The Maserati-driving CEO of the Ashley Madison adultery site has divorced himself from the company, following the discovery that he betrayed the trust of his cheating customers, his monied shareholders, his well-paid board and his self-serving wife.
CEO Noel Biderman announced the split from Avid Life Media on Friday, as former customers and media pick through the company’s private affairs following their disclosure by the group of hackers.
“This change is in the best interest of the company and allows us to provide support to our members and dedicated employees,” a company statement said. “We are steadfast in our commitment to our customer base.”
That claims is a highly debatable assertion for the customers who paid extra money to have their transactions completely deleted from the company’s subscriber list, only to discover their secrets were preserved in the file snatched by the hackers, dubbed the Impact Team, and has now been exposed to the world.
It probably won’t rest easily in the ears of male subscribers who just learned that almost all of the female accounts on the site were either inactive or outright fakes, either.
Avid Life Media stressed that the theft of their subscriber database was a criminal act, and it remains determined to prosecute those responsible. The company also vowed that its “unique platforms” would remain online, although Ashley Madison was not specifically mentioned.
“We are actively adjusting to the attack on our business and members’ privacy by criminals. We will continue to provide access to our unique platforms for our worldwide members,” the statement on Biderman’s departure reads. “We are actively cooperating with international law enforcement in an effort to bring those responsible for the theft of proprietary member and business information to justice.”
It will be interesting to see if the company’s business model can survive the current crisis, which has everyone from powerful corporations to government agencies across the world scrambling to deal with the fallout.
Just a few months ago, Avid Life was regarded as a bizarre but undeniably successful operation, with soaring revenue – $115 million in 2014 – and successful expansion into global markets, but understandable difficulty in attracting investors. It remained profitable and growth-oriented despite efforts by by some governments to ban the site outright, and the refusal of some media to run its advertising.
A February profile in Forbes portrayed Biderman as sitting upon a mountain of Internet gold, poised to make a fresh fortune from sales despite having sold most of his interest years ago:
Biderman says his company is worth $1 billion; analysts (too spooked by taboo to be named) say that’s high but not far off. An October report from Bank of America Merrill Lynch says Match.com is worth $3.8 billion, or 12 times estimated 2015 operating earnings, and Tinder $1.3 billion, or 18 times estimated earnings. A valuation for Ashley Madison, with $55 million in earnings, is likely to fall on the lower end of that range, assuming a sin discount. Biderman disagrees: “If there’s anyone that should be riding the 18- to 20-times multiple it should be a service like ours, which has proven it for the better part of a decade.”
A sale would be a healthy but not crazy-big payday for Biderman. He owns just over 10% of the firm after selling off most of it in a $40 million round in 2007. The investors are a handful of institutions and high-net-worth individuals, most of whom are Canadian, with a few Americans and Germans. But Biderman is doing fine. He has a new Maserati Ghibli courtesy of his board, a Patek Philippe Calatrava from his wife and a beach house in Fort Lauderdale. The one thing the married father of two has not enjoyed, he says, are the extracurricular possibilities his site affords. “I understand the problems of monogamy and the people who need my service. I think I have been able to build a product for them.”
Actually, according to emails exposed by the hackers, it looks like Biderman might have been exploring some “extracurricular activities” after all. International Business Times notes that Biderman’s wife Amanda has said in the past that she would be “devastated” if he cheated on her, but nevertheless defended his lucrative infidelity enterprise: “Ashley Madison is not creating cheaters. It is servicing a need that is there, that exists. And unfortunately, it exists. It’s sad.”
Now Biderman’s out, and it remains to be seen if Avid Life can recover from one of the most devastating blows ever struck against a business model, with nearly every aspect of their… professional conduct challenged by the revelations in the data dump.
The company is correct to note that all this began with a criminal act, made no less illegal by the nature of the target. But the departing CEO’s wife also was correct in her assessment of the company’s existence.