In 1990 the Cacophony Society, led by John Law, organized a trip to the Black Rock desert inspired by the art festivals from the Planet X pottery commune, one of which co-organizer Kevin Evans had attended the year before. Evans knew that the burning man event was being kicked off Baker Beach by the park police, and invited Larry Harvey to bring it to desert... where the rest is history.
1990 had about 300 people. http://en.wikipedia.org/wiki/Burning_man#History
In the 1980s the Planet X pottery commune, based a few miles from the Black Rock Desert, began to hold arts festival on the huge, flat, dry lake bed with changing themes. For instance, one year was giant croquet, with eight-foot high balls and Jeeps as mallets; another was a wind sculpture festival and competition, where participants brought their own sculptures.