I'm not agreeing or disagreeing, since you have an interesting opinion, but in this case Etsy decided to play the game. They could have stayed private and done whatever they wanted without worrying about 'shareholder value'. They chose to IPO, they are now owned by the market. If you can't play the shareholder game then don't go public.
At the same time, if you disagree with what a company is doing, don't buy that company.
One of the things that angers me the most about people like Carl Ichan is that he believe that, just because he has money, he has the right to tell companies how to run themselves. Often times he buys shares in companies just for this purpose. Nobody forced him to buy those shares.
Yet this is the predicament that public companies know they are getting into once they go public. It's a tradeoff and the same applies to getting VC money (but at least you get to choose who your investors are). They've invested in YOUR company and if it's a significant amount of money, they ARE entitled to having some sort of say in things going forward because their money is on the line.
Destroying a profitable, growing or mature company in pursuit of greater second derivatives isn't pro-shareholder -- it's pro a particular kind of investment strategy which views returns through a particular lens. I believe it's deeply myopic.
It's a Wall St myth that quarterly returns are the best thing to optimize for generating shareholder value or that executives are obligated to do so.
It's the kind of capitalism that tells you the most efficient way to heat your house is to set it on fire.
If that profitable growing company constantly takes millions of dollars out of it's accounts and sets them afire, stopping it from doing so isn't going "destroy it".
And it's not a wall street myth that quarterly returns are the best thing, more a CNN/Stock Trader myth. There are a huge number of investors like Warren Buffett who know that is entirely wrong.
But it's a common misconception that cutting spending is bad for business. In this case they are cutting a deluded CEO who had his own personality cult and a massive team of paid cheerleaders. Overpaying employees isn't "investing", paying closer to market isn't going to hurt the business. On the contrary, it can focus it and unleash greater growth.
When Steve Jobs came back to Apple he cut the Newton, dozens of Mac hardware projects, and almost all advanced R&D. He focused the Mac team on four market segments and only four computers. He focused remaining research on areas that could lead to products they understood, mainly touchpads. It took them nearly 10 years of careful iteration, (they designed the iPad first and Steve refused to launch it) before they built the iPhone.
But if Steve hadn't focused on getting Apple's quarterly burn down, they never would have made it. If he hadn't focused their efforts, they likely never would have made great products. If he had thrown money at every half baked idea, they would have died.
The strategy indeed may not have been adding external shareholder value. In fact that is probably not the point of most IPOs (the point is usually to raise money to grow the business and/or increase wealth of the owners). I doubt the intent was to destroy the company, because that results in people losing money.
I certainly agree that the boost-short-term-profit-to-get-rich-then-bail is deeply unethical (and sometimes illegal).
However, "doing it right", and using the added wealth to grow the business in the long term will benefit everyone (founders, shareholders, consumers, and the economy), and is one of the BEST parts of capitalism.
Whenever founders sell part of the business to other parties - either through VC investment or IPO, they (the founders) are now bound to the agreement of returning on that investment and providing value as a (the) core focus of doing business.
If you don't want to be beholden to third parties, then don't sell part of your business.
