For marketplace founders: how small did you go before expanding?

I’m building a two-sided local services marketplace, and one of the questions I keep coming back to is how small the initial market should be.

At first, “Houston” felt like the obvious starting point. But the more we build, the more I think city-level thinking may be too broad for an early marketplace.

A marketplace can have plenty of users and still feel empty if supply and demand aren't concentrated enough to create reliable matches.

So we’re experimenting with something much narrower: focusing on a few neighboring communities first, learning what creates repeat activity there, and expanding only after we see real density.

For those who have built or operated two-sided marketplaces:

How narrowly did you define your first market?

And what told you that you had enough liquidity to expand?

I’d especially love to hear what you measured beyond signups.