The ‘Icahn effect’ hits Silicon Valley

March 20, 2014, 3:20 PM UTC

Carl Icahn earlier this year set his sights on eBay, arguing that the auction company should spin out its PayPal subsidiary. But eBay disagreed, setting off a vitriolic war of words in which Icahn has accused certain eBay directors of self-dealing and eBay has denounced the investor as a truth-twisting hypocrite. We in the media, of course, are eating it up like bread pudding.

On its surface, this is a siloed battle that will likely end with Icahn winning financially (via stock price appreciation) and losing strategically (eBay keeps PayPal) — similar to his recent outcomes at Apple and Dell. But Icahn’s rhetoric in this case appears to have struck a nerve within the broader Silicon Valley tech community, which takes its hero worship very seriously. During a recent evening in Menlo Park, Calif., I heard Icahn referred to as a “bully” by three people and a number of variations on “he doesn’t understand what we do here.” Then there was Reid Hoffman, LinkedIn’s founder (and founding board member at PayPal), who took the time to write a 1,600-word critique of Icahn’s “exploitation” of eBay, which was met by more than 100 appreciative comments. All of it leads me to believe that this situation may have tangible repercussions beyond the specific fates of eBay and PayPal.

Most notably, Icahn represents what so much of Silicon Valley distrusts about Wall Street. He is viewed as a short-term agitator who regards product and company mission as little more than procedural means to a profitable end. It’s the sort of attitude that, for nearly a decade, helped persuade many tech CEOs to favor acquisitions over IPOs. Why deal with intrusive outsiders like Icahn — not to mention extra media and regulatory scrutiny — when you can simply sell out and move on to the next startup? In fact, it arguably wasn’t until LinkedIn’s wildly successful IPO in May 2011, which made Hoffman a billionaire, that going public finally became cool again in Silicon Valley, opening the floodgates for resistors like Facebook. As cash piles grew, worries dissipated.

Now, however, Icahn vs. eBay forces entrepreneurs to confront their former feelings. I’m not arguing that there will be a widespread revival of IPO phobia, but it could have an impact — conscious or not — on leaders of companies that are already on the fence about a public listing. At the very least, it should increase the number of mature startups seeking pre-IPO funding from public investors like hedge funds and mutual funds that also promise to buy into the IPO — thus lengthening the IPO runway and mildly diluting earlier-stage investors.

“It may make people think about who they want their investors to be,” eBay CEO John Donahoe recently told Fortune’s JP Mangalindan. “If you want to build for the long term, you want to have long-term-oriented investors. Again, long-term-oriented investors care about the short term, but they make intelligent tradeoffs along the way.”

Another consequence of Icahn’s eBay campaign should be to make private company investors much more circumspect about joining public company boards of directors. The distraction and potential for conflict (real or perceived) are just too great. In this case, Icahn’s evidence against eBay director and venture capitalist Marc Andreessen is pretty flimsy. But there really isn’t any compelling reason for Andreessen — or any VC — to sit on the board of a company in which his firm did not invest. To borrow an old John Doerr quote, If there’s no conflict, why the interest? All I can come up with are prestige and helping to grow an iconic business — two things that someone like Andreessen isn’t otherwise lacking. Likewise, in situations where VCs do continue to sit on public company boards, it should be incumbent on the company to provide increased transparency around M&A and strategic investment decisions.

Icahn has no particular interest in changing the technology industry, any more so than he had interest in changing the pharmaceutical industry via Forest Labs or the airline industry via TWA. But this time he may be doing more than just making himself a boatload of money.

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This story is from the April 7, 2014 issue of Fortune.