[bdickason]

I would argue that Etsy didn't identify an underserved market inside of eBay but rather intelligently saw a need to service the 'flea market' circuit. Based out of Brooklyn, there's no doubt that Etsy's founders frequent places like the Brooklyn Flea and other places where jewelers, knitters, and other small time crafters hock their goods on weekends to escape their day jobs.

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.