How We Built It: $900K Open Source SaaS

I'm Uli, co-founder of Papermark. And I'm Mark. We bootstrapped Papermark to $75K MRR.

This husband-and-wife duo built a near million-dollar business thanks to this open-source SaaS.

Yeah, I think off the bat being open source was the right bet for us.

In just a year and a half, they took a weekend open-source project to $75,000 MRR.

Papermark started as a tweet. So I asked both of them to come onto the channel and break all of it down. In this video, you'll learn why open source is actually a genius business model, how there are loads of big companies just waiting to be open sourced, and how to grow in open source if you're just starting out today. All right, let's dive in. I'm Pat Walls and this is Starter Story.

All right, welcome Mark and Julia to the channel. Tell me about who you are, what you built, and what's your story.

Hey Pat, I'm Mark, co-founder of Papermark. It's the open-source successor to DocSend for sharing documents and data rooms securely. Papermark started as an open-source project on the side without the idea to go commercial, and we're close to our first million in ARR.

Okay, that's crazy. In 1.5 years, you guys basically built a million-dollar business. Let's go back to how you guys found the idea for this. How did you find the idea for Papermark?

Yeah, it's actually funny. It started as a tweet. I pushed out a tweet and I basically said I'm going to build an open-source alternative to DocSend and it went crazy. Within a couple hours it got like 40,000 views. Lots of people mentioned that they would love to see this as an open-source project. So over the weekend, I built the first MVP, the first version that was usable, and pushed out the launch tweet on Monday. It got like 100k views. Soon after, the first customers came and were asking, "Can we pay you for the service?" And that's how it kicked off.

That's crazy. The amount of founders that I talk to that have built a business based off a single tweet is higher than you'd think. I just want to understand a little bit more about what Papermark is and what it does for our audience who may not totally be in this space. Can you briefly explain what Papermark actually does?

So essentially Papermark is a document analytics and sharing platform. You turn your document into a link which you can share, protect with a password, add a watermark, and then get analytics so you can see exactly what happened: how long someone was on your document, which page they viewed, and so on. Papermark is an alternative to DocSend and other data room providers that have existed for 10+ years but don't innovate much anymore. They mostly focus on enterprise customers. That's why an open-source solution was needed in this market.

All right. The main reason I wanted to bring you guys on the channel is that you built this business on top of open source, which is a super cool model. You found a way to not only build an open-source project but build a really nice business on top of it. Can you explain what open source is, and then we'll get into the business side of things?

Yeah, of course. Open source means the source code that powers the project is publicly available. Anyone can look at it and anyone can contribute to it. The entire history of the project is also public. It opens the project globally to developers in the open-source ecosystem who want to contribute. There are licenses that have some protective mechanisms. In the end you have communities that form around each project and they can be larger or smaller depending on the popularity of the project or the maintainer. A lot of developers want to show off their work. Maybe they can't find a job but they can contribute to open-source to advance their career. Attracting early users with open source is great because you can ship in public.

All right. So you have open source, all the code is free, anybody can use it. How does this actually work for your business and how do you make money?

The business model for Papermark is basically: you can self-host for free. For many users who are not tech savvy or don't want to deal with the overhead and maintenance, we have a hosted version that we charge for. It's the open-core model. Our core software is open source and self-hostable. If you need advanced features, you can acquire a license and still run it on your infrastructure, but with our enterprise license attached to it, so you can enjoy the full suite just as it is on papermark.com.

Looking back, what are the benefits to building open source that you've realized?

Number one, it's highly defensible because you have nothing to hide behind. You give away the core product for free, and there's no need for anyone else to build the same project and charge for it. Number two, it's very scalable because there's essentially zero barrier to entry. We have people coming to our project every day, looking at it, contributing, running it for their teams, or converting to papermark.com because they don't want to self-host. They come to us because we do the best service in hosting the solution. Number three, we have community-driven R&D velocity. Incumbents only have employees maintaining the software. We have a community looking through the project and contributing new features or fixes. The velocity is immense. Number four, it's very secure and has high trust. The code can be audited by any third party. You're not hiding behind proprietary software, so when a bank wants to evaluate if it's a good fit, they can audit the code and see that everything is secure.

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For anyone watching right now who's a developer excited about open source, what are the opportunities right now to build open source and also build a business on top of it?

With the era of AI, founders can target much smaller niches. It makes it easy to create a small, differentiated business off an existing incumbent. The key markets I see today that are being rebuilt are CRMs. They've become so large and complex and try to do one-size-fits-all. Why not build a targeted CRM for veterinarians or office building managers that only needs a specific subset? Reduce complexity. Ask yourself: is there an open-source alternative? Does it make sense to build one? Is the market massive? Is there room for other players? Often, software isn't the differentiator. So being open source is no detriment to your business.

Okay, let's change subjects a little bit. Let's talk about growth. I mean 0 to $900,000 ARR, there's something here. If you guys can just break down how did you grow this quickly, what were the right decisions that you made?

Yeah, I think off the bat being open source was the right bet for us. Building in public is extremely natural because you have nothing to hide. There's no downside to sharing the small progress you're making, even if features aren't 100% complete. Share that on X, LinkedIn, with anyone, and you'll slowly gather a community. Then in terms of growth, we also participated in Hacktoberfest, a month-long open-source hackathon. There's a cycle where we build faster, more customers notice, and incumbents are slow. Then people switch because the feature sets reach parity and go beyond it.

Cool. And thanks for sharing that. Can you break down some of the numbers behind the business?

So in the first year we grew to $20,000 MRR. By the middle of the second year we grew to $75,000 MRR. We're getting close to our first million. In the middle of the second year we were serving around 30,000 users because there's a lot of free users. We have around 7,000 GitHub stars, 60 contributors, and our north star metric is the amount of views on shared documents. We have about 800,000 views on shared documents. That means people upload documents, share the link, and 800,000 people view their documents.

Let's change topics a little bit. I know a lot of people watching this are developers, even people building in open source. Let's talk about tech stack. Tell me about how this business is built.

We run Papermark as two projects in Next.js. One is our website and marketing content, and the other is the open-source project which powers app.papermark.com. It runs Next.js with TypeScript. Day-to-day we use Cursor as our AI IDE. Everything's hosted on GitHub. Papermark is hosted on Vercel. PlanetScale for our Postgres database. Trigger.dev for background jobs. Resend for email. And Stripe.

On that same note, can you break down some of the costs and margins to run this business? What does it look like to run a business built on open source?

Our main cost is spending on freelancers and founder salaries, around 80%. Then around 15% on experiments with marketing and growth, and 5% to 6% on tools.

Thank you for sharing that. Last question that I have is advice for anyone who wants to build in open source, do things in open source, potentially even build a business in open source. What would be your advice to someone watching this?

I think being an open-source alternative in any market to any big incumbent isn't a surefire success. You need to reach feature parity with existing tools and then out-ship them. You want to become the clear successor to incumbents, not just an alternative that's also there. You need to turn that excitement around open source into product momentum. Convert them into paying customers or active users. Only then can you make it a successful business.

From my experience, I didn't know how to code at all, and I decided okay, I'm going to build my first project. I took existing open source to build on top of. Then what I built I also made open source and I felt so much push and support from the open-source community and contributors. If you want to try open source and see what it is, you need to jump into it. You won't get the whole idea if you don't build. Just do it open source from the beginning, be part of the community, help people contribute, and they will do the same. You'll see your project grow.

All right. Well, that's great advice. Thank you Julia and Mark for coming on the channel. It's so impressive what you guys built in just a couple years. Thanks for sharing everything about the open-source model. It was awesome. See you guys soon.

Thanks, Pat.

Thank you.

I wanted to thank Mark and Julia for coming on to the channel. I loved hearing about how they grew Papermark and their unique approach to building this project with open source. However, I must remind you that it all still started with a simple idea. And nowadays, that's all you need to potentially build something that changes your life. And that's why we launched Starter Story Build. We'll help you take that idea in your head and turn it into a real app using only AI tools. So if you're ready to launch your project, head to the link in the description and check out Starter Story Build. All right, that's it for this episode. Thanks again for watching. We'll see you in the next one. Peace.