The Mid Market Tech Gap with David Robinson, Founder of Stratos Development Group | Episode 489

The mid-market is where tech decisions get dangerous. You are big enough that uptime, security, and delivery speed matter every day, but you are not big enough to burn cash on massive consulting retainers or absorb the fallout from a shaky vendor. That “valley in the middle” is exactly where David Robinson lives, and it is why he built Stratos Development Group to offer right-fit technical leadership, managed services, and software development that feels structured without being out of reach. 

We walk through David’s journey from building early electronic medical record software in healthcare to leading engineering at a venture-backed startup, and then into entrepreneurship. From there, we get practical about what mid-market teams actually struggle with: competitors using the same licensed infrastructure, product roadmaps hijacked by one or two big customers, and the need to own real intellectual property and architecture to keep a competitive edge. 

For payments, fintech, and ISO leaders, the conversation goes deep on what Stratos is seeing right now: consolidation, tougher differentiation, and the technical friction that can make or break net-new deals. David shares how ISOs can approach technology enablement and custom integrations, plus the bigger opportunity of moving from ISO to ISV. If you already have a book of business, you also have a built-in feedback loop, faster validation, and a clearer path to launching software that your clients will actually pay for. 

We also tackle AI and the “vibe coding” era, including why agentic development can boost productivity but cannot shortcut PCI, SOC, or HIPAA compliance. If you want to modernize safely and win in a more competitive market, this one is for you. 

Transcript

Welcome And What To Expect

SPEAKER_00 0:00

Welcome to the Leaders in Payments Podcast, where we talk to C-level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top.

SPEAKER_01 0:18

Hello, everyone, and welcome to the Leaders in Payments Podcast. I'm your host, Greg Myers, and today's special guest is David Robinson, who is the founder of Stratus Development Group. So, David, thank you so much for being here and welcome to the show.

SPEAKER_02 0:30

Really a pleasure to be here with you today, Greg.

David Robinsons Early Career Path

SPEAKER_01 0:32

So before we dive into your career and the company, can you give us a quick snapshot of your personal background, maybe where you grew up, where you call home today, a few things like that?

SPEAKER_02 0:40

Yeah, sure. Started and uh grew up in California, Central Valley. Grew up there. My father was a federal agent with the uh FBI, and my mother was a paralegal. I say that because I think it influence on me at a young age and needing to describe reasons for things actually led me to where I am today. If I wanted to go out on the weekends, I really had to have a good reason to do so. And they taught me those skills early on. And those skills uh came in handy when I entered the technical space in my early professional life. I started in the healthcare space and uh having those deep communication skills uh afforded me some opportunities that were not otherwise common, especially in that area of work. So I started in healthcare, specifically inside of women's health, and we did some cool things there. I eventually became the subject matter expert inside of uh reproductive endocrinology, which is a niche of medicine uh surrounding IVF procedures and things like that. I built the first electronic medical record system for that practice of medicine, and later got uh headhunted by the former CEO and CFO of WebMD to join them at a startup in New York early in the career. Um I was their VP of engineering and we worked underneath a couple of private equity groups, Kleiner Perkins, SR1, Google Ventures. We did uh in and out in about two to three years, um, did an exit there, uh, landed on my feet and uh decided that all the experience that I took from that side of business, um working under private equity, that there was a massive gap in the mid-market to provide relevant and legitimate and high-end services for technical leadership, MSP and software development for the mid-market. And so, in the space, really kind of where we are today, you see that you've got two kind of camps. You've got your big four, your Fortune 500 consulting groups, and then you have your fivers and your, well, my nephew has an engineering degree, and you guys you've got these two camps in a massive valley in the middle where the mid-market lives. And if you ask anybody that's in that mid-market sector that is doing any real amount of business, they would prefer the structure, the stability of those big four consulting groups, but they just don't fit the profile that they would otherwise engage with. And so they're left with horrible decisions to make. We call them high-risk decisions in a low trust market, is what we say. And we've tried to fill that gap and be that partner that can provide right size or right fit services for that mid-market company. That mid-market wants groups that pay their taxes and have insurance and have been doing this for a while. It's been 15 years now, and that's the position that we play today at Stratos Development Group. And so far, so good. Still in business.

SPEAKER_01 3:20

Awesome.

Why He Started Stratos Development Group

SPEAKER_01 3:21

So obviously earlier in your career, you kind of were a part of something and then you started something. So what led you to actually start it yourself?

SPEAKER_02 3:29

Yeah, I've always been a little bit more entrepreneurial in that way. I just I think that I across the years, I was always doing something else. And when I wasn't doing something else, I tried to find a way to lead something within the structures that I found myself in. You know, raising hand to projects I probably shouldn't have, things like that, and gaining that experience, you know, not sleeping for a week or two weeks at a time until you figure it out. Um, but that really pushed me forward. And so I, you know, starting something was kind of a natural next step for me after that exit. It was the right time, right place, right contacts, right network, right experience. And it's not to say that um even during this run, it's not had its fair share of learning experiences. So certainly in the weeds, um, been in it for a while, but nowhere near to the end, I don't think. So uh still growing, still learning today.

SPEAKER_01 4:18

Okay.

The Mid Market MSP Model

SPEAKER_01 4:19

Well, let's talk a little bit more about the company. So tell our audience sort of what do you do? Who are your markets, what's the best client look like, maybe some details about the company and what you do.

SPEAKER_02 4:30

Yeah. So Stratos Development Group most understand it best as an MSP, a managed service provider, which is typically referred to with email management, hosting, network and installation switches, server on-prem. But we specialize in the software side. So we say that we're an MSP that specializes in software, and in accompanying to that is sort of the business development aspect that goes with the software side. We help clients in the mid-market. Usually that falls on an average between about 10 to about 100 million in ARR organizations. We do have some enterprise clients, which is great as anchors, but we work with that really solid mid-market client. They come from a couple different experiences typically, right? And they range in industry. I'll tell you that right now that the primary industries that we deal with happen to be healthcare, prop tech, payment tech, music tech, and kind of any SaaS application you could possibly imagine in between. We've probably done at least one or two things there. But those are the those are kind of the four main categories that we deal with or make up most of our portfolio today as a company. And so when we get clients that come to us, we've been blessed that our referral channels have continued to grow. I think having clients come from other trusted clients or other trusted partners out there in the industry make up a little over 60% of our book of business today. So that's where they primarily come from, but they all end up having similar problems. Some of those problems, they are organizations that started up, got moving, licensed a bunch of their technology, are now in a place, especially in today's market, with AI and a very competitive landscape, the expansion or leverage of human capital through technology and sorts of things, where they've licensed their infrastructure. They now are playing in a pool where everybody else is leveraging the same infrastructure tools. And there is no competitive difference between them. The competitive difference happens to be the people who started the company, but they're not able to transcend that difference maker down through the company stack. And so, okay, what do you do? And so we work with businesses to take ownership of some of that, let's call it the intellectual property or the actual architecture, the mechanisms of the company by rebuilding certain components to give them the competitive advantage that they otherwise wouldn't have. Other places that we work with are coming from a place where, let's say they did have a software, a thing that they were offering out in the marketplace. What ends up happening is a lot of companies in the mid-market, they have a product, they build the product, they ship the product, they end up being, you know, monetarily successful by all accounts and measures, but they get to a place where they get one or two big clients, company's profitable, people are happy, it's going well. And then all of a sudden the software, the company itself, or what have you kind of plateaus. And it plateaus because these two big clients that came on that made the business successful as to where it is today, all of anything that they say, they ask for, they want changes on, they say jump and you say, Well, how high? And all of your resources go to just satisfying their needs. And losing sight or losing track of the ability to continue or maintain a competitive edge to continue to innovate is where then we step in as a function to help companies continue to maintain that competitive edge. And of course, now today, doing a ton in terms of the modernization of organizations from an AI perspective, from an architecture perspective, people have a lot of questions. And we're a group that answers these questions in rapid succession. So we have a lot of experience with that. This isn't our first rodeo. People are seeking a lot of things and not knowing where to find them. We're a good resource for that. And that's a large part of where a lot of the clients come from today, at least from their progress from even a mid-market and headed on their way to an enterprise uh level organization.

SPEAKER_01 8:20

Okay.

Payments Work With ISOs And Fintech

SPEAKER_01 8:21

So for this audience, they'll be interested in maybe some of the things you've done in the payments and fintech space. So obviously you don't have to use names, but can you talk a little bit about, you know, kind of what you're seeing in that space and some of the things that you've been working on?

SPEAKER_02 8:36

Yeah, absolutely. So in the payment tech, ISOs, that space in particular, I think there's an extraordinary amount of things happening right now. And it's not that it just started yesterday. This has been going on for a while. The consolidation and reshuffling of everybody's position and leverage points that they have over their books of business. Things are getting more strategic. It's getting a little bit tougher to stay competitive in those ways. And so what we're finding today is we have two different types of clients, especially from an ISO perspective, that have books of business. These are either nationally known ISOs or even more localized ISOs with very specific niche clients that they work with. But we do two different things for these groups. One, we partner with them from an integration or technology enablement standpoint. So ISOs that are looking at closing fresh, net fresh deals or that are looking at bringing on more business, or they have agents or brokers that are bringing them things. More often than not, it comes with some technical component. There has been to date different solutions that help satisfy different technical integrations, none of which the ISOs own, and they're piggybacking off of just in order to make some of these things happen. That's totally fine. That is fine. And then there's this other bucket that does represent a larger opportunity for a lot of the ISOs where there isn't something that's off the shelf. And so they actually take a pass or a walk on some of these things. And that's where we get calls from different ISOs to come in and help them overcome those challenges to lock in a net new business for themselves and to do a couple different things that way. The other thing that we're doing right now in the ISO or payment tech spaces has a lot to do with this ISO to ISV transition period, with books of business being consolidated, being carved out with the different services that all their clients are using. These SaaS applications are figuring this out. And they're figuring out that payments is a great place to be, just like all these uh ISOs have known for so many years, and they're finding their way out the door in a lot of cases. The exciting thing about that for us and what we've been able to do with some very special ISOs is we've helped them realize that they really actually have the best possible success rate of any startup that we've ever worked with. The difference of most of the early stage companies and even the mid-market ones that have semi-market acceptance is the fact that they have ideas and they're solving problems, and that's the entrepreneurial spirit. And they go and they invest and they solve these problems with mechanisms, with services, with the things that they provide. And then they've got to go find all their clients. The difference with ISOs is you already have all the clients and you already know all the problems they're dealing with. And so it's not a matter of, it's never a question of is there any problems and what problems are those? You're likely aware of them if you would just ask. And when you do provide a solution to put forward, you have the baked-in market all ready to go to because you already have all the clients. And so you get your validation from there and you're able to roll things over very quickly. It's become a very, very advantageous opportunity for many ISOs or many that just happen to be in the payment tech space. If you've got a captive audience of clients that you already have access to to ask these questions to identify something that you could provide to the space, it's very, very strong. On top of that, the benefits of injecting some technical aspect to your business that otherwise was residuals based only, there's a certain multiple exit value on that residuals based in the payment space. But once you inject some level of technology in that and you leverage a new SIC code in the open marketplace, your multiplication value doubles, triples, quadruples on some occasions. That's really exciting too, as these payment groups are looking for kind of their next steps or mid to long-term sort of uh futures. That's been fun.

AI As The Growth Catalyst

SPEAKER_01 12:32

Okay. Well, let's talk a little bit about the future. Where do you see the biggest growth opportunity for your business?

SPEAKER_02 12:38

Uh for our business specifically, can't have this conversation without just sitting here and talking about uh AI. Uh sure. Our business is our client's business. And so the growth opportunity for our business in particular rests upon the competitive nature that the marketplace is presenting right now. We are but a drop in an ocean of opportunity. Our competitors in the big four, that being Accenture, that being Deloitte, Erneston Young, Bain, these advisory groups. For example, Accenture is the, I believe they still represent, if not, it's the second or third largest employer in the world. The opportunity for us is to we see educating the mid-market on the same principles that the Fortune 500 already know. I think it's been an interesting thing coming from a place where my career early on was so progressive, and I entered these massive areas to participate and play at a very deep level, that everybody understood the advantage of leveraging these consulting groups, these managed partners, these technical infrastructure organizations that help people move further, faster at a reduced fixed overhead cost and risk for their own businesses. And what's so interesting to me is now doing this for 15 years is watching small organizations, small companies turn into mid-market companies and lean into and research and dissect so much of what the larger organizations and the Fortune 500 companies, you know, taking that inspiration and applying it to their own business. But when it comes to technical teams and things like that, all of a sudden they know better. And they could be in any industry and all of a sudden they decide they're going to be a technical, technical company with no leadership on that side of things. And historically it stunts, delays, and otherwise has a significant risk attached to that type of investment into companies. And I don't blame them, you know, necessarily. I think when you progress as an organization to that mid-market level, you've you've been on a track record of finding success through solving those problems. The moment you get to that mid-market level, though, the problems and the nature of those problems has a significant change and a significant impact into the next steps that your business is going to take. And it's going to be a big question for you as to whether or not you really feel like you have what you need in order to overcome those challenges because you will not be able to license your way through the maturity steps to get you to the next level that I assume you're you're hoping to achieve. And so it's that's interesting. So the biggest growth opportunity that we have is just education. I think AI is a catalyst to opening those conversations of education to a lot of these companies that otherwise have put this off. But that we have people come to us all the time that are realizing these steps and wanting these services. And again, I before ourselves, yes, there's other groups out there. I'm not going to say we're the only ones. We're the only ones I would recommend, obviously. I've been around. We have a lot of friends in the other groups, and we all talk and we all do things very differently from one another. And so for us, AI is turning into these educational conversations that are opening the eyes of these groups because the choices that they're faced with is sort of adapt and overcome, or stagnate and slowly sort of be impacted by the industry as opposed to being, you know, that catalyst of change of the industry. And they realize today now that even for groups that felt confident that they could bring in some technical in-house to kind of balance things out, or they're realizing some portion of this problem, the risk factor is going up. That's across all employers for all job roles. I mean, you have people doing job interviews online and using AI to answer questions. You have no idea who's capable of what. And now what we call the vibe coding era, right? Everybody's a coder now, everybody's an engineer all of a sudden, right? Like my sister is an engineer overnight. And that's just that's not the case. That's not the reality. You know, simple things like anything that you end up deploying inside of your company, if you have any level of certification, whether that's HIPAA or SOC or PCI compliance requirements, et cetera, you have to support these things and it has to be compliant. It's not, you can't vibe code your way through compliance. There's a lot of things that become bigger risks, not lesser risks in that capacity. And so, yeah, education. And if we overcome the barrier of education and are able to successfully engage in those conversations in a meaningful and a productive way, I think that our business will selfishly flourish. But what we would like to see is deserving and meaningful companies that have services to provide and problems to solve go further, faster and beat their competition. We're very competition focused at here at Stratos, and we enjoy being a part of those organizations.

Agentic Development And Lean Teams

SPEAKER_01 17:21

Okay. So beyond AI, what are some of the biggest trends that are sort of reshaping the dev space? You talked about the vibe coding and all of that. I mean, obviously we we see and read that all the time, but what are some of the other trends that you're seeing that really kind of affect your business?

SPEAKER_02 17:38

Aaron Powell Agentic development practices. So I mean, what's happening to our business in particular is the same as anywhere else that AI is bringing to the table, is we are leveraging more human capital for more meaningful work at scale. So even in relation to, let's call it other big like the big four that I've already mentioned, let's talk about Accenture. I mean, they've cut a significant level of employees. And that's mainly because so many of these organizations are right sizing for this leverage of human capital through using these tools, just like anywhere else. So we are equally on that path, except for instead of needing to right size, we've been right sized. So our teams that we deploy inside of different organizations to achieve the results that we provide to companies are are never never overdone. They were never too large to begin with. In fact, we were very aggressive from the very beginning. So for us, this is just business as usual. We're just able to provide more value to more clients than we ever have. Um and so that's been a big change for us, and it's very, very meaningful. Our growth from a profitability standpoint is on the rise, while the growth in the fixed overhead is reducing at a rate that that does not match the past 15 years. Let's just say that. And obviously that's good news for us, but that's also good news for everybody else. For groups like ourselves that are have been right size, what that allows us to do is leverage capital to continue to ensure that our clients are receiving the best talent from the best organizations, from the best places on earth. Our company is spread across four different countries these days. It just allows us to continue to elevate our services and compete higher as an organization, as an MSP, and ipso facto be competitive for the clients. And that's really what they desire is a competitive team. So it's been great. We've loved it.

What Payments Leaders Should Do Next

SPEAKER_01 19:35

Okay. Well, one final question. If there's payments people out there that are listening to the show and they're they're thinking about or maybe looking for a resource like you guys, what should they be thinking about right now? And how would you frame it to them in their minds that they should be thinking about from a from a development perspective and what you guys bring to the table?

SPEAKER_02 19:56

Yeah. If you're in the payment space right now, it's not surprising that you probably have had these conversations, are having these conversations, are thinking about having having these conversations. The next step and kind of what I would say is, you know, come and talk to us. I'll be there, um, schedule some time with me. Let's sit down, let's talk about your unique positioning in the marketplace, what you have in front of you, and what can be done, or what might be a good avenue or a path to achieve whatever next steps you have for yourself. We always like to bring ideas to the table as well. We always say here at Stratos that the information is free. It's the execution that does end up, you know, costing a little bit of an investment on that side that we participate in. But the information is free. Have the conversation. Open yourself and the organization up to what possibilities could play out for you and what impact that could have for you and your business, whether that's a stability play or a growth play. Sometimes we've had clients that come to us, sometimes it's a pure survival play, short term, only to then turn around and become a competitive advantage in the end because they took a hold of their own destiny in some ways by leveraging this technical aspect of business development. So yeah, I would say uh, you know, take the next steps and just open that conversation. Don't be afraid to have it.

SPEAKER_01 21:10

Okay.

Closing And Where To Subscribe

SPEAKER_01 21:11

Well, David, I think that's a great way to wrap up the show. So thank you so much for being on the show today. I know your time is very valuable, so I really appreciate you being here. No, thanks so much, Greg.

SPEAKER_02 21:19

It's always a pleasure. Thank you.

SPEAKER_01 21:21

And to all you listeners out there, I thank you for your time as well. And until the next story.

SPEAKER_00 21:26

Thank you for joining us this week on the Leaders in Payments Podcast. Make sure you visit our website at leadersandpayments.com, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.