Joe Kiani, Co-founder and CEO of Masimo, Talks About Fighting Corporate Giants and His Fixation on Reducing Preventable Hospital Deaths

By Peter Page Peter Page has been verified by Muck Rack's editorial team
Published on May 4, 2023

The first real gig that Joe Kiani landed when he graduated from engineering school was consulting for a medtech company intent on building an inexpensive pulse oximeter, which is the device routinely clipped to a patient’s finger to measure the amount of oxygen in their blood. In the course of his work Kiani learned that pulse oximeters at the time were shockingly unreliable, with false alarms many times more frequent than actual medical emergencies. Harried hospital staff often ignored alarms from pulse oximeters, with predictably tragic consequences when the beeping pulse oximeter signaled a genuine emergency.

Kiani also figured out what the problem was and how to overcome it, which he proposed the company do. The people who had hired Kiani were not interested in a better pulse oximeter, just a cheaper one, so he quit and with his business partner, Mohamed Diab, they co-founded Masimo to do it themselves.

Masimo succeeded at building a better pulse oximeter, but Kiani was soon dumbfounded by the utter disinterest of hospitals. He learned that improving patient safety was not a significant factor in the criteria used by the hospital group purchasing organizations (GPOs) that controlled hospital buying. Kiani crusaded against the exclusive purchasing agreements that shut out medtech newcomers. That triggered a major fight between Masimo and the GPOs that caught the attention of the New York Times, which published a long series of exposes about the lethal consequences of the cozy relationships between GPOs and medical suppliers. That in turn led to a Senate investigation into hospital purchasing practices, at which Kiani was called to testify. GPOs eventually amended their purchasing practices, opening the market to Masimo and many other medtechs with promising solutions.

Masimo, based in Irvine, California, now sells nearly half of the pulse oximeters in the world. The company is valued at nearly $10B, a large sum but well below its peak valuation of nearly $16.5B in November 2021 (the need for pulse oximeters skyrocketed during the Covid pandemic). A big chunk of that valuation decline occurred last February after Masimo announced the purchase of Sound United, a consumer-focused audio, speaker and headphone business that owns brands including Marantz, Denon, Bowers & Wilkins and Boston Acoustics. The price of Masimo stock dropped 37% the day after the announcement, wiping out $5 billion in market value.

Kiani has no regrets about the purchase of Sound United, or the ongoing litigation brought by Masimo against Apple for alleged theft of trade secrets and patent infringement. Both the acquisition of Sound United and the fight with Apple stems from Masimo pursuing Kiani’s vision of a single wearable that can continuously monitor a person vital signs, as he explains below. (Full disclosure: my wife was chosen to try out the first commercial iteration of the watch and has written a detailed evaluation of its performance and shortcomings.)

Grit Daily: Not to embarrass you, but you’re a genuine immigrant success story. Please tell us a bit about your early years in Iran and then your family’s adjustment to life in the US.

Joe Kiani: Thank you, Peter. I moved to the U.S. from the beautiful city of Shiraz at the age of nine. My dad wanted to attend university here. In Iran, my mom was a nurse and my dad was an engineer. My mom worked as a nurse and was at home taking care of us. My sister was in and out of the hospital so I spent a lot of time with my mom in the hospital. I remember wanting to be a doctor.

Things were changing in Iran. When we arrived in the U.S. in 1974, I didn’t know more than three words of English and missed my friends but it was also very exciting to be in the U.S. We lived in the tiny town of Albertville (Alabama), which was surrounded by woods and lakes; it was a nine year old’s dream. Later, we moved to Gadsden and Huntsville (both cities are in Alabama) and lived in the projects for a while. We were poor, but we were happy and hopeful of a better future.

Joe Kiani (on the far right) in Shiraz with his cousins before he left for the US.

We didn’t have a lot of money so we all tried to help out. I remember getting up super early to mow grass for our neighbors. In 1977, we moved to California. Two years later, the Iranian revolution happened, and my parents had to go back to Iran so they could send us money and allow us to get our college education. At 15 and 14, my sister and I were on our own and learned to grow up fast. We were going to school and working at the same time – sometimes holding multiple jobs. I was the resident apartment manager, teacher’s assistant, and worked in the Dining Commons at our college. I had great friends and a passion for poetry and music. Roger Waters and Rush music got me through my teenage challenges.

Grit Daily: You graduated from high school and went to college at 15, which is really rare these days even for those few kids who could do it. What was college life like for you?

Joe Kiani: I was the smallest and youngest person in a college of 40,000 students. But it was great. I met a lot of great people and made some lifelong friends. I had some incredible professors too. My favorite was Professor Fred Harris. Fred was a renowned scholar in advanced signal processing. His class is what inspired me to learn about adaptive filters, AI and other advanced signal processing techniques, which I ultimately applied to solve the motion problem in pulse oximeters. He is still my mentor, serves on our foundation and is a very close friend.

Grit Daily: Pulse oximeters are important but not what anyone would call glamorous. What got you started working with those devices?

Joe Kiani: When I first saw and learned about pulse oximeters, I was awestruck. I guess it was my destiny. I thought how incredible is it to shine light through the body and measure the oxygen level in the blood. So, I have to disagree, pulse oximeters are very glamorous! After graduating with my Masters, I started consulting for a company that was trying to make a very low-cost pulse oximeter. I realized the motion problem soon after and thought I could solve it. I suggested we do it, but they were not interested. To make a long story short, I left them and returned everything they had paid me to get a release to start my own company to solve the motion artifact problem with pulse oximetry.

Grit Daily: Is it true that you and your partner, Mohamed Diab, launched Masimo in a literal garage?

Joe Kiani: Yes. I had a small condo with an attached garage. I took out a loan against it to start Masimo out of my garage. Mohamed and I worked day and night until we were able to create a pulse oximeter that worked in motion and low blood flow. My sister helped with research and everyday business. Money was tight and I still remember giving a friend many shares in Masimo, just to use his desktop publishing computer to write out my business plan.

Joe Kiani and Mohammad Diab, co-inventors of modern pulse oximetry, in the early years at Masimo

Grit Daily: The Masimo pulse oximeter was better than what was on the market when you launched but you had a very hard time breaking into the market because of hospital GPOs, or group purchasing organizations. You eventually became a sort of whistleblower about how hospital GPOs operated and ended up testifying about it to Congress. Please tell us about that experience.

I wasn’t a whistleblower, in the sense that I was on the outside, but I did openly share my story with NY Times reporter, Walter BogdanichBarry Meyer and Mary Walsh who did fantastic investigative work in exposing the relationships between the GPOs and the megacompanies who paid for exclusivity.  Imagine having an invention that could help save lives, but you could not get it in the hands of the clinicians. It was incredibly unfair to everyone involved. The day their first article came out, where our challenges were featured on the front page of the New York Times, I received a call from the Senate Judiciary Committee to see if I would testify in front of the Senate on what I knew about GPOs and the biggest medical suppliers.  I did, and as they say, the rest is history.  We got on contract, the GPOs came up with codes of conduct that should preclude them from entering into sole source contracts and bundling deals that were the teeth of their sole source contracts for clinical preference items. This helped many innovative small companies get contracts.

Grit Daily: Masimo has a corner on a lucrative market just for pulse oximeters, but you have branched out into direct competition with Apple and other giant companies in the market for “sports watches’’ to monitor heart rate and so forth. Why take the leap?

We don’t have a corner on pulse oximeters, but I’ve always had the dream of a health wearable that would allow consumers access to accurate data about what’s going on inside their bodies. I have a sketch of a watch from the beginning days of Masimo. At the time, the technology was just not there. We had dramatically reduced the size and power consumption of our SET pulse oximeter to make it into a wearable.

I wasn’t planning on competing with Apple. Apple called me in 2013 and said you are the platinum of noninvasive monitoring – come and meet with us, tell us how you do it and what you think of the future because we want to integrate your technology into our products. I eagerly went and did it, but unfortunately instead of working with us, they hired away about 30 of our team members, starting with our Chief Medical Officer and took our trade secrets and infringed on our patents. So, we ended up as competitors and in a number of lawsuits. A reporter at the Wall Street Journal recently wrote an article titled, When Apple Comes Calling, ‘It’s the Kiss of Death.’

This week the trial ended with a hung jury and while we are disappointed that the jury was unable to reach a verdict, we intend to retry the case and continue to pursue legal redress against Apple. As we begin that process, the United States Trade Commission is scheduled in the coming months to decide whether to ban the importation of certain models of the Apple Watch, following a ruling last year by an Administrative Law Judge that Apple infringed one of Masimo’s patents for pulse oximetry. We hope eventually we will not only win the battles in the courts, but win the hearts and minds of consumers who want a serious product that gives them actionable information. We were forced into a similar situation when we started with the Goliath in the hospital business. We ended up winning in the courts and have been successful in the hospital market. We now have another Goliath to beat.

I believe the future of healthcare is in the home. We want you to have accurate and continuous data about your health – not spot checks like what smartwatches on the market offer. We want the type of accuracy your clinician’s trust. We want to help you monitor your loved ones. We also want you to be able to go with your monitor to the hospital when needed and back home earlier so you can recover from the comfort of your home and still be monitored by your doctor and family. Recovering at home will also help reduce preventable patient harm like hospital acquired infections. We purchased Sound United last year to expand our consumer division and are working on the healthcare of the future.

Grit Daily: You are a dogged advocate for reducing accidental deaths in hospitals. More specifically, you’ve been working for a number of years to persuade the manufacturers of medical devices, including your competitors, to open their platforms so all the systems can talk to each other. How is that initiative progressing, and what could it accomplish?

Joe Kiani: Over 10 years ago, I realized that the number of preventable patient deaths in healthcare are going up, not down. I wanted to do something about it. I was at the Clinton Global Initiative and decided to publicly commit to eliminating preventable patient deaths in hospitals. I started the non-profit Patient Safety Movement Foundation and President Clinton has supported our efforts ever since. We got the best patient safety experts in the world and created Actionable Evidence Based Practices clinicians can implement to address the top causes of harm. Nearly 100 companies, including our primary competitor, Medtronic, and major companies like Oracle, Philips and GE have signed the open data pledge. We now have an ecosystem that will allow bright engineers and researchers to develop predictive algorithms to help detect patient distress before it is too late to intervene. Our 10th anniversary World Patient Safety, Science and Technology Summit will be held in Newport Beach on June 1st and 2nd, 2023. We hope your interested readers will join us.

Grit Daily: I realize from researching for this interview that you have many initiatives, so is there anything you want to mention that I haven’t asked about?

Joe Kiani: If we all take action out of kindness and fix the things we can, one day we will have a world filled with truth and justice and we’ll have longer and happier lives. There is a project I started four years ago. Masimo purchased a building as an asset and then partnered with a non-profit called Friendship Shelter to use it for housing the homeless and providing the support assistance they need. It’s incredible what we have been able to accomplish together and now there is a successful template that can be replicated. In our country, we have over 580,000 men, women and children that live on the streets and the number is increasing. With for-profits partnering with non-profits, we have an opportunity to make a huge difference.

By Peter Page Peter Page has been verified by Muck Rack's editorial team

Journalist verified by Muck Rack verified

Peter Page is an Editor-at-Large at Grit Daily. He is available to record live, old-school style interviews via Zoom, and run them at Grit Daily and Apple News, or BlockTelegraph for a fee.Formerly at Entrepreneur.com, he began his journalism career as a newspaper reporter long before print journalism had even heard of the internet, much less realized it would demolish the industry. The years he worked as a police reporter are a big influence on his world view to this day. Page has some degree of expertise in environmental policy, the energy economy, ecosystem dynamics, the anthropology of urban gangs, the workings of civil and criminal courts, politics, the machinations of government, and the art of crystallizing thought in writing.

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