Alongside the 30 million Ashley Madison user accounts leaked online — including names, email addresses, physical descriptions, and detailed sexual preferences — CEO Noel Biderman’s emails are now available for anyone to read.
Forbes pulled out a handful of conversations from those emails that show that Ashley Madison’s parent company Avid Life Media was considering acquiring Grindr, the location-based dating app for gay, bisexual and bi-curious men, earlier this year.
The relationship between Biderman and Grindr founder Joel Simkhai stretches back to 2012, when the two had several conversations about advertising each others services. So when rumours emerged in May this year that Grindr was considering a sale, Joel Biderman started asking around to see how Grindr was doing financially.
According to Forbes, Jonathan Pollack from Toronto-based Fireside Capital called Raine Groupe, the company advertising Grindr for a possible sale. He came back to Biderman with some impressive figures — $US31 million (£19.9 million) in revenue, 4 million active users, and 250 million paid subscribers for 2014. Grindr was also said to be earning $US14 million (£9 million) in annual earnings before interest, taxes, depreciation and amortization (EBITDA).
The Ashley Madison files also include an investor pitch deck from Grindr showing that the company considered itself to have even better prospects. The company expected cumulative advertising and subscription revenue to reach $US38.1 million (around £24 million) in 2015, then jump to $US48.1 million (£30.8 million) in 2016.
But for a while it looked as though the idea would go no further. At the end of May Biderman was convinced that Grindr would not consider a sale for less than $US100 million (£64 million).
“The Ashley factor”
Ashley Madison’s biggest shareholder Jason DeZwirek continued the conversation at the beginning of June. We pulled up DeZwirek’s June 8 emailed originally flagged by Forbes. It’s here that things get interesting.
In it, DeZwirek quotes another Ashley Madison board member referred to as “Leonard” by DeZwirek and thought to be Leonard Latchman of LDL Corp by Forbes:
“He says the expected purchase price is between 60 and 70 million (dollars). He also said Joel is willing to only 51% and keep the rest for now and that he is willing to stay on board for a couple of years.”
It’s not clear where they got this information from. DeZwirek feared that Avid Life Media would be unable to raise the $US35 million (£22 million) needed for a 5% stake in Grindr because of Ashley Madison’s name and reputation. But the aforementioned Leonard had a plan.
Here’s more from DeZwirek’s email:
“Leonard thinks it would be a good acquisition for us and I said I agreed but I did not think that we could raise the debt even if it is as little as $US35 million because of the Ashley factor. He thinks he could (raise the debt) with a Grindr standalone. He mentioned going it alone with no association to Avid and flipping it to Avid after closing. I thought that was an interesting idea but of course the debt holders would have to agree at the time. He could pursue it, and if he were successful flip it to use, or if for some reason he does not other dominoes would have to fall. While highly unlikely that he would be successful it is kind of a no-lose situation. Does any of this change our position on pursuing it?”
“I would rather own SeekingArrangement”
Biderman remained sceptical that Avid’s name would actually be kept out of such a deal, believing that one of his company’s board members shouldn’t really be playing that sort of game. Instead, he first suggested that Avid be more transparent with Grindr founder Joel Simkhai about its “debt raising concerns,” but then followed with another option.
“I could easily see a scenario wherein a group led by Leonard will lead to a possible default and therefore our ability to get the asset much more cheaply … and a condition wherein we can now ask for his resignation from the Board given the clear conflict he would find himself.”
While the meaning of Bilderman’s final idea on the topic isn’t exactly clear, Simkhai would probably be the one to lose from such a deal.
But Biderman seems to have shut the idea down.
“In my mind I don’t really see where Avid owning Grindr helps us at the end of the day. I for one would rather own SeekingArrangement for that kind of money.”
We have reached out to Ashley Madison and Grindr for this article, and will update with any new information.