People telling the Masimo Corp. story like to compare it to David and Goliath, the surprising victory of a shepherd boy defeating a nine-foot giant—aka a “garage startup” victor over larger device companies. Except, to Chief Executive and Chairman Joe Kiani, there’s nothing surprising about the company’s success.
“We didn’t discover a technology and find what we are supposed to do with it, but figured out [the problem] and what can be done,” said Kiani when he accepted one of the Business Journal’s third annual Innovator of the Year Awards on Sept. 12 (see related stories on pages 14, 16 to 18). “We wouldn’t do it unless we are helping save people’s lives.”
Kiani added that he “accepted this award on behalf of my team.” The innovator has evolved into one of Orange County’s most successful executives while hardly evolving into the stereotypical buttoned-down CEO.
Sans tie at the podium, Kiani shared his moment with 12-year-old Carson Kropfl of San Clemente, whose idea of reshaping recycled skateboard decks to fit backpacks and lockers made him this year’s youngest award nominee. Kropfl shared a table with Kiani and perhaps rekindled a memory or two. Kiani hit college at age 15, and made “the move of his life,” for the second time.
Growth, Persistence
Kiani’s early path to success and fortune was also no glide. He emigrated from pre-revolution Iran. And the man whose medical devices would eventually save countless lives made a key career switch at San Diego State University—away from medicine to engineering. He funded Masimo with a second mortgage. What a company Kiani built.
He announced Irvine-based Masimo’s next seven-year growth plan at its annual stockholder meeting in June, and said it feels incredible that the company has succeeded in making a sustainable business as a public company.
“The company went public in 2007,” he said. “We told them we have a 10-year plan. They couldn’t believe it. They said, ‘Joe couldn’t keep his costs down. He keeps spending [on R&D] …’ We were able to build an infrastructure and pipeline, and make money.”
Masimo reported 2016 revenue of $695 million, including royalties, up 10.2% from a year earlier. It recently traded at about $85 per share for a $4.4 billion market cap. And in this year’s second quarter the designer of blood, oxygen and brain monitors rang up a record $193 million in sales and $47 million in profits—a Wall Street-loving 24% net margin.
“We are looking to reach 30% operating margin over the next few years,” Kiani said at the stockholder meeting, adding that revenue and operating margin growth don’t include new products soon to be added to its offerings or mergers and acquisitions.
Kiani’s innovations in noninvasive patient monitoring devices have also made him one of Orange County’s wealthiest innovators, No. 29 on the 2017 Business Journal tab of OC’s Wealthiest with an estimated personal fortune of $575 million.
His company plans to invest cash back into growing operations in the U.S. and overseas, as well as grow its manufacturing capability.
Kiani said the company is looking to buy. “We are not looking to pay a lot of money but where we can invest in and find new ideas. We are interested in any opportunities in the medical world, including consumer healthcare.”
Ever the engineers, Masimo innovators embrace the Internet of Things, data analytics, algorithms, and creating the next best thing for patient safety. The owner embraces an old-fashioned work ethic.
“I’m an example of persistence,” Kiani told the awards luncheon crowd of 400, in reference to the aforementioned battles with the medical establishment over issues like hospital-purchasing rules. “We went after what people haven’t been able to do, what people thought can’t be done, and we said, ‘let’s do it.’”
Kiani is also chief executive and chairman of consumer wearables maker Cercacor Laboratories Inc. in Irvine. It makes Ember, a noninvasive, endurance athlete-targeted device that measures medical-grade biomarkers, such as hemoglobin and oxygen saturation, to help athletes and coaches personalize training to optimize performance.
Safety, Style
Kiani, whose standard uniform is a crisp, white dress shirt and a dark-colored suit, believes in dressing his part.
“The way you dress is a sign of whether you respect your environment, the people around you,” he told the Business Journal. “If you dress sloppy or [are] dirty, it’s a way of telling them, ‘I don’t care about you.’”
Kiani was featured in the Style File of the Business Journal’s Mediha DiMartino in July. “I hoped Obama would kill the tie the way JFK did away with the hat,” he sighed.
Care is certainly something Kiani feels strongly about. He founded the Patient Safety Movement Foundation in 2012 with the goal of eliminating preventable deaths in U.S. hospitals by 2020 and reducing preventable deaths in hospitals worldwide. The organization seeks to break down silos separating clinicians, hospitals and medical technology companies to work together to save lives. Its annual World Patient Safety, Science & Technology Summit is held in Laguna Beach with former President Bill Clinton as keynote speaker.
Over 1,700 hospitals from around the world have committed to patient safety, as well as over 60 medical device and technology companies that have made the pledge to share their data.
Kiani serves on the board of the Children’s Hospital of Orange County, Chapman University’s President’s Cabinet, San Diego State University’s College of Engineering Advisory Board, the Clinton Foundation Executive Council, Medical Device Manufacturers Association board, and the Masimo Foundation of Ethics, Innovation and Competition in Healthcare.
He is also an angel investor and sits on several startup companies’ boards.
