Maybe they did "listen" but couldn't do anything about it?

Couldn't do anything because there was nothing that could possibly have been done, or couldn't do anything because they were the wrong people to be running the company? Certainly the dot-com bust didn't help, but you appear to agree that the "professional managers" brought in by the VCs were not up to the task, which leaves open the question of what managers that were up to the task would or could have done. Unfortunately we can't re-run the experiment to see what would happen if ArsDigita had not taken the VC investment and the original management had remained in charge.

There is another side to Ars Digita

True, and Michael Yoon's story is a good counterpoint to Greenspun's.