Joe Kiani had fulfilled his goal. He founded and serves as CEO and Chairman of Masimo Corp., which is one of the top manufacturers of pulse oximeters, those fingertip sensors that hospitals use to detect oxygen saturation in patients' blood. Masimo Corp. has carved out a successful niche in the market. Kiani, who came to the United States from Iran as a child in extreme poverty, became wealthy thanks to Masimo and, according to Forbes, a millionaire. As an electrical engineer, he took pride in the fact that the products he had created were of the highest quality and that they outperformed their main rival, Nellcor, a division of Medtronic, a business nearly 15 times larger than Masimo, in the U.S. hospital pulse oximeter market. About 90% of sales are accounted for by the two businesses combined.

It's a successful business as well; Masimo, situated in Irvine, California, made $223 million on $1.2 billion in sales last year. The company's shares increased 85% from early 2020 through the end of 2021, giving Masimo a market capitalization of more than $16 billion. This growth came amid an uptick in the stock market and was supported by increased demand for Masimo's technology due to Covid-19 (low blood oxygen levels being an early warning that the disease is getting worse).

Kiani then made the decision to make the dream more difficult. On February 15, soon after the market had closed, Masimo revealed that it had agreed to pay a little over $1 billion to acquire Sound United, a consumer-focused audio, speaker, and headphone company that is the owner of names including Marantz, Denon, Bowers & Wilkins, and Boston Acoustics. Masimo's stock fell 37% the following day, wiping away $5 billion in market value.

Kiani was in disbelief. "We believed [investors] would respond with "Awesome!" As he sits on an ecru couch in his obsessively tidy office, he asserts, "And given our track record, we're not going to muck it up. "Do you remember what one of them told me? Big shareholder, very irate shareholder? Back it up. AVOID BUYING.

The unfavorable response, though, didn't surprise Mike Polark, an analyst with Wolfe Research in Boston: "In MedTech, focus pays." The issue wasn't that Kiani had overpaid for Sound United at eight times Ebitda. Additionally, it's a strong, lucrative industry that should boost Masimo's revenue this year by 67% to $2 billion. Polark continues, "Wall Street's problem is strategic direction. Why do over-the-ear headphones sell well at Masimo?

Immediately after the takeover, Kiani's business would become less profitable. The medical equipment division of Masimo has a remarkable gross margin of 65.8%. 20% is more usual in common consumer gadgets like headphones.

According to an early August filing, the action spurred activist investor Politan Capital Management, a year-old company managed by Quentin Koffey, a former employee of activist investor Paul Singer's Elliott Management and hedge fund D.E. Shaw, to purchase a roughly 9% position in Masimo. Poli­tan declined to comment on its plans, although the company pushed health insurance provider Centene to appoint a new CEO back in March.

Joe Kiani is one of the few precocious teenagers on college campuses, and their numbers are dwindling. Less than 1% of American university students are under the age of 18. When "academic redshirting"—parents delaying a child's entry into kindergarten to give them an advantage—was not yet popular, that number was six times higher sixty years ago. According to Harvard economic historian Claudia Goldin, "everything was 'the smarter you are, the faster you should go'" at that time. Now, the situation has changed.

Kiani, who has sold Masimo shares for more than $500 million since the company's IPO in 2007 and still owns an 8.5% ownership valued at $650 million, is wagering that consumer electronics and medical equipment will progressively converge. He wants Sound United to expand into hearing aids and improved earbuds in addition to over-the-ear headphones. He believes that people will embrace using them to measure their vital signs, such as heart rate and oxygen saturation, in addition to listening to music (or enhancing their hearing). He's not the only person with this view, of course. Garmin sells wristbands that keep tabs on your blood oxygen saturation, heart rate, and hydration. A wearer of the most recent Apple Watch can receive alerts when their heart rate is unexpectedly high, low, or irregular. Sony announced its entry into the market for over-the-counter hearing aids in September. The only real distinction between such businesses is that they are all huge global corporations with extensive consumer industry knowledge.

Kiani, 57, has overcome several challenges thus far. When he was nine years old, his family relocated from Iran to Alabama so that his father could pursue an engineering degree. The four-person family once resided in a Huntsville housing project because they lacked money. The Kiani family moved to San Diego in 1977 since Joe's father had enrolled there for an MBA degree.

Two years later, when Joe was 14 and his sister was 15, their parents—his mother was a nurse—left the teenagers to live on their own while they returned to Iran for work. Kiani chuckles, "My sister kind of took over as mom." She was strong. I was under curfew. Kiani completed high school at the age of 15 primarily because of the superior arithmetic he had learned in Iran, which allowed him to skip a few grades. In the same year, he enrolled at San Diego State University with his sister to study electrical engineering while also managing his housing complex and working part-time in the dining hall. He enrolled in every course he could with signal processing specialist Professor Fred Harris, and in 1987 he earned a master's degree in electrical engineering.

In the late 1980s, he took a side job inventing a low-cost $100 pulse oximeter for a startup while working as an engineer at semiconductor distributor Anthem Electronics. Kiani discovered that these devices frequently produced false alarms, which were typically set off when patients unintentionally moved their fingers.

With his understanding of signal processing and adaptive filters—basically, noise-canceling software—Kiani assured the startup that he could lessen the incidence of false alarms. The business had no interest. As a result, Kiani, who was 24 at the time, decided to launch his own company, Masimo, in 1989, funding it with a $ 40,000 - second mortgage on his condo. He kept his day job at Anthem for two years while working nights and weekends in his garage in Southern California.

Kiani worked on a prototype that kept pulse oximeters functioning even when people wearing them walked around or had low blood flow using an equation he described as something out of fifth-grade algebra. Given that you can't advise babies not to wiggle, the neonatal intensive care unit proved to be one location where it was very crucial. Soon after, he applied for a patent for his concept and contacted four American businesses in an effort to incorporate Masimo's technology onto their platforms. No luck. He found more success abroad, striking deals with NEC in Japan and numerous businesses in Europe.