Fire Rises in Tinder Lawsuit

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Flames, by flickr user William Warby, licensed by Creative Commons.

…And the flames went higher

These days, young people much prefer searching through their phone to meet people instead of actual face to face conversation. Technology has transformed the dating world, led by apps such as Tinder. Users can swipe right on anyone in their area they might be interested in meeting up with for a date. Valued at over $1.3B in 2015 with a ceiling of over $3B based of downloads and subscriptions, there is no doubt that Tinder was a home run for the co-founders. However, much like dating these days, there is not always smooth sailing. In a new lawsuit, the original co-founders are suing the current owners, claiming they inflated the valuation and seeking over $2B in damages.

The parent company, IAC/InterActiveCorp, is claiming that the lawsuit is “meritliess” and plans to defend their position. Tinder co-founder Sean Rad states that IAC manipulated the information given to Wall Street during their 2017 valuation, essentially stealing “billions” from him and co-founders and early employees. Rad and fellow plaintiffs contend that 20% of company should equate to several billion dollars, meaning the true value should have been over $12B. The valuation was completed by Bank of America Merrill Lynch. Match Group, the main subsidiary of IAC, saw their stock dip briefly when the lawsuit was filed. Match expects Tinder to generate $800M in 2018, about 75% higher than the 2017 evaluation.

Tinder is a great example of “how didn’t I think of that?”. With early iterations on the web such as Hot or Not, eHarmony, and OkCupid, the advancements on smartphones gave way to the gold standard of swiping to find romance (whether temporary or long-term) in Tinder. Starting with a free model, Tinder users can upgrade for more features, such as better placement, more access, and other bells and whistles. Averaging about $27 per user, the app is incredibly well known by word-of-mouth for anyone between the ages of 18-35. It remains to be seen what will happen to this lawsuit, although clearly the co-founders feel that they were burned.