Start downstream from the transaction
In my August 1, 2020 First 1000 issue on Etsy, the part I kept coming back to was how the team found both sides of the market without pretending to have liquidity.
Before Etsy, the founders were working at a software house called IOspace. One project was a redesign of Getcrafty, an online artisan forum with more than 10,000 members at the time. By spending time in that community, they heard the same complaint repeatedly: artisans wanted somewhere to sell their work, and eBay felt expensive and hostile.
That was a better starting point than “people like handmade goods.” They had a visible group, a repeated pain, and a relationship with the people running the community.
The team then worked with two forums instead of spamming every website where somebody mentioned crafts. Getcrafty gave them access to an existing community. Craftster, which the issue says had more than 100,000 members, had users describing a similar frustration. The exact commercial terms of that partnership are unknown, but the logic is clear: Etsy became a useful bridge for a community that already had attention.
Remove the first marketplace objection
Etsy’s MVP was ready before its payment system. Instead of waiting to perfect payments, the team launched free for buyers and sellers while they finished the missing piece.
That did two jobs. It got the marketplace moving, and it answered the biggest complaint the team had heard about eBay: commissions. The offer was not “trust our new marketplace because we are trustworthy.” It was “try this without paying while we build the part that is missing.”
The source says these forum partnerships created thousands of sellers who were excited to register and try Etsy by launch. That is a historical account from the original issue, not a current marketplace metric. But the mechanism is useful: a partner can supply both distribution and credibility when the product adds value to the partner’s existing community.
Recruit supply with a customer attached
Etsy did not only recruit sellers from eBay. The team went to craft shows, approached interesting creators, offered to buy them lunch, left behind small “craft show kits,” and handed out handmade brochures and promo codes.
The important part was not the lunch. It was that these sellers had audiences. Many had no e-commerce presence at all, so a successful Etsy store gave them somewhere to send their own customers. Supply acquisition could create demand acquisition at the same time.
That is the marketplace loop I would copy. Find suppliers who already have a reason for buyers to follow them, then make the new marketplace a better home for that relationship.
The founder checklist
If I were opening a two-sided marketplace today, I would ask:
- Which existing community already talks about the problem? Start where the complaint is specific, not where the market is merely large.
- Can the partnership make the community more useful? A link dump is distribution. A real integration is a reason to keep sending people back.
- Which suppliers bring their own audience? The best early supply may be a distribution channel in disguise.
- What can be free while the missing infrastructure is finished? Remove the first objection without pretending the product is complete.
- What is the smallest completed transaction? A registration is not liquidity. Name the moment when buyer and seller actually get value.
The takeaway
Etsy’s early move was not to manufacture a marketplace from nothing. It was to connect an existing conversation to a transaction, then recruit people whose reputation could travel with them.
Sources and original research
Adapted from my original Etsy First 1000 issue, published August 1, 2020. The historical numbers and company actions above come from that issue; the marketplace checklist is my adaptation. I did not add current Etsy metrics or claim a new study.
Updated September 20, 2026. Based on original First 1000 reporting and the sources listed above.