In the world of in-app dating, Sean Rad’s profile shows up as a CEO match for IAC’s Tinder and, unlucky for him, the internet giant swipes left.
Last month, when speaking at the Forbes 30 Under 30 Summit, Rad announced that Tinder would start generating revenue this month with the launch of a premium subscription-based model.
According to Forbes, Rad received a call just before this public appearance asking him to step down as CEO but stay on with the company in a lesser leadership role.
The call came from Sam Yagan, co-founder and OkCupid and CEO of The Match Group, which controls Match.com as a division of IAC.
Tinder’s complex company structure
You see, Tinder’s story begins in Hatch Labs, a mobile app incubator which was funded by IAC and Xtreme Labs. Rad was working at Hatch Labs LA where he was put in charge of Cardify, an app for retail loyalty cards, and it was here that Tinder – or, really, the early prototype Matchbox – was born, during a hackathon in Rad’s first week.
As a product of this environment, Hatch Labs owned Tinder outright as an app created by its employee. In turn, IAC owned the majority of Hatch Labs.
Normally, a high-potential platform such as Tinder would spin out and form a company of its own, but, unfortunately for Rad, Hatch Labs closed in early 2013 before Tinder could do just that and grant the co-founder and CEO control of the company.
After Hatch Labs closed, Tinder became the property of IAC, and it was agreed that the group would hold a 60pc stake in the start-up, and Rad 10pc.
In this arrangement, Yagan would oversee the management of Tinder, along with IAC’s various other online dating properties which together generated revenues of more than US$780m in 2013.
And so you have a situation where Rad was informed by Yagan that he would no longer be CEO of the company he co-founded, which left the Tinder creator with “a bruised ego”, to say the least.
The court case that brought Tinder’s dating problems to light
Rad was reportedly offered the chance to give up the role but stay on with the company under someone else’s helm, an offer with which he “strongly disagreed” at first.
The story, which is front-page news for Forbes’ 24 November edition, reports on Rad’s experience in detail, incorporating the court case that may well have led to this latest development.
Whitney Wolfe, who also came to work on the Tinder team after Cardify, began a relationship with co-founder and CMO Justin Mateen that turned sour, to the degree that Wolfe filed a sexual harrassment lawsuit against Tinder and IAC.
The entire bitter affair (which was eventually settled out of court) and revelations from Wolfe painted Tinder and the team behind it in a very poor light, dragging the founders’ names through the mud.
In the end, Rad decided to accept IAC’s offer to remain on Tinder’s board and will now be president of the company. Rad is also acting CEO until a suitable replacement is found, and the expectations are high as he foresees “an Eric Schmidt-like person” filling his role.
Meanwhile, Tinder Plus, the app’s premium service, will roll out soon with a travel feature allowing users to scope out the ‘local talent’ in farther-flung places and an ‘undo’ button to let them revisit profiles on which they regretfully swiped left.
Sean Rad image by Steve Jennings/Getty Images for TechCrunch via Flickr