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Tinder founders sue dating app's owner for $2 billion

"We never imagined the lengths they would go to cheat all the people who built Tinder," the company's former CEO said.
by Claire Atkinson and Alyssa Newcomb /
Swiping Right on Inclusivity with Tinder & GLAAD @SXSW 2017
Founder and CEO of Tinder Sean Rad attends Swiping Right on Inclusivity with Tinder and GLAAD at SXSW 2017 at the Austin Convention Center on March 10, 2017 in Austin, Texas.Vivien Killilea / Getty Images for Tinder/GLAAD file

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The founders of the dating app Tinder sued its owner on Tuesday for at least $2 billion in damages, charging that they were cheated out of stock options.

Tinder's founders — Sean Rad, Justin Mateen and Jonathan Badeen — and several other members of its executive team are accusing IAC/InterActiveCorp and its dating-focused subsidiary, Match Group, of financial manipulation that resulted in their stock options being stripped away.

Of the founders, only Badeen is still at the company.

Rad, Tinder’s co-founder and first CEO, said in a statement to NBC News: “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.”

The statement claims that Tinder is on pace to earn $800 million this year, which is 75 percent more than IAC/Match projections. The Tinder founders said in its lawsuit, filed in New York, that IAC, which is led by Chairman Barry Diller, concocted false financial information, hiding truthful projections of continued rapid growth and delaying the launch of new products.

IAC and Match released a joint statement via email calling the allegations “meritless” and saying that the company plans to “vigorously defend against them.”

“Mr. Rad has a rich history of outlandish public statements, and this lawsuit contains just another series of them,” the company said in its statement. “We look forward to defending our position in court,”

As IAC increased its majority stake in Tinder in 2014, Rad, Mateen, Badeen and the others bringing the lawsuit received stock options representing 20 percent of the value of the company they had helped build, with the option to sell to IAC/Match at four future dates.

At the end of 2016, months before the first date, Greg Blatt, Match’s chairman and CEO, was named as the interim CEO of Tinder. Match’s chief financial officer and chief strategy officer were also “inserted” into Tinder operations, “to allow defendants to control the valuation of Tinder and deprive Tinder option holders of their right to participate in the company’s future success,” the lawsuit alleged.

Blatt’s role in Tinder was a “glaring conflict of interest,” according to the lawsuit, which describes him as a “longtime lackey” of Diller, IAC’s controlling shareholder.

The defendants are accused of lowballing the value of Tinder and painting an “alternate universe, in which Tinder was stagnating toward freefall.”

The complaint also includes allegations that Blatt groped and sexually harassed Rosette Pambakian, Tinder’s vice president of marketing and communications, in front of colleagues at the company’s December 2016 holiday party in Los Angeles. Pambakian is still with the company.

Blatt is described in the lawsuit as someone who has a “well-earned reputation as a notorious bully with a volcanic temper and a habit of threatening to fire employees who contradicted him.”

No action was taken after the incident, “because a credible investigation — let alone a firing in public view — would have derailed their scheme," the lawsuit alleged.

“But just two weeks after their scheme concluded, Defendants publicly announced Blatt’s ‘retirement’ — rewarding him with a lucrative golden parachute and a glowing farewell message from Diller praising Blatt’s ‘integrity.’”

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