Number of words: 3,808<\/p>\n\n\n\n
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\u2019s president of Starkey, which employs 6,000 people and sold $800 million in hearing aids last year. \u201cWe\u2019ve been right here in Eden Prairie since 1974,\u201d Sawalich says as he walks me through company headquarters, then corrects himself. \u201cTechnically, it started a few years before that, in the basement of Mr. Austin\u2019s home. It\u2019s one of those great entrepreneurial American success stories.\u201d<\/p>\n\n\n\n
Sawalich moved from waxy buildup to events to sales to, finally, president, the company\u2019s top position, which he assumed in 2016 in the wake of a fraud scandal that rocked Starkey. He\u2019s also stepson of the aforementioned Mr. Austin\u2014William 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.<\/p>\n\n\n\n
Starkey is now the only one of the surviving Big Five manufacturers based in the U.S. What\u2019s 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\u2019re an increasingly complex digital product, requiring teams of engineers and robust investment in research and development.<\/p>\n\n\n\n
A thin, barely visible wire curls over the top of each of Sawalich\u2019s ears and vanishes into the canals, where an earpiece the size of a marker tip delivers sound. \u201cThese are real,\u201d he says. \u201cI do have some minor hearing loss.\u201d (It\u2019s from loud music and shooting guns in his youth.) He\u2019s also wearing these tiny, barely visible aids because they\u2019re the company\u2019s latest and greatest development\u2014the reason 300 of America\u2019s top audiologists will arrive in two days\u2019 time at this building, the William F. Austin Education Center, via red carpet while running a gantlet of whooping and clapping Starkey employees.<\/p>\n\n\n\n
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\u2019t have them, and those who do accept their fate wait an average of seven years from the first symptom before seeking help. \u201cWith these, hearing aids are going to evolve,\u201d he says, \u201cso that you don\u2019t have to have hearing loss to want a hearing aid.\u201d<\/p>\n\n\n\n
You heard\u2014correction, read\u2014that correctly. Starkey is now pitching the world a hearing aid for people who don\u2019t need hearing aids.<\/p>\n\n\n\n
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\u2014for instance, the person across the table in a busy restaurant\u2014while 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.<\/p>\n\n\n\n
\u201cIn the next five to seven years, your hearing aids are going to be like Jarvis from Iron Man,\u201d Sawalich says. \u201cIt\u2019s going to be your personal assistant. It\u2019s going to know more about what\u2019s going on with your body that you want to know\u2014your heart rate, blood pressure, glucose. The ear is the new wrist.\u201d<\/p>\n\n\n\n
This is the kind of ridiculous slogan that only someone inside the bubble of wearable med tech could use unironically. But it\u2019s not an insane idea. The ear is where pediatricians get your kid\u2019s temperature. It\u2019s 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\u2019t tell the Thrive app that he or she is fine within seconds after a fall, it will call for help.<\/p>\n\n\n\n
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. The case, which reached court in early 2018, captivated the local media and caused great embarrassment for Austin, who testified in the trial, and Sawalich, who didn\u2019t and hasn\u2019t talked about it before. \u201cI just hate going back and thinking about it,\u201d he says, \u201cbecause it makes me ill.\u201d<\/p>\n\n\n\n
The defense strategy in court, I observe, seemed to be to drag Starkey\u2019s two principals through the mud, to try to make them unsympathetic victims for a jury. \u201cI don\u2019t think they tried,\u201d Sawalich says. \u201cThey did.\u201d<\/p>\n\n\n\n
We pass a large corner office. Inside are 12 desks crammed in fairly tight quarters. \u201cThis was our former administration\u2019s president\u2019s office,\u201d Sawalich says. That man, Jerome Ruzicka, was at one time Sawalich\u2019s mentor. \u201cI named my son after him. Not many people know that. William George Jerome Sawalich.\u201d He sighs. \u201cA lot of these guys had been here for decades. They were family. I admired them. I wanted to be them.\u201d<\/p>\n\n\n\n
Sawalich waves a hand at the office. \u201cEverybody thought that I couldn\u2019t wait to get in there,\u201d he says. \u201cI don\u2019t want anything to do with it.\u201d Instead, he had the space gutted and handed it over to engineers doing advanced technology projects.<\/p>\n\n\n\n
He notes that much of what\u2019s around in the offices is new. Software systems have been replaced, departments realigned, the org chart overhauled. An engineering center was opened in Tel Aviv, and the existing list of 600 projects was winnowed by two-thirds. There\u2019s a new chief counsel from Sun Country Airlines, a new chief operating officer from General Electric, and a new chief technology officer from Intel.<\/p>\n\n\n\n
\u201cOver the last two years, we\u2019ve made Starkey a lot healthier and stronger, and we\u2019ve narrowed our focus,\u201d Sawalich says. \u201cI wish what happened didn\u2019t happen. But one door shuts and another one opens, right?\u201d<\/p>\n\n\n\n
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\u2019s Wheel across the hall from the office he never uses at Starkey HQ. This week, it\u2019s the latter. A few days earlier he arrived back in Minneapolis from a nine-country, three-week run through Africa\u2014during which a team from the Starkey Hearing Foundation, led by Austin and his wife, Tani, fit 12,000 people with hearing aids\u2014and 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.<\/p>\n\n\n\n
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\u2019s nothing he\u2019d rather do than tinker with hearing aids. When I ask his wife why a 77-year-old billionaire isn\u2019t out enjoying his twilight years, she replies that he\u2019s \u201chaving a ball\u201d 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. \u201cI\u2019ve got to say, \u2018Bill, put your toys up,\u2019\u2009\u201d she says. \u201c\u2009\u2018Your back is going to be out.\u2019 I did that at 10:30 last night.\u201d<\/p>\n\n\n\n
\u201cI enjoy working,\u201d Austin says. \u201cIt gives me meaning to help other people. That\u2019s why I started this endeavor in the first place.\u201d<\/p>\n\n\n\n
Famous people with failing ears flock here, to \u201cthe Mayo Clinic of hearing,\u201d as Sawalich calls it. Rows of framed headshots display the universe of celebrities who\u2019ve come for Bill Austin\u2019s Midas touch. He\u2019s 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. \u201cI didn\u2019t tell Roger, of course,\u201d Austin says. \u201cHe\u2019d think these hands had touched the devil.\u201d<\/p>\n\n\n\n
Austin and I are scheduled to talk more formally the next day\u2014this is only a brief stop to say hello. But once Starkey\u2019s founder winds up, it\u2019s hard to slow him down. \u201cI\u2019ve done more ears than anyone\u2014no one is close,\u201d he says. \u201cNo one has done one-tenth as many, not a fraction. But it\u2019s 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.\u201d<\/p>\n\n\n\n
\u201cOK, Bill,\u201d Sawalich says. \u201cWe\u2019ll catch up with you\u2014\u201d<\/p>\n\n\n\n
\u201cI wanted to do something else,\u201d Austin says, launching into his origin story. \u201cI was gonna save lives with these hands and be a missionary doctor like Albert Schweitzer.\u201d He was repairing hearing aids at night to save money for medical school when an old man came in for help. \u201cI was able to help him hear when no one else could,\u201d Austin says. \u201cAnd I saw in his face what it meant to him.\u201d<\/p>\n\n\n\n
On his way home that night, Austin interpreted a quote on the side of a bus as a message urging him toward a higher calling, and before going to bed he sat down and talked to himself out loud. \u201cI said, \u2018Bill, the reason you want to be a doctor is so you can help people.\u2019\u2009\u201d But patients can\u2019t always be fixed, and even on his best day he\u2019d be lucky to help 25 people. \u201cAll of a sudden, my personal limitations dawned on me,\u201d he says. \u201cAnd I had a fast-forward vision in living color\u2014like I was in a trance. I saw myself in the bottom of a grave. And people were standing around. And one guy said, \u2018He was a nice old doc, and he helped our community.\u2019\u2009\u201d<\/p>\n\n\n\n
Here, as Sawalich makes some final let\u2019s-move-this-along gestures, Austin smacks his hands together. \u201cI was out of the grave like that. I knew what I was gonna do. I dropped out of school and started the business.\u2009… It was our destiny to become the leading provider in this field, because we were doing it not for money but to serve people better. And that was the goal every day. And I got a little derailed with foundation work because I thought poor people needed a chance. So I was traveling the world for years.\u201d<\/p>\n\n\n\n
At this point, he\u2019s no longer just going through his bio. He\u2019s talking about the troubles\u2014the events that nearly destroyed his company.<\/p>\n\n\n\n
\u201cNow we\u2019re back on it,\u201d he says. \u201cThe whole thing got distorted from my vision into a different vision. Now we\u2019re back having fun, doing what we like to do.\u201d<\/p>\n\n\n\n
Starkey was already famous in Minneapolis for its annual gala, a glamorous party that attracts A-list celebrities to the Twin Cities every summer to raise money for the foundation. But the indictments announced by U.S. Attorney Andrew Luger on Sept. 21, 2016, raised the company\u2019s profile even higher. Five perps, including Ruzicka and CFO Scott Nelson, were charged with conspiring to steal more than $20 million from the company and its owner. Ruzicka and W. Jeff Taylor, former president of a supplier to Starkey, were found guilty. Ruzicka was sentenced to seven years in prison, Taylor to 18 months, and Nelson, who cooperated, to 24 months. Ruzicka and Taylor are expected to appeal.<\/p>\n\n\n\n
He stared at his longtime president and asked how much he\u2019d taken. \u201cJerry ducked his head and said, \u2018About $10 million,\u2019\u2009\u201d Austin told the court<\/p>\n\n\n\n
Austin honestly seems madder about time lost than about close friends stealing from him. He says he sometimes wondered why innovation wasn\u2019t happening at the rate he expected, but he trusted the people running the company while he was traveling 200-plus days a year for the foundation. In retrospect, there were signs of trouble. \u201cIt was hard to get things done,\u201d he says. \u201cI\u2019d tell people, \u2018We can do this.\u2019 They\u2019d say, \u2018We can\u2019t do that now. We\u2019ve got too much software backlog,\u2019 or, \u2018It\u2019ll take a year.\u2019 I thought, Well, that\u2019s just the way life is.\u201d<\/p>\n\n\n\n
In July 2015, Austin got word that Ruzicka had been approaching employees about joining him in a hearing aid company he was planning to start upon leaving Starkey in 2016. \u201cI just thought, That isn\u2019t right,\u201d Austin says. Austin doesn\u2019t do email or even know how to use a computer, but he asked a few trusted employees to take a peek into Ruzicka\u2019s corporate email, and this quiet investigation revealed more skulduggery. Ruzicka wasn\u2019t just recruiting employees to join a company that would compete with Starkey; he seemed to have been stealing. \u201cIt was like pulling on a string and unraveling this unbelievable chain of things that I had no idea I was going to find,\u201d Austin says. Among those things were bonuses disguised as insurance premium payments, evidence of payments Austin knew he hadn\u2019t authorized\u2014including one for $2 million to the guy running the company\u2019s small, unprofitable retail operation\u2014and even the theft of a company car.<\/p>\n\n\n\n
By Sept. 8, Austin had seen enough. He summoned Ruzicka for a meeting. There\u2019s audio of this. Austin secretly recorded it, and it was played in court. \u201cYou know how much time I\u2019ve spent studying you, Jerry,\u201d Austin says on the recording. \u201cI tried to dismiss all of this.\u2009… Well, it wasn\u2019t very brilliant.\u201d<\/p>\n\n\n\n
Later that day, Austin met Ruzicka again, for dinner. He stared at his longtime president and asked how much he\u2019d taken. \u201cJerry ducked his head and said, \u2018About $10 million,\u2019\u2009\u201d Austin told the court. In fact, it was almost $19 million.<\/p>\n\n\n\n
Austin fired Ruzicka, Nelson, and several other key executives, then referred the matter to the authorities. \u201cI couldn\u2019t really investigate any further. I couldn\u2019t get bank records. So I just turned it over to the FBI, forgot about it, and went back to work,\u201d he says.<\/p>\n\n\n\n
Austin claims to hold no grudges. He feels sorry for Ruzicka, he says, but happy for the company. \u201cBecause of this, we had to make a lot of changes to get to where we wanted to go,\u201d he says. \u201cWe brought in new people that we needed to go to the level that we\u2019re going to. I\u2019m not complaining about what happened.\u201d<\/p>\n\n\n\n
He says he\u2019s not even angry about the ugly trial. \u201cI\u2019m not running for political office. I\u2019m not running for sainthood. They can say anything they want. I knew they had to do anything they could to save themselves from going to jail. I probably would have gone along with it, too.\u201d<\/p>\n\n\n\n
Starting on Feb. 9, 2018, Austin spent three days on the stand, much of that time helping the prosecution lay out a complicated and often boring fraud case. But when the defense took over for cross-examination, things took a turn.<\/p>\n\n\n\n
The defense attorneys hammered away at his character. They accused him of establishing residency in Texas to avoid taxes. They introduced a $66 million settlement he\u2019d reached with his second wife in 1988. They asked him about \u201click \u2019em and stick \u2019em,\u201d audiologist shorthand for using saliva to lubricate a hearing aid before inserting it\u2014something Austin did regularly, Miller\u2019s attorney suggested, including on his client.<\/p>\n\n\n\n
\u201cIt\u2019s not a frequent habit,\u201d Austin replied.<\/p>\n\n\n\n
\u201cWell, it\u2019s a grotesque thing for you to do anytime, wasn\u2019t it?\u201d<\/p>\n\n\n\n
\u201cThat\u2019s your opinion you\u2019re entitled to,\u201d Austin said.<\/p>\n\n\n\n
Another attorney asked if it was true, as Austin claimed in an interview, that the archangel Michael took over his body and spoke to a young boy in Toluca, Mexico, in 2011.<\/p>\n\n\n\n
\u201cI do make that claim,\u201d he replied, calmly.<\/p>\n\n\n\n
Austin talks openly of receiving visions through the years, as well as receiving directives in answer to his prayers, such as one he got in 1980. \u201cI was told it was not about hearing aids,\u201d he told the courtroom. \u201cIt was about reflecting [God\u2019s] love for his people, and hearing aids were the vehicle that I could use.\u201d<\/p>\n\n\n\n
Sawalich was also a major focus of the defense attorneys\u2019 cross-examination. Some of it was salacious, especially the assertions by the former CFO, Nelson, that Sawalich had multiple affairs with underlings, which he denies. But a good portion of the defamation focused on Sawalich\u2019s qualifications to lead Starkey, which is a peculiar line of inquiry in a fraud trial where he was neither victim nor accused.<\/p>\n\n\n\n
\u201cHe was made president because he was the stepson, the son of his wife,\u201d the attorney said. \u201cIsn\u2019t that true?\u201d<\/p>\n\n\n\n
\u201cI believe that to be true, yes,\u201d Nelson replied.<\/p>\n\n\n\n
When I ask Sawalich about this assertion, he bristles. \u201cYou can either do this job or you can\u2019t,\u201d he says. \u201cAnd Starkey is Bill\u2019s baby. He\u2019s not going to hand it off to just anyone.\u201d<\/p>\n\n\n\n
For Austin, it was just another thing to take in stride. There was never a master plan to install his stepson, he says, but a situation arose, and he rolled with it. \u201cBrandon\u2019s done one hell of a lot better than I would have thought he could,\u201d Austin says. \u201cI really applaud him for not being the genius himself, but putting together a team, knowing that he needed all of these different attributes to make this thing go.\u2009… Jerry was running it like a dictator. Everything funneled back to him.\u201d Sawalich, on the other hand, \u201cjust coordinates the team. He\u2019s like a coach.\u201d<\/p>\n\n\n\n
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\u2019s previous job was in Silicon Valley, running Intel Corp.\u2019s Perceptual Computing Group, a vaunted unit of 1,400 engineers working on autonomous intelligent systems\u2014such things as self-navigating robots, drones that can fly themselves without hitting trees or wires, and facial recognition cameras.<\/p>\n\n\n\n
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\u2019t stop talking for hours. \u201cMr. Austin said, \u2018I looked up your work\u2014perceptual computing, that\u2019s pretty interesting,\u2019\u2009\u201d Bhowmik recalls. \u201c\u2009\u2018Do you realize there might be an opportunity to use the same advance technologies to help humans?\u2019\u2009\u201d<\/p>\n\n\n\n
Bhowmik hadn\u2019t been thinking about AI in quite this way. At Intel he\u2019d 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. \u201cIntel\u2019s spending billions on that, and Mr. Austin\u2019s take was completely different,\u201d he says. \u201cHe said, \u2018Rather than using sensors and AI to make smart machines, why don\u2019t you use them to help people understand the world better?\u2019\u2009\u201d<\/p>\n\n\n\n
On a subsequent visit, over pizza in the basement of Sawalich\u2019s home, Bhowmik and Austin mind-melded again. Austin, he recalls, asked him to \u201clook at the work from two angles.\u201d The first was, \u201cDon\u2019t look at this as just a hearing aid. It\u2019s a platform\u2014a device that could be used to help humans improve their communications.\u201d That\u2019s the deeper meaning of the translation function: It empowers people to talk to one another despite language barriers.<\/p>\n\n\n\n
\u201cThe second part was helping people live better,\u201d Bhowmik says. \u201cHis 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.\u201d<\/p>\n\n\n\n
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. \u201cI can turn up the volume on the world,\u201d he explains. \u201cHow cool is that?\u201d<\/p>\n\n\n\n
Today, the audiologists visit, and Bhowmik excuses himself to get ready for his presentation to them. Twenty minutes later he\u2019s standing backstage while Sawalich warms up a large crowd of mostly white men. He calls out a few by name. \u201cThis is like a family reunion,\u201d he says, shouting out a Scott and then a Bob. \u201cEveryone in this room practically raised me!\u201d<\/p>\n\n\n\n
This, he tells them, is a \u201cnew and improved, stronger Starkey.\u201d He\u2019s back on script now. \u201cYou\u2019ve been with Starkey through thick and thin, through ups and downs. We\u2019re about ready to go on a rocket ride. You don\u2019t ask what seat. You just get on.\u201d The applause is rousing. There\u2019s even a holler or two. Then Sawalich cedes the stage to Bhowmik, who leads with the meat and potatoes. He describes the artificial intelligence, the state-of-the-art sensors, the 45 hours of battery life. It\u2019s so light and small that the wearer will forget about it entirely.<\/p>\n\n\n\n
And that\u2019s just the first point. \u201cNo.\u20092: It\u2019s a groundbreaking wearable,\u201d tracking body and brain fitness.<\/p>\n\n\n\n
\u201cNo.\u20093: It\u2019s an incredible ear-worn language translator.\u201d Here he pauses to acknowledge the murmuring. \u201cCan you believe it? It\u2019s supposed to be science fiction! \u201cNo.\u20094: It\u2019s a revolutionary in-ear fall detector and alert system.\u201d<\/p>\n\n\n\n
Each of these features is enough to move product. Fitness trackers are huge. Who wouldn\u2019t like to hear the words for \u201cI need more wine\u201d 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 Aging. Fifty percent of them die within a year. \u201cDo you think you can sell that value to your patients?\u201d<\/p>\n\n\n\n
Around the room, audiologists stir. The next day, they\u2019ll go back to their practices to begin selling the Livio AI to patients. Which isn\u2019t 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, while proving that not all of Bill Austin\u2019s visions are wacky.<\/p>\n\n\n\n
Starkey\u2019s founder was watching from a control room as Bhowmik described the thing Austin swears he sketched out at a 1998 engineering summit in Germany. \u201cThis is our future,\u201d he told his people then, and 20 years later\u2014with just a few speed bumps and one failed palace coup\u2014the future finally arrived.<\/p>\n\n\n\n