Pulse Raising

As the child of Iranian immigrants in the deep South, JOE KIANI surmounted overwhelming odds to become a billionaire. So why should he be afraid to push his scrappy medical monitoring company into consumer electronics, challenging companies 100 times its size?

Joe Kiani had achieved the dream. Masimo Corp., which he founded and runs as CEO and chairman, had carved out a lucrative niche as one of the top makers of pulse oximeters, those fingertip sensors that hospitals use to measure oxygen saturation in patients’ blood. Masimo had made Kiani, who immigrated in poverty to the U.S. from Iran as a child, rich—a billionaire, by Forbes’ reckoning. As an electrical engineer, he took pride in the fact that devices he had personally designed were excellent, commanding a slightly bigger share of the U.S. hospital pulse oximeter market than its chief competitor, Nellcor, which is a unit of Medtronic, a company roughly 15 times Masimo’s size. Together the two companies account for about 90% of sales.

It’s a profitable enterprise, too—last year Masimo, based in Irvine, California, earned 223 million on 1.2 billion in revenue. Amid a rising stock market and bolstered 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), the company’s shares climbed 85% from early 2020 through the end of 2021, giving Masimo a market capitalization of more than 16 billion.

Then Kiani decided to complicate the dream. After the market closed this February 15, Masimo announced it was spending just over 1 billion to buy Sound United, a consumer-focused audio, speaker and headphone business that owns brands such as Marantz, Denon, Bowers Wilkins and Boston Acoustics. The next day, Masimo’s stock plunged 37%, wiping out 5 billion in market value.

Kiani was shocked. We thought investors] would say awesome!’ And given our track record, we're not going to screw it up,’ he declares, perched on an ecru couch in his compulsively neat office. You know what one of them said to me? Very angry shareholder, big shareholder? Give it back. Don’t buy it?”