the few online dating sites that actually generates a profit: match.com. All of their other properties, particularly Tinder and OkCupid, are basically meant to get younger people hooked so that they will eventually convert to paying for Match.com.
This is absolutely untrue. There are many very profitable dating sites and apps. Tinder is a fantastic example of a dating app making money hand over fist since they began monetising, their revenue is in the hundreds of millions per quarter. Tinder is projected to be half of all Match groups revenue this year.
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.
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:
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.
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 judges, lawyers and court cases more and more because of how emotion gets in the way of otherwise clear thinking which can be critical when people's lives are in the balance.
But, based on your statement, we safely assume you're not a judge or even a legal professional?
So without alternative argument from other legal professionals it is safe to assume that the legal professionals who crafted the statement, do so for it's effectiveness in achieving their goal, which is winning this suit and not for PR or convincing you personally.
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?
I have no idea why this is downvoted, I think this is pretty profound.
AI, or even sentiment analysis, could easily filter non-factual posturing from statements of objective fact. Of course, people can filter it too, you never see this type of crap slip in to an academic journal.
I think if an AI auto-highlighted social-judgements it could revolutionize how a lot of things are read (a news article, HN, etc)
I will say (and this is meta), I'm more than happy to take a hit every now and then for the sake of how comments work here because after my experience on other tech news sites' comment sections (e.g. Ars Technica, sorry to name names) which are full of emotional hysteria, mob mentality, and upvote whoring, I've come to see that HN has by far the most quality Internet comment culture anywhere - I've never seen it on the Internet before in my 20 years. So I don't mind, let's keep commenting when and where we think we have something useful to say, and thinking freely and openly in a way that's pretty strongly protected by the excellent guidelines established here at HN.
I don't know, if in fact the plaintiffs are being silly (losing lots of money can make people do silly things), I don't mind. I like when organizations are willing to call out bullshit. Whether or not it actually is bullshit is for the court to decide, but clearly match group believes it is.
Remember that judges read a whole lot of boring legalese every day. They enjoy it when it is slightly less boring.
Moreover, the a lot of that legalese is generated directly or indirectly by the propensity of chancers with lawyers launching frivolous suits. So if I was a judge, I would be quite happy to read a nice explanation of how silly the plaintiff is being.
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.
Some of the best HN has to offer in terms of interesting and thought provoking discussion is on generic tangents, and so long as the discussion remains civil and contained to those threads concerning it I see no reason to discourage it for being discussed.
I know how unsatisfying this is going to sound, but: this is a point on which we just have to pull rank. It's our job to foster the kind of site where signal/noise ratio doesn't completely suck, and many years of experience have taught us that generic tangents lead to low-quality discussions that grow like weeds.
I don't think I agree with you, but I want to make sure I understand what you're saying before I go down that route here. What exactly do you mean by a "generic tangent"? You originally said "political", but now you say "low-quality"? Are political discussions inherently low quality, or is low-quality in this context in addition to it being political in nature?
Do you think tedious or blatantly illiterate comments get as many flags as vaguely tangential or vaguely controversial comments?
(I really think there are lots of comments that are "blatantly illiterate", in that they respond to a meaning that is just obviously not in the parent. I guess that only kind of breaks the assume good faith guideline, as they are missing the meaning rather than mischaracterizing it.)
The point of the question is whether the userbase has been trained to respond aggressively to only a subset of low signal comments.
I'm not sure about tedious—there's an awful lot of tediousness in internet forum comments—but we certainly see many flags on blatantly unsubstantive posts.
My comment is directly related to the parent comment. I would hope HN moderators are not in the business of dismissing comments they do not agree with as 'generic tangents', but hey, it's your site I guess.
If it's only related via something generic then it's a generic tangent.
FWIW: when you deal with the quantity of this stuff that we do, "agree with" doesn't enter into it. It's not even in the same solar system. No one could sustain the cognitive load of having to agree or disagree with that many things.
I think you're right. Being civil doesn't pay dividends unless most other people are civil too too, and if incivility is punished. Neither of those things are true, generally, right now, so being civil just makes you look weak.
Nah, not really. Real morality maybe. But there are environments where "doing the right thing" will simply fuck you. (I guess you could argue if you were _really_ really strong, you could do the right thing and survive. But that's almost tautological. The point is, the environment you're in may force you to make the choice of "do things you would rather not" or "fail".)
Or, more concisely, hate the game, not the player.
I will agree "strength" is probably not the right descriptor there. I almost didn't play it because I wasn't entirely sure.
I'm not perfect, far from it, but I try to fail graciously before I choose to stray from doing the right thing.
That said, I absolutely do recognize that that is a luxury that not everyone has given their situation. However, I do think that some use that to justify not having to do the right thing in cases where that isn't actually true, and that at least striving to always do right, but sometimes failing to do the right thing due to circumstances is a better approach in the long term versus minmaxing immediate returns because doing the right thing is inconvenient.
I think it depends a lot on the thing involved. If it's just, oh hey, there's a norm of being kind of an asshole, then, fine, maybe it's not ideal, but go with it if that's what you have to do to be effective. (And I think that's the situation we were talking about originally, w/r/t "civility" in language.)
On the other hand, if it's something like "hey we're gassing the jews" or "we're bombing schoolbusses full of children," then hopefully you're doing everything you can to fight against it (though, emperically, most of us will just go along).
It depends on context. As much as some people would hate to admit it, communication and messaging is one thing POTUS is far from stupid about.
On Twitter and TV, he speaks the way he does to maximize attention and media coverage. He has found that evading basic courtesy is an effective way to use those media to his advantage.
In the context of a court statement or other official correspondence, I doubt you'd see him use such colorful language (indeed, check official White House correspondence signed by Trump: he doesn't).
I doubt he gets re-elected, so I would put forth the assertion that being non-civil and acting like a jackass doesn't work long term. People get a good look at it and it isn't appealing when they can see it for what it is.
Well, and the DNC by choosing the by-the-numbers weakest major party candidate in the history of polling (with slower negatives than Trump, sure, but much more committed negatives.)
Russian interference couldn't have tipped the balance (assuming it even did) if it hadn't been within range in the first place.
1.5 years of wall-to-wall TV news coverage got him elected. Has the TV news started to cover something else? Not that I've noticed; they have to chase the ratings after all and Trump has been a godsend for them. So, yeah, Hillary will lose to him again.
Despite everything that was known before the election, he was elected. And he delivered on the major promises to his core supporters (Supreme Court, tax cuts, hard on immigration, rolling back regulations, etc).
Uber is a great tech example of the same phenomenon. Many people on HN who rail about Uber's dubious business practices still use their services because it's convenient or because it is the cheapest. They may dislike the business but they aren't voting with their wallets. Uber "gets away" with slimy practices because "ends justify the means"
Depends on who the Dems run against him. But remember that Trump lost the popular vote by 3 million voters, and that even though a lot of left-wingers stayed home in protest of the Clinton-Sanders thing, and so far he's done a wonderful job of galvanizing fence-sitters against him.
I worked for match group as a C-level executive and had a equity structure that was similar, but on a way smaller scale. They use outside firms and a methodology called baseball arbitration to come up with a FMV. Although I didn't like some of the decisions that impacted the value of my equity, I was always treated fairly.
Yeah, basically. If the founder disagrees with IAC's/Match's valuation, they can come up with their own valuation and the "independent" outside party picks the winner, with no modifications.
It's already been mentioned that this particular document was not for a judge, but if it had been it would probably depend on the judge.
Many judges treat legal writing as a form of literature, and like to use interesting or creative language instead of just sticking to a dry boring style. I'm sure such judges would not mind some colorful language in filings as long as it helps get the point across.
A good lawyer will know if they are dealing with such a judge and write their filings appropriately.
Here are some examples of judges deviating from dry boring writing.
Noble v. Bradford Marine, Inc., 789 F. Supp. 395 (S.D. Fla. 1992) [1]. The section titles in the opinion are "Hurling Chunks", "Like a Winged Monkey Flying Out of the Ashes...", "NOT!", and "A Schwing and a Miss".
Fisher v. Lowe, 122 Mich.App. 418, 333 N.W.2d 67 [2]. A tree was hit by a car, and the owner of the tree sued. Defendants won and plaintiff appealed. The appeals court wrote this opinion:
We thought that we would never see
A suit to compensate a tree.
A suit whose claim in tort is prest
Upon a mangled tree's behest;
A tree whose battered trunk was prest
Against a Chevy's crumpled crest;
A tree that faces each new day
With bark and limb in disarray;
A tree that may forever bear
A lasting need for tender care.
Flora lovers though we three,
We must uphold the court's decree.
Affirmed
When West [3], published a copy of this case they kept to the spirit of of the judge's writing, and their summary was:
A wayward Chevy struck a tree
Whose owner sued defendants three.
He sued car's owner, driver too,
And insurer for what was due
For his oak tree that now may bear
A lasting need for tender care.
The Oakland County Circuit Court, John N. O'Brien, J.,
set forth The judgment that defendants sought
And quickly an appeal was brought.
Court of Appeals, J.H. Gillis, J., Gave thought
and then had this to say:
1) There is no liability
Since No-Fault grants immunity;
2) No jurisdiction can be found
Where process service is unsound;
And thus the judgment, as it's termed,
Is due to be, and is,
Affirmed
[3] a publishing company that took copies of the public domain court opinions and added notes pointing out each important legal point in the cases, labeled those points from an extensive legal subject classification they maintained, and added indexes and cross references to the other cases in the same volume and in their prior volumes. This was in an era when everything was done with paper documents, not electronic.
People who grew up with electronic documents and networks might find it quite interesting to look into how legal research worked in, say 1970. They might expect it to be cumbersome, but it was actually quite reasonable, due to metadata companies like West and Shepard's [4].
Random semi-tangential question: It seems that when companies/PR people/lawyers respond to lawsuits, they always use some version of this EXACT phrase:
"The allegations in the complaint are meritless, and ____ intends to vigorously defend against them."
Responses almost always use the word "meritless" (or "baseless") and almost always describe their forthcoming response to be "vigorous".
Is there a legal reason why these responses always use the same language? Or is this like an inside joke in legal circles?
It's a stock phrase that avoids committing to any theory of the case. (It's overused nature adds to its utility as a generic denial.) "Meritless" is also a bit of jargon that means "the alleged facts don't add up to a legal claim." It captures in one word what would otherwise be a complex phrase: "the allegations are false, and even if they are not, they fail to make up the elements of the asserted claims, and even if they did make up a legal claim, there is an applicable defense."
It really just means they believe the allegations are untrue and that they think the evidence will demonstrate they're untrue or there won't be enough evidence to prove them.
The reason this is often stated or quoted is that a defendant has to make a statement to this effect when replying to the complaint. However, at the time of the initial reply, no discovery will have occurred and therefore no evidence will be officially available to either prove or disprove the allegations. Accordingly, all you can really say at that time is "we disagree and believe the allegations in the complaint are not true and/or can't be proven."
Yes, the stock phrases are preferred due to having established meaning from case law – interestingly, simple language is less likely to have needed to be tested in court, so this force drives evolution of legalese!
Often when comments on a legal case, what you say could be misinterpreted and used against you at a later time. For example, if you said "we believe the claim that X did Y is untrue", it could be used later to say "they obviously agree the other facts are true then!".
If you use this stock statement, then it won't be used against you at a later time.
Because when people hear a word they like, they like to try and use it every chance they get. They want to show off their large vocabulary. I remember thinking something similar when the election cycle rolls around and every pundit and news anchor is talking about how an issue "resonates" with voters. An otherwise rarely used word that becomes used to describe something specific becomes almost like a brand name.
I'm playing the smallest violin in the world for these guys, a la Reservoir Dogs :-). I hope they can find a new job :-( if they can't suss out this 2b :-(((
$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.
I was active in online dating around the time Tinder came out, and there was a lot of talk about finding the "Grindr for straight people" - like some sort of holy grail. Consensus at the time was that women weren't interested - that just swiping on pictures didn't appeal to them. But if only they could be - filling out a whole profile was a lot of work that turned off a lot of people...
But the reality is that online dating was starting to become more and more acceptable and normalized so that line was crossed, Tinder became a thing, and the rest is history (including most other dating apps evolving towards being clones of it)
It’s actually a well researched business case study and in the case of Tinder carried out perfectly. It’s too hard for existing company to disrupt itself because it takes too long for the new venture to make a significant difference to the bottom line, the value chain and company structure is too entrenched, the standard for excellence is too high for a nascent product or service. In business literature to avoid getting disrupted you’re supposed to set up a independent office far away and incentivize the “founding” team with upside and full autonomy and credit for success.
Thanks, yeah that makes sense. They weren't spawned from Match which was the source of my confusion they were wholly incubated under IAC Hatch, which makes a lot more sense.
Are you kidding? The same reason Mars produces different chocolate bars. The same reason facebook owns mutliple social networks. The same reason Apple produces multiple phones.
My question was specifically of why they were spawned from Match which was what the OP stated. They were not actually spawned from Match they were actually incubated under IACs Hatch [1].
Mars produces different chocolate bars for different markets Milky Way was a US product while Mars was an English product. Both Tinder and Match exist in the same markets.
Facebook owns multiple social networks b/c they were a threat to their business. Those are actually different products. The main differentiator between Tinder and Match is the Tinder is mobile-centric. FB did not spin up a separate start up under a different name when it launched it's mobile version did it? No because it had well-established brand awareness much like Match.
Apple also didn't produce a second company to launch the iPhone X did it? No because it had well-established brand awareness much like Match.
That's part of the IAC culture, they have a lot of companies/brands under their belt: Match, Angie's List, Ask, College Humor, dictionary.com, OkCupid, Plenty of Fish, Vimeo, Daily Beast, etc etc.
You’re going to be matched with the person you married. Tinder is a little thing that that’s not even a flame... much more casual. Less commitment. More swipes.
Try new things? Aware incubating as a startup is better? Maybe they had many of these. They own match, okcupid, plentyoffish and others, would have made sense to setup a bunch of app teams and let them play.
If you had this obviously brilliant app idea why would you launch it as an internal project? Something about the founding story here has never added up.
There might be clauses in those Tinder founders' employment contracts with Match.com that any intellectual property that they came up with during their employment belongs to Match.com.
There's a similar plot in the Silicon Valley TV show (Piped Piper v.s. Hooli).
Not really. For people that work with social networks and social dynamics it was an obvious game changer. (Not obvious to invent, obviously, but once shown, anyone who understands the space could see its brilliance.)
Match, Tinder and Bumble are in a weird relationship. Match tried to make an inappropriate pass atTinder, but she is not interested, so considers it as a sexual harassment. Same goes for Bumble.
This is a relationship 101. If they can't settle internally then they should leave this dating business :-)
Unsurprisingly, if you start treating a personal relationship like a legal agreement, you'll probably suffer the situation just as badly as if you treat a legal agreement like a personal relationship. They're entirely different creatures. There's no "relationship 101" that covers them both.
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 launched as an internal project at Match. Taking options in a majority-owned entity is...odd. There is no proper way to value a majority-owned entity without discounting for the majority ownership. Issuing options for the parent would have been a better offer and better ask.