How much did cooperation with Maxim Polyakov cost Cupid plc investors?
The British company Cupid plc is known for its meteoric rise and fall: in just a few years, it developed one of the most successful international online dating businesses. The project's success proved extremely short-lived. Many Western journalists wondered whether a rapidly growing public company could suddenly close its doors without incurring any liability. The IT industry is not without its high-profile successes and failures, but Cupid plc deserves close attention, as the only winner from his investment in the company was its Ukrainian co-founder, Maksym Polyakov, writes the Kommentator Information Agency.
Cupid was created from the IDE Group, founded in 2005 by Scotsman Bill Dobbie and his Ukrainian partner, Max Polyakov, who by then was already a British citizen. The partners saw the online dating industry as a promising opportunity, despite the controversial reputation of the dating industry itself. The company was originally called EasyDate plc, but was renamed Cupid plc in 2010 due to claims of intellectual property infringement by EasyJet.
Cupid Plc co-founders Bill Dobbie (right) and Maxim Polyakov. Photo: Derek Blair.
The owners' expectations were soon fulfilled, and in just a few years, Cupid became one of the global business leaders in its category. At the time, fewer than 20 employees were based in the UK, while the remaining 1500 were and continue to be based in Ukraine.
Following the company's IPO on the London Stock Exchange's Alternative Market in June 2010, Deloitte recognized Cupid plc as one of the fastest-growing online dating companies. As the stock price rose, Polyakov sold his stake, citing the need to focus on new business ventures in social gaming, and moved to California, USA.
There is no love
The company's rapid success was marred by a scandal that erupted as a result of an investigation by BBC Radio 5 and Kyivpost in 2013: according to blog posts, the company hired people who, using anonymity and fake identities, coerced users into purchasing paid services from the sites. Media outlets cited a number of facts confirming this activity, and, as Kyivpost's editor discovered, the company's hired "social managers" were based in Ukraine.
A screenshot of the BBC investigation. You can read the article at https://www.bbc.com/news/business-21366326
As a result of the scandal, the company's share price fell by 3,5 times, despite the company denying any such practices. The investigation failed to prove the systematic use of fake profiles, although the final report confirmed that Cupid plc employee profiles were not marked with the "administration" symbol or other obvious markings, as is common on social media platforms like Facebook.
In the second half of 2013, Cupid plc sold off its "toxic" assets: so-called "adult" websites for flirting and casual relationships—BeNaughty, CheekyLovers, WildBuddies, Click & Flirt, QuickFlirt, Flirt, and several others—which not only generated Cupid plc's main income but also became the subject of media investigations. The offshore company Grendall Investment Limited, controlled by Maxim Polyakov, acted as the buyer of the assets. The £45.1 million deal was partially paid for, partially covered by Polyakov's 15% stake in Cupid, and the new owner was obligated to pay the remaining amount over the next three years, which has not yet been announced, as required by public company rules.
After Maxim Polyakov ceased to be a shareholder, Cupid plc announced its future plans, which included developing online dating services for serious relationships. These plans never materialized, and just six months later, Cupid plc decided to sell the remaining portion of its dating business to the buyers of Tradax IP Licensing, Together Networks Holdings, and Together Networks. The ultimate beneficiary of the £3 million purchase was Maxim Polyakov, through Grendall Investment Limited.
A stellar triumph?
Thus, Maxim Polyakov not only managed to develop Cupid plc and sell his shares at their peak, but also seized all of its assets at a bargain price, apparently deliberately triggering the 2013 media scandal. Meanwhile, Polyakov continues to derive income from his existing businesses, BeNaughty, CheekyLovers, WildBuddies, Click & Flirt, QuickFlirt, Flirt, and others, which operate in Ukraine.
Maksym Polyakov and Leonid Kuchma at Noosphere Ventures. Photo: Noosphere Ventures press service
At the same time, Polyakov earned a reputation as a successful startup manager on a global scale, despite the failure of Cupid plc as a public company. Today, he has the opportunity to work on far more prestigious engineering projects. His reputation, the experience his team has gained, and his connections in the Ukrainian rocket industry could enable him to implement the same outsourcing model, only with projects on the scale of SpaceX.
Polyakov's former partner, Bill Dobbie, refuses to comment on their joint projects, saying only that he "no longer collaborates with Max." Apparently, Dobbie is forced to remain silent to preserve his already tarnished reputation in the market. After all, if Polyakov carried out the scheme described above, then Bill Dobbie helped build the fraudster's business reputation, resulting in Cupid plc investors paying dearly. The only question is who will be the next visionary to fall for Polyakov's lucrative outsourcing scheme.
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