April 2019 Bloomberg Businessweek
Even if your ears are fine, you might want a device that translates 27 languages, tracks fitness, and monitors vital signs.
When Brandon Sawalich started at Starkey Hearing Technologies in suburban Minneapolis, he was 19 and there were about 70 companies worldwide making hearing aids. That was 1994. His job was to clean the ones mailed in for repair or, occasionally, as returns, because the user was dead and no longer required them. Today, Sawalich is 43, there are five companies, and he’s president of Starkey, which employs 6,000 people and sold $800 million in hearing aids last year. “We’ve been right here in Eden Prairie since 1974,” Sawalich says as he walks through company headquarters, then corrects himself. “Technically, it started a few years before that, in the basement of Mr. Austin’s home. It’s one of those great entrepreneurial American success stories.”
Sawalich moved from waxy buildup to events to sales to, finally, president, the company’s top position, which he assumed in 2016 in the wake of a fraud scandal that rocked Starkey. He’s also stepson of the aforementioned Mr. Austin—William Austin, the billionaire company founder who built Starkey into a privately held Goliath and has made hearing aids for seemingly every famous person who requires them, including four U.S. presidents, two popes, Nelson Mandela, and Mother Teresa.
Starkey is now the only one of the surviving Big Five manufacturers based in the U.S. What’s thinned the herd of competitors, Sawalich says, is technology. Hearing aids used to be relatively simple, inexpensive to make, and not hugely different from brand to brand. Today they’re an increasingly complex digital product, requiring teams of engineers and robust investment in research and development.
A thin, barely visible wire curls over the top of each of Sawalich’s ears and vanishes into the canals, where an earpiece the size of a marker tip delivers sound. “These are real,” he says. “I do have some minor hearing loss.” (It’s from loud music and shooting guns in his youth.) He’s also wearing these tiny, barely visible aids because they’re the company’s latest and greatest development. Sawalich is fond of saying that Starkey makes a product nobody wants. Almost two-thirds of the people in America who need hearing aids don’t have them, and those who do accept their fate wait an average of seven years from the first symptom before seeking help. “With these, hearing aids are going to evolve,” he says, “so that you don’t have to have hearing loss to want a hearing aid.” You heard—correction, read—that correctly. Starkey is now pitching the world a hearing aid for people who don’t need hearing aids.
Sawalich pulls an iPhone out of his jacket pocket and opens an app called Thrive, built to accompany this paradigm shift of a product. The Livio AI, as the new device is called, uses tiny sensors plus, as its name suggests, artificial intelligence to selectively filter noise and focus on specific sound sources—for instance, the person across the table in a busy restaurant—while also tracking various health metrics, including steps walked, stairs climbed, and cognitive activity, such as how much the wearer is talking and engaging with other humans. It also does near-instantaneous translation of 27 languages and will, after a forthcoming update, measure heart rate. The cost is next-level, too: $2,500 to $3,000 per hearing aid or more, depending on the doctor and his or her services. “In the next five to seven years, your hearing aids are going to be like Jarvis from Iron Man,” Sawalich says. “It’s going to be your personal assistant. It’s going to know more about what’s going on with your body that you want to know—your heart rate, blood pressure, glucose. The ear is the new wrist.” This is the kind of ridiculous slogan that only someone inside the bubble of wearable med tech could use unironically. But it’s not an insane idea. The ear is where paediatricians get your kid’s temperature. It’s an ideal spot to measure heart rate and equilibrium, which is how the Livio also provides fall detection for wobbly seniors. If a user doesn’t tell the Thrive app that he or she is fine within seconds after a fall, it will call for help.
Brandon Sawalich became president under ugly circumstances, then transformed the company.
Starkey is a company reborn, Sawalich says. And not only because it had to be, what with the former president and former chief financial officer getting indicted and later convicted for conspiring to steal more than $20 million in an elaborate corporate fraud case. He notes that much of what’s around in the offices is new. Software systems have been replaced, departments realigned, the org chart overhauled. An engineering centre was opened in Tel Aviv, and the existing list of 600 projects was winnowed by two-thirds. There’s a new chief counsel from Sun Country Airlines, a new chief operating officer from General Electric, and a new chief technology officer from Intel. “Over the last two years, we’ve made Starkey a lot healthier and stronger, and we’ve narrowed our focus,” Sawalich says. “I wish what happened didn’t happen. But one door shuts and another one opens, right?”
Bill Austin tends to be in one of three places: in a makeshift clinic, fitting people for hearing aids under a tent in a developing nation; on a Gulfstream jet in transit between developing nations; or standing over a detailing machine nicknamed Bill’s Wheel. This week, it’s the latter. A few days earlier he arrived back in Minneapolis from a nine-country, three-week run through Africa—during which a team from the Starkey Hearing Foundation, led by Austin and his wife, Tani, fit 12,000 people with hearing aids—and proceeded directly to the office, which is where we find him, working on orders in his uniform of black sneakers, black pants, black shirt, and white lab coat.
Austin has ice-blue eyes, the deep creases of an enthusiastic smiler, and a sculpted poof of white hair that comes to a Dracula point on his forehead. He says there’s nothing he’d rather do than tinker with hearing aids. When I ask his wife why a 77-year-old billionaire isn’t out enjoying his twilight years, she replies that he’s “having a ball” and that she has to remind him to turn on his cellphone so that she can call and force him to turn off the lights and come home. “I’ve got to say, ‘Bill, put your toys up,’ ” she says. “ ‘Your back is going to be out.’ I did that at 10:30 last night.”
“I enjoy working,” Austin says. “It gives me meaning to help other people. That’s why I started this endeavour in the first place.” Famous people with failing ears flock here, to “the Mayo Clinic of hearing,” as Sawalich calls it. Rows of framed headshots display the universe of celebrities who’ve come for Bill Austin’s Midas touch. He’s fit Frank Sinatra, Elton John, Steve Martin, Paul Newman, Chuck Norris, Chuck Yeager, Walter Cronkite, Bob Woodward, and a bunch of astronauts. Not long ago, Gene Simmons and the Dalai Lama came on the same day. Another time, it was Hugh Hefner and megachurch pastor Roger Schuller. “I didn’t tell Roger, of course,” Austin says. “He’d think these hands had touched the devil.”
“I’ve done more ears than anyone—no one is close,” he says. “No one has done one-tenth as many, not a fraction. But it’s OK. No one else wants to. Lots of people want to be good golfers. Lots of people want to be good skiers. Not many people want to eat dust.”
An anechoic—non-echoing—chamber for product testing
Everyone at Starkey seems to agree that the most important thing Sawalich has done as president is hire Achin Bhowmik as chief technology officer. Bhowmik’s previous job was in Silicon Valley, running Intel Corp.’s Perceptual Computing Group, a vaunted unit of 1,400 engineers working on autonomous intelligent systems—such things as self-navigating robots, drones that can fly themselves without hitting trees or wires, and facial recognition cameras. When Starkey was courting him, Bhowmik flew to Minneapolis for a full day of interviews. He was in the first meeting when Austin barged into the room and commenced conversing with the new prospect. They didn’t stop talking for hours. “Mr. Austin said, ‘I looked up your work—perceptual computing, that’s pretty interesting,’ ” Bhowmik recalls. “ ‘Do you realise there might be an opportunity to use the same advance technologies to help humans?’ ” Bhowmik hadn’t been thinking about AI in quite this way. At Intel he’d been examining human systems to see how they could be replicated in, say, a car, in the hope that someday that car could drive itself as well as a human could drive it. “Intel’s spending billions on that, and Mr. Austin’s take was completely different,” he says. “He said, ‘Rather than using sensors and AI to make smart machines, why don’t you use them to help people understand the world better?’ ”
Achin Bhowmik, formerly of Intel, became Starkey’s chief technology officer after the housecleaning.
On a subsequent visit, over pizza in the basement of Sawalich’s home, Bhowmik and Austin mind-melded again. Austin, he recalls, asked him to “look at the work from two angles.” The first was, “Don’t look at this as just a hearing aid. It’s a platform—a device that could be used to help humans improve their communications.” That’s the deeper meaning of the translation function: It empowers people to talk to one another despite language barriers. “The second part was helping people live better,” Bhowmik says. “His challenge was, could you tap into the most advanced sensor technologies and artificial intelligence to have this device help people live better in ways more than just helping them hear? Of course you could. The ear is the best place for having sensors.”
For the past couple of months, Bhowmik has been wearing a set of Livio AIs even though he has perfectly good hearing. The result, he says, is that he feels a little superhuman. “I can turn up the volume on the world,” he explains. “How cool is that?”
Today, the audiologists visit, and Bhowmik excuses himself to get ready for his presentation to them. He describes the artificial intelligence, the state-of-the-art sensors, the 45 hours of battery life. It’s so light and small that the wearer will forget about it entirely. And that’s just the first point.
“No. 2: It’s a groundbreaking wearable,” tracking body and brain fitness. “No. 3: It’s an incredible ear-worn language translator.” Here he pauses to acknowledge the murmuring. “Can you believe it? It’s supposed to be science fiction! “No. 4: It’s a revolutionary in-ear fall detector and alert system.” Each of these features is enough to move product. Fitness trackers are huge. Who wouldn’t like to hear the words for “I need more wine” in French whispered in her ear? And every 11 seconds, an older adult is treated in the ER for a fall, according to the National Council on Ageing. Fifty percent of them die within a year. “Do you think you can sell that value to your patients?”
Audiologists go back to their practices to begin selling the Livio AI to patients. Which isn’t hard. Within just four months, the device will account for 50 percent of all product sales worldwide at Starkey. For 2019, the projection is 80 percent. It will greatly increase the sales of a company that was already very profitable.