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I'm as ambivalent about capitalism as the next person. But Etsy is a lousy counterexample to the premise of combining success in business and progressive values

I'm as ambivalent about capitalism as the next person. But Etsy is a lousy counterexample to the premise of combining success in business and progressive values. Current and former employees conflating the two is disappointing. 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.

ghaff 9y ago
Expenses rising to meet revenue is a pretty common pattern everywhere. (Except for many VC-backed companies where they rise to exceed revenue in the name of growth.) It's a pretty natural tendency because there are always people you want to hire, amenities that seem eminently reasonable, investments you think will pay off, and gear/services that will make work easier/faster.
- TheSpiceIsLife 9y ago
  Additionally, profits are taxed / expenses aren't, so it makes sense for a business to spend money in an effort to grow, or just generally flail about.
wils1245 9y ago
>>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. 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.
trafficlight 9y ago
>> 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. 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.
- bayonetz 9y ago
  Please reveal said company.
  - akgerber 9y ago
    Likely: https://www.fastcompany.com/40419011/how-tiny-bozeman-montana-became-a-booming-tech-town https://www.fastcompany.com/40419011/how-tiny-bozeman-montan...
    - deleted 9y ago
      [deleted]
    - trafficlight 9y ago
      Nope.
samirillian 9y ago
> 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. Now I am curious. What's so wrongheaded about it?
- rtpg 9y ago
  I think the implication here is that hiring huge amounts will ultimately lead to needing the giant reorganizations that leave a bunch of people suddenly jobless.
tmnvix 9y ago
> 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. 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.
- shaftoe 9y ago
  You're assuming that in the first example, they'd be unemployed. Instead, they're freed up to do new initiatives that generate new wealth that would not exist in the second scenario. 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.
  - ehnto 9y ago
    I agree, but in this context I think it's important that wealth shouldn't be the only measure of social value. There is plenty of wealth generation going on. Perhaps there is a greater good at one place than the other thing they may have been doing. All hypothetical. But the point is wealth can't be the only measure of success.
  - tmnvix 9y ago
    Actually, what I had in mind when I wrote that was a situation where total economic activity was sufficient to meet everyone's needs (as I believe it currently is) and each employee was working 1/10th of the total time expected of the single employee. An extreme example, I'll admit, but one that demonstrates that people might be in a better situation if they have a lot more time and sufficient resources rather than an over abundance of time and no resources or an over abundance of resources and no time.
tootie 9y ago
Must have been quite a gravy train back in it's heyday. I could never figure out how they employed so many people and what they all did.
notyourday 9y ago
> But Etsy is a lousy counterexample to the premise of combining success in business and progressive values. Current and former employees conflating the two is disappointing. There was zero reason for Etsy not to be profitable. It over-hired and over-spent.
geofft 9y ago
> 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. 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.)
- glitch003 9y ago
  >If so, why should a company like Etsy even bother to go public? 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.
deleted 9y ago
[deleted]
sgt101 9y ago
I would argue that Twitter and Facebook have more that triple the headcount that they need to run their business. That headcount is in sales and marketing and is acquired in order to "monetize" latent value in the customer base. The actual product (that attracted the customer bases) could (and was) be sustained by a far smaller head count focused on the technology and minimal revenue development operations. Essentially .coms are utilities and have developed into rent seeking utilities.

ghaff 9y ago

Expenses rising to meet revenue is a pretty common pattern everywhere. (Except for many VC-backed companies where they rise to exceed revenue in the name of growth.) It's a pretty natural tendency because there are always people you want to hire, amenities that seem eminently reasonable, investments you think will pay off, and gear/services that will make work easier/faster.

TheSpiceIsLife 9y ago
Additionally, profits are taxed / expenses aren't, so it makes sense for a business to spend money in an effort to grow, or just generally flail about.

wils1245 9y ago

>>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. 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.

trafficlight 9y ago

>> 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. 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.

bayonetz 9y ago
Please reveal said company.
- akgerber 9y ago
  Likely: https://www.fastcompany.com/40419011/how-tiny-bozeman-montana-became-a-booming-tech-town https://www.fastcompany.com/40419011/how-tiny-bozeman-montan...
  - deleted 9y ago
    [deleted]
  - trafficlight 9y ago
    Nope.

samirillian 9y ago

> 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. Now I am curious. What's so wrongheaded about it?

rtpg 9y ago
I think the implication here is that hiring huge amounts will ultimately lead to needing the giant reorganizations that leave a bunch of people suddenly jobless.

tmnvix 9y ago

> 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. 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.

shaftoe 9y ago
You're assuming that in the first example, they'd be unemployed. Instead, they're freed up to do new initiatives that generate new wealth that would not exist in the second scenario. 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.
- ehnto 9y ago
  I agree, but in this context I think it's important that wealth shouldn't be the only measure of social value. There is plenty of wealth generation going on. Perhaps there is a greater good at one place than the other thing they may have been doing. All hypothetical. But the point is wealth can't be the only measure of success.
- tmnvix 9y ago
  Actually, what I had in mind when I wrote that was a situation where total economic activity was sufficient to meet everyone's needs (as I believe it currently is) and each employee was working 1/10th of the total time expected of the single employee. An extreme example, I'll admit, but one that demonstrates that people might be in a better situation if they have a lot more time and sufficient resources rather than an over abundance of time and no resources or an over abundance of resources and no time.

tootie 9y ago

Must have been quite a gravy train back in it's heyday. I could never figure out how they employed so many people and what they all did.

notyourday 9y ago

> But Etsy is a lousy counterexample to the premise of combining success in business and progressive values. Current and former employees conflating the two is disappointing. There was zero reason for Etsy not to be profitable. It over-hired and over-spent.

geofft 9y ago

> 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. 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.)

glitch003 9y ago
>If so, why should a company like Etsy even bother to go public? 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.

deleted 9y ago

[deleted]

sgt101 9y ago

I would argue that Twitter and Facebook have more that triple the headcount that they need to run their business. That headcount is in sales and marketing and is acquired in order to "monetize" latent value in the customer base. The actual product (that attracted the customer bases) could (and was) be sustained by a far smaller head count focused on the technology and minimal revenue development operations. Essentially .coms are utilities and have developed into rent seeking utilities.