My wife loves Etsy. She's tech-savvy, loves to craft, loves fashion, and loves to shop.

My guess is they overcame the chicken/egg problem because a lot of their sellers are also buyers–which allowed rapid initial growth. Mix in some good PR, people complaining on Ebay forums, VC connections, and there you go.

http://www.doublex.com/section/work/etsycom-peddles-false-fe... ("There are virtually no male sellers on Etsy")

The line is blurred by the fact that they allow vintage items (defined as 20 years old or more - clearly something decided by 23 year olds) and mass produced craft supplies in their own sections, which has always been a source of confusion and friction. The CEO/founder blamed this on 'Leah from Craftster' in an interview, saying she picked the categories.

Other than that, it's not juried in anyway which is think is good. BUT, they do sometimes interrogate sellers about whether their items qualify, and come to incorrect and poorly supported conclusions about whether people are allowed. Etsy has has a long history of closing people's shops suddenly with no accountability or recourse... it's really inconsistent, too. Really inconsistent. Check out http://www.etsybitch.com for some recent horror stories.

And in terms of controlling quality, there definitely isn't much... :) http://www.regretsy.com/

In some cases, that goes for safety as well. My wife (a EE) noticed that there are a lot of sellers on Etsy selling jewelry made from recycled printed circuit boards (earrings, necklaces, bracelets, etc). Unfortunately, a lot of the sellers don't know that PCBs are full of heavy metals that should not be exposed to the skin without some sort of varnish coating. Especially since some sellers like to remove components and sand the boards down so they look cooler.

Lead poisoning FTW!

That one is quite funny.

Anyone that is caught in limbo between eBay and Craigslist and thus resorts to flea markets or other 'in-person' gatherings for sales are good targets.

As far as I can see, actually cultivating community has been a big shortcoming for Etsy. The 'teams' section of the site is very underdeveloped (it's been the same for years and isn't tied into the rest of the site very well). The forums are frequented by the a small group of focused people, mainly all sellers, and the tone on there has been very negative for years. The in-house messaging system ('conversations') is extremely lacking, with no serious organization tools for your messages. The shop/item favoriting system doesn't function as a social networking 'friends' system, it's geared only towards shopping.

Etsy sellers tend to network through their own blogs (mainly on blogger), independent craft blogs, and use Twitter for communication.

One odd side effect of this passion and sense of community is that sellers see selling on Etsy as a hobby rather than a profession, and their effective compensation reflects this.

Their board is Jim Breyer, Fred Wilson, Caterina Fake and Rob Kalin (founder, CEO).

They are profitable as of earlier this year, founded in 2005, based in Brooklyn, and put on a good show fo' sho'.

They probably get less attention in the tech space because their user base is mostly women.

The number of items on Etsy has increased by 100 times in the past few years, but the lens through which you can see the items has stayed the same size - search pages of 20-30 items. Few people are going to page through more than 20 pages of results.

Basic search has improved significantly since Chad Dickerson came on board, but I think even the tech staff acknowledges that there's a long way to go.

One major problem is the tagging system, and the lack of true categories. It used to be that your first tag functioned as the 'top level category', but they didn't make this clear in the listing creation step. You could (can?) also choose contradictory tags/categories with no problems. The top level categories are rather disparate conceptually, and aren't particularly well chosen (i.e., 'Quilts', with 24k items, has it's own top level entry, same as 'Jewelry' with 1.4 million, and art, with 500k). Also, the tags and titles are completely in the hands of sellers, some of whom mis-label items inadvertently or intentionally. It's a bit of a tricky deal.

As an aside, if you are in the market for an external hard drive, this is the most beautiful one I have ever seen: http://www.etsy.com/listing/47397822/walnut-and-maple-wood-e... (I'm not affiliated with that seller in anyway, I just dig his product).

Wow, where'd you hear that? :)

But tell Gerry I said to pop on over here and chime in.

Etsy is successful, ultimately, not because of some putative secret sauce (though we do have very powerful and unique behind-the-scenes tech).

We are successful, ultimately, because we are providing tools that support and enable the livelihoods of hundreds of thousands of people, help their artistic and creative achievements be seen and recognized around the world, and subvert the common shopping experience people have to add a personal connection to the creators of the goods they buy.

If anyone were to identify a similarly unmet need, another ignored and under-served community, and created a place online that had a positive impact on the lives, they would also succeed. What "business model", which metrics or revenue streams make sense, depends on that community's characteristics, and it doesn't have to be complicated or some sort of trick.

That all said, it's of course crucial to have reliable, flexible, scalable, rapidly evolving technology behind you. I have been working here relentlessly to get our team to the point where we are free to innovate as much as we can. To be honest, there is already abundant information on the web and elsewhere about what works, and what doesn't; it's not really a mystery.

But you need the resoluteness to actually execute on these best practices, and the courage to innovate even in the face of occasional mistakes.

I have kinda asked this to the group, but thought I would direct it at you. Do you think other sub-markets of eBay could flourish as a separate entity? Or was Etsy just able to find a really good balance of a good market with a good audience?

I actually invested in another company that directly targets another eBay segment.

So yes, I strongly believe that other sub-markets of eBay are interesting to compete with.

This, to me, was the win, not going after a piece of eBay's pie.

Rather than asking "Other markets that could flourish by being spun out of ebay," I would search for more organizations helping 'micro-entrepreneurs' (i.e. from the bedroom to a small booth rental) make their living.

I don't care for etsy as a customer but it's a great company from a business standpoint.