From Services to SaaS: DeepSet’s Framework for Building Two Complementary Products

Six years ago, DeepSet started with €5,000 and a services business. Today, they maintain two successful products: Haystack, their open-source framework, and DeepSet Cloud, their commercial platform. In a recent episode of Category Visionaries, founder Malte Pietsch revealed the strategic thinking behind this evolution.

Starting with Services “We started basically doing professional services. We built custom AI solutions, learning solutions for enterprise customers,” Malte explains. This wasn’t just about revenue – it was about learning. “Be close to your customers. So I think for us, this bootstrapping phase was incredibly valuable because we just learned so much about really pain points of these customers.”

The Early Product Strategy Unlike many open-source companies that figure out monetization later, DeepSet thought about their commercial strategy from the beginning. “We more or less from day one, then thought, okay, what’s the commercial product like? What’s the business model that can really create here to have a sustainable business?”

They studied successful open-source companies like Elastic and Databricks, learning from their journeys. This research shaped their approach to building complementary rather than competing products.

The Open Source Foundation Two to three years into their journey, DeepSet launched Haystack. The timing wasn’t accidental – it came after significant market learning through their services work. But they approached open source differently than most.

“It’s really a lot of developers out there know it, tried it, like it and typically like the devs are not our buyers,” Malte notes. This understanding shaped how they positioned both products: Haystack for developers, DeepSet Cloud for enterprises.

The Commercial Evolution DeepSet Cloud wasn’t just Haystack with enterprise features – it was designed to solve specific problems they’d identified through their services work. “What we really believe in is that they should spend time on customizing the behavior of the use case and not on any undifferentiated heavy lifting, how to scale efficient gpu’s, how to sync data from your sources. So that’s kind of what we abstract away for teams.”

Maintaining Both Products The challenge wasn’t just building two products – it was maintaining them while ensuring they remained complementary rather than competitive. DeepSet’s solution was what Malte calls their “sandwich motion” strategy.

“At some point, of course they ask the developers about hey, what is that technology? Does it make sense? Do you trust us,” Malte explains. Having developers advocate for their technology through Haystack makes enterprise sales conversations for DeepSet Cloud more effective.

The Services to Product Transition Despite their services business being profitable, DeepSet maintained clarity about their ultimate destination. “We didn’t want to build a professional service company,” Malte emphasizes. This conviction guided their product development strategy.

The transition wasn’t about abandoning services completely – it was about evolving their relationship with customers. As Malte explains: “We really saw that the team spent a lot of time not always on the right things. What we really believe in is that they should spend time on customizing the behavior of the use case.”

Key Lessons for Founders

1. Services can provide crucial market insights for product development
2. Open source and commercial products should be strategically aligned from day one
3. Different products can serve different audiences while remaining complementary
4. The transition from services to product should be gradual and strategic

Looking Forward DeepSet’s dual-product strategy positions them well for the future. “In three to five years, I really believe AI will be embedded in all products, like in our daily life. All processes or products will have some AI feature embedded.”

Their journey offers a blueprint for technical founders considering a similar transition. The key isn’t just to build two products – it’s to create a strategic relationship between them that serves different audiences while maintaining a unified vision.

For founders building in deep tech markets, DeepSet’s experience suggests that the path from services to product doesn’t have to be linear. Sometimes, maintaining multiple complementary offerings – whether services and product, or open source and commercial – can create strategic advantages that wouldn’t be possible with a single-product focus.