The first time Josh Silverman addressed the staff of Etsy as their newly installed chief executive, he tried to connect with a work force known for its diversity, idealism and sincerity. "Hello," he said. "My name is Josh. I identify as male. My preferred pronouns are 'him' and 'he.' Most people just call me Josh." It was May 3, and Mr. Silverman was speaking to a roomful of traumatized employees. The day before, Etsy had fired 80 people, the first big layoffs at the online marketplace for handmade and vintage arts and crafts. Among those ousted was Etsy's beloved chief executive of six years, Chad Dickerson. Now Mr. Silverman — an Etsy board member but an unknown to most employees — stood in the Etsytorium, trying to win over a hostile crowd. His earnest introduction was an olive branch of sorts, an effort to signal that he was attuned to Etsy's vibrant gay and transgender community, and would be respectful of the company's distinctive culture. But to many in attendance, his remarks came off as tone deaf, and his inability to read the room foreshadowed sweeping changes that would soon transform Etsy. The drama began last November, when Mr. Silverman joined the Etsy board and began asking tough questions of management. Soon after that, an activist investor took a stake in Etsy and called for the sale of the company. Then powerful private equity firms began buying shares, stoking fears of a takeover. The board was under pressure, and in early May abruptly fired Mr. Dickerson and installed Mr. Silverman. On the same day as the chief executive changeover, the company announced its first layoffs. Within weeks of assuming control, Mr. Silverman shut down several projects that had been in the works for months. Not long after that, he fired another 140 employees. It was a dizzying series of events at a company that has long held itself up as a paragon of righteous business practices. Etsy's founders believed its business model — helping mostly female entrepreneurs make a living online — was inherently just. Employees shared their emotions freely, often crying at the office. Perks included generous paid parental leave, free organic food and a pet-friendly workplace.