Under the Radar

Stratos Product Development President Sean MacLeod has helped build the company into a versatile custom shop for some of the top technology and manufacturing companies in the U.S.

Suppose youre a smart, young mechanical engineer who wants
to build better high-tech gadgets and have an impact. You are intrigued by
tricky consumer electronics and medical device challenges in the wireless,
networked, always-on, must-be-reliable real world. You snagged a degree from
Stanford University and got your feet wet solving problems and honing
organizational skills in Bay Area tech firms. You have options and job offers,
but where would you go to engage your skills across a wide spectrum of
enterprise?

For Wallace White, the answer was Stratos Product
Development LLC, a low-key, 50-person, engineering services firm in Seattle
with a rock-star client roster that includes Microsoft, Nike, InFocus, British
Airways, Fluke Electronics, Response Biomedical, Abbott Laboratories, Spacelabs
Healthcare and Apple. Founded in 1987, Stratos has forged a central but largely
behind-the-scenes role in bringing a series of new technologies to market. It
offers a unique blend of services from product strategy to applied research,
industrial design, engineering and project management. Throughout its
evolution, it has attracted a cadre of mechanical, electrical, software, biomedical,
optical and industrial engineers needed to commercialize new technology.

Stratos balanced approach to innovation lured him in, White
said. The style differed markedly from one Silicon Valley employer that prized
innovation so much, it was routine for projects to change schedules several
times, wreaking havoc on planning. Stratos approach also veered sharply from
another shop where it was all about the schedule with no room for innovation.

Related: Design For All Seasons

Were a very flat organization. Were not heavily siloed.
There is good cross-pollination, White says of the culture at Stratos, where
he is lead mechanical engineer and manages projects ranging from home theater
projectors to portable medical diagnostic devices.

From its origins working in consumer electronics, Stratos
has carved a niche serving life sciences, biotechnology, medical devices and
health care electronics. Health care related projects now comprise about
three-fourths of the companys business. Housed in 23,000 square feet of
offices and labs on Elliott Avenue in Seattles Belltown, the company provides
engineers a work environment that includes open spaces, low walls, and great
views of Washington State Ferries and Port of Seattle marine traffic.

Weve been used in the past by Nike, Apple and Microsoft as
an arms-length skunkworks, says Stratos President Sean MacLeod. Were taking
a look at technology in a very different way.

And what are its cutting-edge engineers, designers,
strategists and researchers focusing intently on in 2010?

The NetGuard wireless heart monitor, which Stratos designed and developed, was a huge success for Datascope.

Were doing a lot of real-time health care monitoring
outside of the hospital, MacLeod says. He describes a small portable medical
device with the ability to measure biometric information and send it over
cellular networks, so medical professionals can know patients heart rates,
oxygen levels, brainwave activity and their physical location, among other
potentially urgent data points. (One device Stratos designed and developed for
Datascope, the NetGuard wireless heart monitor, was so significant, it led to Datascopes
acquisition by a Chinese medical device maker, Mindray Medical, which has
operations in Redmond.) Many components of these real-time, network-connected
monitoring devices are already in the market, MacLeod acknowledges.

Stratos principal co-founders, Mike Nelson and Allan
Stephan, came from network troubleshooting equipment manufacturer Fluke Corp.
in Everett. A mechanical engineer and an industrial engineer, they foresaw the
need to provide a range of product design and development services across
multiple disciplines, MacLeod says.

Were actually very purposeful about that, he says. Weve
talked about narrowing it over the years. Weve gone through narrowing and
broadening back out again. Theres a fundamental strategy behind it that we
execute on.

Companies turn to Stratos when they are trying to push into
new markets. MacLeod notes, Everything we do here is all about moving to that
next market.

Stratos redesigned Flukes series of digital multimeters.

Stratos also offers tacit assetspeople, structure,
culturethat can be applied to many different projects, including the companys
consulting practice, MacLeod adds.

Within a corporate culture, you arent going to get that
same focus, MacLeod says. We are different from a corporate environment. If
we dont execute, at the end of the day, we die. Our reputation is to be very
innovative, creative up front, create the highest value, then move forward into
the market and execute on getting that delivered to introduction.

In one recent and productive partnership, Stratos managed
the design phase of a product development project for Pathway Medical
Technologies Inc., a Kirkland-based firm that manufactures and markets medical
devices for the treatment of arterial disease. That design phase consisted of
concept development, feasibility, and design verification and testing. They
also transferred the design to manufacturing, says Steve Hulteng, manufacturing
engineer at Pathway.

An important element offered by Stratos was their project
management capability for medical-related products, Hulteng says. Pathway
identified this skill set as a major factor in achieving a successful outcome
for this particular project, which differentiated them from other design
firms.

Stratos business model has evolved over the years. In the
mid-1990s, the company incubated new technologies in new companies, cultivating
both homegrown technology and tech transfer. Now, the original co-founder and
CEO runs the firms venture arm, and the business is structured like a holding
company with a consulting practice that oversees startups. Stratos has also
started, developed and spun off a couple of its own businesses, including one
that makes tiny wearable computers.

Because were doing that ourselves, we understand the
dynamics of a venture-funded company, says MacLeod, who runs the services side
of the business. When we provide consulting services, we understand what their
value-creation process is.

MacLeod would not disclose details about the private
companys financials, but he acknowledged that in 2008, the business saw its
best first half since the late 1990s, when a public report said Stratos
revenue was on track to hit $6.5 million for the year. Weve grown 30 percent
year over year this year from last, he adds.

While Stratos can point to a history of innovation and evolution,
it plans on keeping its nose to the grindstone.

Eighty percent of innovation is just hard
worknot the birth of a moment of brilliance. Its hard work, MacLeod says.
Twenty percent may be brilliance. But the rest is staying focused, being thoughtful
about whats going on. It is like quantum mechanics. By the time you go Aha!
the clock has ticked one more second and youre in a different place now. With
every tick, something else changes. The markets change. The populations change.
Thats what drives engineers nuts: There is never any particular moment when
its all done, its all captured. The minute you say that, its changed.