Power Sheet - November 19, 2015

Investors contemplating a long-term relationship, or just a fling, with Match Group faced a quandary this morning. That’s when the company that owns Tinder, OkCupid, and more than 40 other dating sites worldwide became available on the financial hookup platform otherwise known as Nasdaq through an IPO. Actually there were two quandaries. One was the usual question of whether shares were worth their offering price of $12. The other concerned leadership.

The great consultant Ram Charan has long maintained that a board of directors’ most important job is choosing the right CEO, and the CEO of Match Group is Sam Yagan – but you’d never know it from yesterday’s publicity about the company. Much of it focused on an interview with Tinder chief Sean Rad in London’s Evening Standard. While Tinder is only one of Match’s many brands, it’s the most famous and possibly the most important. BTIG analyst Brandon Ross wrote in a note yesterday that valuing Tinder is difficult based on data released so far, but it could eventually be worth all the rest of the company combined – or could even be worth Match Group’s entire market valuation of $4.2 billion (including debt). So if you’re a potential investor evaluating the company’s leadership, how much of your decision is based on Yagan and how much on Rad?

They appear to be radically different leaders. In the Evening Standard interview, Rad, 29, comes across as good-hearted, immature, far from intellectual, socially awkward, and unpredictable. I’ve never heard of another CEO telling an interviewer that a “really, really famous” supermodel was “begging” him for sex, but he said no because she wasn’t “an intellectual challenge.” For all his virtues, Rad is probably not a guy you’d want running a publicly traded corporation of which you were an owner.

Yagan, by extreme contrast, is a 38-year-old highly successful serial entrepreneur. In 1999 he founded SparkNotes, still the leader in study guides, which he sold, then a file-sharing network called eDonkey, then OkCupid in 2003. Time named him one of the world’s 100 most influential people, and here at Fortune we put him on our 40 Under 40 list.

Rad dropped out of USC after two years – a badge of honor among tech entrepreneurs, but another huge contrast with Yagan, who has a degree in applied math and economics from Harvard and an MBA from Stanford, where he was a Siebel Scholar, an Arjay Miller Scholar, and the Henry Ford Scholar, which is what they call the class valedictorian. He has been Match Group’s CEO for the past two years when it was wholly owned by Barry Diller’s IAC. In short, he’s a guy you can quite easily see as CEO of a publicly traded company.

Which leader is more important for investors? Despite Tinder’s significance in Match Group, I’d say Yagan deserves a much heavier weighting in investor judgments; unsurprisingly, Diller and his advisers seem to have arranged things wisely. The larger point is that judging leadership is at least as important as judging finances in an investing decision, especially in a business like Match that is inherently almost impossible to value on conventional measures.

You can share Power Sheet with friends and followers here.

What We're Reading Today

Activist investor urges Yahoo to postpone Alibaba spinoff

Starboard LP has asked Yahoo's board and Marissa Mayer to halt the planned spinoff its $20-billion-plus Alibaba stake until they understand the potential tax hit from the deal. Mayer had said she would move forward with the spinoff this year. Meanwhile, one of Yahoo's bright spots, its daily fantasy sports games, could face trouble. New York Attorney General Eric Schneiderman has expanded his investigation into the legality of daily fantasy to include Yahoo, the third largest player in the market. Reuters

U.S. to crack down on inversions while Pfizer, Allergan talk $150B deal

Treasury Secretary Jacob Lew will unveil new guidelines that would limit the benefits to U.S. companies that merge with businesses overseas to reduce their taxes. The restrictions would be retroactive to Sept. 2014. Inversion is one reason Pfizer is in talks to buy rival drug maker Allergan, based in Ireland. Negotiations between Pfizer CEO Ian C. Read and Allergan's Brenton Saunders seem to be closing in on a price of $370 to $380 per share, a 22% premium to Allergan's recent price. Fortune

Volkswagen faces deep cuts

CEO Matthias Müller is expected to announce cost cuts tomorrow as the troubled automaker focuses on fixing the 11 million vehicles that violate emissions requirements. Tomorrow is also the deadline for VW to tell U.S. regulators how it will bring the affected diesel engines into compliance and what it has done to find the perpetrators of the deception. NYT

Clinton to present plan to fight ISIS

At the Council on Foreign Relations, Hillary Clinton will outline her security proposals and detail how she would attack the Islamic State. While many Republicans have pushed a strong military response, Democratic candidates have offered few details.
CNN

Building a Better Leader

SolarCity CEO talks about growing in a large industry

As a newcomer, Lyndon Rive had to enter policy debates with utilities for his company's survival. He called on consumers for help. Inc.

Working at a sub shop in high school...

…taught Frank Carni, head of auto claims at Farmers Insurance, to take the job where you can make the most difference. Fortune

Americans' per capita health spending is nearly double Germany's...

...but U.S. life expectancy remains below the average for developed countries. Quartz

Best-Laid Plans

Square reduces IPO price to $9

Before Jack Dorsey's company went public this morning, he had to reduce the offering price from a planned range of $11 to $13 a share to $9. That price values the company at less than half the $6 billion that private investors thought it was worth last year, a dramatic sign that the private market is overheated. NYT

Ford labor contract at risk of a 'No' vote

Members of the United Auto Workers appear to be rejecting a deal that CEO Mark Fields and UAW President Dennis Williams agreed to, which includes raises. With three-quarters of the votes counted, 52% of Ford UAW employees have rejected the deal. If it falls through, it would be the second of the contracts that Williams negotiated with the Detroit Three automakers (after the one with Fiat Chrysler) to fail on the the first vote. Detroit News

Argentina's election takes an unexpected turn

Popular President Cristina Fernández de Kirchner thought she had a hand-picked successor in Daniel Scioli as head of the ruling party after she steps down. But as the Nov. 22 runoff election nears, underdog Mauricio Macri has become the favorite, partly because Scioli can't differentiate himself from Kirchner. Fortune