How We Built It: $900K Open Source SaaS

I'm Ule, co-founder of Papermark.

And I'm Mark. We bootstrapped Papermark to 75K MR. This husband and wife duo built a near million dollar business thanks to this opensource SAS.

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 MR. Paper Mario 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 really 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

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

rooms securely. Papermark started as an open- source project on the side without the idea to actually go commercial and uh we are close to reach our first million error.

Okay, that's crazy. In 1.5 years, you guys basically built a million-doll business. Let's go back to how you guys

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 like I'm going to build an open source alternative to Docsend and it went just like crazy. Within, you know, a couple

like crazy. Within, you know, 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 actually built it at least their first MVP, the first version that was usable and pushed out on Monday the launch tweet and it got like 100k

views. And then soon after their first

views. And then soon after their first customers came and were asking like, "Can we give you money to buy the service?" And that's kind of how it

service?" And that's kind of how it kicked it off.

That's crazy. The amount of founders that I talked to that have built a business based off a single tweet is actually way 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 the papermark is a

does? So essentially the papermark is a document analytics and sharing platform.

So you kind of turn your document into the link which you later can share protect with the password with the watermark and then get the all analytics

so they can see exactly okay someone was on my document for 5 minutes on this slide 1 minute here. So you know exactly what happened and the papermark is uh

essentially alternative to the docend and other data room providers which exist already for 10 years or more but they like don't innovate anymore. They

don't produce anything new. They mostly

focus on the enterprise customers.

That's why the open-source kind of new solution was needed in this market.

All right. So 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

guys managed to find a way to not only build an open source project but build a really really nice business on top of it. Can you first explain to me just

it. Can you first explain to me just what open- source is and then we'll get into the the business side of things.

Yeah, of course. So open source like the name says the source code that's powering the project is publicly available. So anyone can look at it,

available. So anyone can look at it, anyone can contribute to it. And the

cool thing is that the entire like history of the project is also publicly available. It also opens up the project

available. It also opens up the project globally to any developer in the open source ecosystem that likes to contribute or that is interested in the project and wants to contribute to it.

There are of course licenses that have some protective mechanism and in the end you have these communities that form around each project and they can be larger or smaller depending on the popularity of the project or the

maintainer as well. A lot of developers these days they want to show off their work. Maybe they can't find a job but

work. Maybe they can't find a job but they can do open source projects. They

can contribute to open source in order to advance their own career. So

attracting early users open source is great because you can just ultimately ship in public.

All right. So can you break it down for me? So you have open source, all the

me? 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?

So the business model for Papermark is basically you can either self-hosted for free or for many of the users that maybe not be techsavvy that don't want to host it themselves because they don't want to

do deal with the overhead or the maintenance. We have a hosted version

maintenance. We have a hosted version that we charge for for the open core model. Our core software of Papermark is

model. Our core software of Papermark is is open source and self-hostable. And

then if you need advanced features, you can acquire a license and still run it on your infrastructure as a self-hosted version, but just with our enterprise license attached to it, so that you can enjoy the full suite just as it is on

papermark.com.

papermark.com.

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

Number one, it's highly defensible because you you have nothing to hide behind. you essentially give away the

behind. you essentially give away the core product for free. There's no need for anyone else to kind of build the same project and charge anything for it because it's essentially already as low

as it can get. 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, either contributing to it,

running it for their small teams, or then seeing the open source project and converting actually to papermark.com because they don't want to deal with the self-hosting of it. they just come to us

because we do the best service in in in hosting the solution. Number three, we have that communitydriven R&D velocity.

Incumbents only have like their employees that basically maintain the the software. We have the community that

the software. We have the community that basically looking through the projects, monitoring it, seeing where they can contribute new features. If they find like issues, they can immediately swoop

in and like provide a a solution for it.

The velocity with the community is just like immense. And number four, it's very

like immense. And 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 that we need to grant access to someone at a bank that is trying to evaluate whether it would be a great fit for the infrastructure. They have to run through

infrastructure. They have to run through so many checks and they can do that very easily by just by auditing our open source code and seeing that nothing nefarious is going on and everything is extremely secure. All right, before we

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you're building. And without further ado, let's get back to the interview.

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

With the era of AI, founders can target much smaller niches and like smaller markets. It just makes it so easy to

markets. It just makes it so easy to create like a very small differentiated business off of an existing incumbent.

The kind of like key markets that I see today that are being rebuilt is anything that has to do with like a CRM. they

have become so large that the software itself is is very complex and they try to do this like one sizefits-all where of course once you're in at like the highest tier you can then customize it

to your own use case but why not build a very targeted CRM for veterinarians or like office building managers that have

like a very specific use case to use the CRM but and don't need like the entire complexity. Think about reducing

complexity. Think about reducing complexity in what existing businesses are there and just like build it very simple. Think to yourself like is there

simple. Think to yourself like is there an open source alternative? Does it make sense to build an open source alternative? Is the market massive? Is

alternative? Is the market massive? Is

there enough room for other players in the market? Because often times you will

the market? Because often times you will find that software is not really the differentiator. So being open and open

differentiator. So being open and open source is no detriment to you or your business.

Okay, let's change subjects a little bit. Let's talk about growth. I mean 0

bit. Let's talk about growth. I mean 0 to 900,000 ARR there's something here whether it's open source whatever it is but 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 I think being open source was the right bet for us building in public with open source is is extremely natural because you have nothing to hide behind already there's

no downside to sharing the small progress even that you're making even if the features are not 100% complete share that on Twitter on LinkedIn just with anyone and you'll slowly gather

community around that. Then lastly, in terms of growth, we also participated in this month-long open- source hackathon called Hacktoberfest. There's like a

called Hacktoberfest. There's like a cycle where we build faster, more customer notice that we're building and shipping features whereas the incumbents are slow and like sleeping and then they

start switching because now the feature sets aren't reaching feature parody and even going beyond that.

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 MR to middle of the second year we grew to 75,000 MR. So we are getting closer

to our first million middle of the second year we serving around 30,000 users because there's like a lot of free users. Uh then we serve around,000

users. Uh then we serve around,000 customers. Uh 60 contributors uh 7,000

customers. Uh 60 contributors uh 7,000 stars. Maybe the focus if our northstar

stars. Maybe the focus if our northstar metric is amount of views on the shared documents. So we have 80 800,000

documents. So we have 80 800,000 views on the shared documents. It means

that people upload their documents then share the link and then 800,000 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.

source. Let's talk about tech stack.

Tell me about how this business is built. Yeah. So we run Papermark as two

built. Yeah. So we run Papermark as two projects in Nex.js. So one project is our website and our marketing content and the other project is the open-

source project which powers like app.papermark.com.

app.papermark.com.

It runs uh next.js with TypeScript. On

our day-to-day of course we're like so many others are using cursor as kind of like our AI IDE. Everything's hosted on GitHub. Papermark is hosted on Verscell

GitHub. Papermark is hosted on Verscell Planet Scale for our Postgress database.

Trigger, it's a background tools. Resend

is I think like a fan favorite these days for like easy email. It gets

delivered to your inbox like in terms of transactional emails like really quickly. And then of course Stripe.

quickly. And then of course 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

this business? What does it look like to run a business built on open source?

Yeah. So our main cost is spending on freelancers and founder salaries around 80% then we have around 15% on different

experiments with marketing and growth and uh 6 to 5% it's the 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-

watching this? I think being an open- source alternative to like in any market to any big incumbent isn't a shorefire success. You need to reach at least

success. You need to reach at least feature parody with the existing tools in the market and then you need to out ship them, right? You only you need to be better than the current offering in

the market. You want to become the clear

the market. You want to become the clear successor to the incumbents, not just be an alternative that's also there. And

you need to turn that excitement around open source into product momentum. So

convert them into paying customers or even users of your tool. Only then you can actually make it a successful business.

Uh from my experience I didn't know how to code at all and I decided okay I'm going to build the first project. I took

existing opensource to build on top of and then what I build I also made open source and I feel so much push and support from the open source community

and contributors. I would definitely if

and contributors. I would definitely if you want to try open source and see really what it is, you need to kind of jump into it. You will not get the whole idea if you're not going to build that.

Just do it open source from the beginning. Try to be part of the

beginning. Try to be part of the community. Help people contribute and

community. Help people contribute and they will do the same and you will see how 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

the channel. It's so impressive what you guys built in just a couple years.

Thanks for sharing everything about the open source model, building it open source. It was awesome. See you guys

source. It was awesome. See you guys soon.

Thanks Bad.

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

your life. And that's why we launched Starter Story Build. We'll help you take that idea up here and turn it into a real app using only AI tools. So, if

you're ready to launch your project, then 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.