To me it feels like a byproduct of an overemphasis on a certain kind of inclusiveness, in which people are elevated based on how long they’ve been around and how much buyin there is into the mission. Everyone’s opinion is valued, everyone wants resources, everyone wants to be promoted. If there’s not money constraints or a sense of practicality driving decisions, everyone gets headcount and promotions, driving bloat.
My last job was with a very mission driven startup. We were short on money so headcount wasn’t bloated, but we were plagued by “managers” with no one under them who’d been around since the beginning and didn’t contribute much. The product drifted, and we wasted a lot of time.
I switched to a new, more unapologetically capitalist company, and my team has been subject to some absolutely cold blooded re-orgs. It’s a much less friendly place, but much, much better run in terms of getting stuff done.
Not sure what the moral is. I made some great friends at the first company, not so much at the second. But the new place is in many ways a much less frustrating place to work.
From an investor's point of view this would not be ideal. Having said that, from a broader societal point of view, it's less clear.
Put it this way: as an investor, I am going to view a business that has 1 employee (on $100k) and $1m in profit much more favourably than a business that has 10 employees (on $100k) and $0.1m in profit. From the broader societal point of view though, the second arrangement could be better.
More activities across the same labor pool makes more wealth in a society than fewer activities which consume all available resources. This is why we're much richer now that 70% of workers aren't farmers.
All hypothetical. But the point is wealth can't be the only measure of success.
Wouldn't it have been fine to not go public?
That is, it sounds like, regardless of whether Etsy was profitable (in the sense of producing dividends), it was at least breaking even: it was hiring as many people as it could support on revenue, but not more, and certainly not as many people as it could support on venture capital raised in exchange for equity (or worse, debt). Is that correct?
If so, why should a company like Etsy even bother to go public? What did it gain that was worth being subject to the judgment of people whose value system is that breaking even isn't a good goal?
(I got an Etsy job offer days before the layoffs. It basically sounded like the Etsy I wanted to join died that day, and I still haven't understood why the "old Etsy," pre-IPO, couldn't have lived.)
Etsy took $85m in VC funding. Those VCs want an exit. So, in my mind, they made the decision to eventually go public at the same time they made the decision to take that funding.
I do agree with your broader point "Wouldn't it have been fine to not go public?" but I think if you want to plan to not go public, you probably should bootstrap your company instead of taking VC funding.
There was zero reason for Etsy not to be profitable. It over-hired and over-spent.
Now I am curious. What's so wrongheaded about it?
There's a certain bay area company that has a large developer office here in my rural state. They've been hiring as fast as they can for the past few years. From all my friends who work there, I get the impression that there are way more people now than there is actual work to do. And yet they continue to hire because I assume head count alone is primary metric.
Etsy grew rapidly and organically for a decade, and never figured out how to grow intentionally in an ROI-positive way. As a private company it was not particularly concerned with revenue per employee, and headcount expanded like a gas to fill available revenue. After going public it was way too slow to realize that this wasn't going to fool the public market.
I feel deranged pointing this out, but hiring triple the headcount you need to run your business is not a progressive social value. I don't know what it is.
n.b. I worked for Etsy from 2007-2014. My own values force me to own this.