Keynote with Joe Kiani, the Founder, Chairman, CEO of Willow Labs, and Founder of Masimo | LSI USA '25

Joe Kiani  0:06  
Good morning. How are you all doing? Good? Great. Great to see you all. Thank you, Scott, for putting this program together and bring in, I think the ingredients of what it takes to hopefully solve many of our medical challenges, still, entrepreneurs, investors, establish Medtech companies. What are we losing? About 700,000 people a year to cancer. About the same to heart failure, 300,000 a year in the US alone to medical errors from patient safety issues. So we still have a lot to do, and you guys are the people together that are going to do it. I I want to share a story with you. I had a I had a speech planned, but this weekend, something happened, and the more I reflect upon it, the more I just want to share it with you. I was at the Indian Wells tennis tournament, and I've been there, going there for about 20 years. For the last 10 years, I've been greeted by a woman who's about 75 years old, a beautiful 75 year old woman, and she said, I have something for you. She gave me this a little angel. And she said, You've been an angel for so many people. I think you need an angel to look after you. You know, at first, really touched me, because I thought, wow, she's been tracking what's been going on to my company. And that's, that's really sweet. And then I started thinking, Oh, my God, am I someone who needs an angel to look after me? And then I started thinking about, thinking, You know what, I've had many angels looking after me for many, many years. I won't get into my childhood, but I met an amazing young engineer when I was a young engineer, Mohammed Diab, who was very curious, was a purist, somebody who loves to do what they love to do, and the money is very secondary for them. And he happened to say yes to anything I asked him to do, including joining me when I started Massimo, and by the way, he's here with me again at Willow. And then I started thinking about the angel investors that believed in me when maybe they shouldn't have, like Dr Nelson, like Dr Swan, like Bob fibush and and then another angel I met Steve Jensen, who was a young IP attorney at Kenobi that really came into my life and gives lawyers a really good name, and has helped me throughout many, many of my trials and tribulations. You know, starting Massimo for my garage with a $40,000 loan has been obviously one of the incredible experiences, incredible gifts of my life. And think about it, to be able to not just create a business, but create a business that can help people. This is the business we're in. You know, somewhere between Mother Teresa and maybe, I don't know, Rockefeller, hopefully more in the middle, maybe more towards Mother Teresa. But you know, we have a we have a real responsibility and an opportunity to change people's lives for the better. And it's not easy to really make a true difference. It requires really hard work. It requires inventions. It requires capital. It requires perseverance. When I when I started Massimo, I realized pulse oximetries did not work when people moved What I didn't realize, if I solved that problem, what it would take to get it to the marketplace. The many, many hurdles that are put in front of you that sometimes, unfortunately, people leaning towards too much, towards Rockefeller try to monopolize the market and not let things in, even if it's for the betterment of people. And we try to work with that company, but I think they didn't have one of the guiding principles that I think is essential when you're running a medical technology company, which is to do what's best for patient care. If that can be your compass to do what is best for patient care, I think you make a lot better decisions. To actually lead to making a more successful enterprise, but we invented something incredible, and then we had to pretty much re engineer the whole market just to get it into the hospitals. The only hospitals we could sell our products into at the beginning were in Asia and Europe, because the US market was closed up. It was closed up by group purchasing organizations, GPOs, that were taking somewhere between 10 to 12% from nalcor was at the time, covidian or Tyco healthcare now part of Medtronic, to keep the competition out. And fortunately, another angel, Walt buckdanich, who broke the nicotine story years ago, the Wall Street Journal, called us and just said, Look, if you're willing to go on the record, because nobody else will. I'm going to go to New York Times. I'm going to get an investigative team, and we're going to go really tell the world about this problem. And at the time, even though I feared we might get blackballed by helping, by talking about it, I decided, you know, it's the right thing to do, and I did it, and we did it. And took two years when the first article came out in March 2002 that same day, I got a call from the Judiciary Committee of the Senate asking me if I would testify. 30 days later, I was testifying at a Senate hearing about how GPOs, colluding with dominant medical technology companies, were blocking innovative products. I mean, think about it, our product was saving babies eyesight. 2000 babies a year were getting blind from erythropoiet prematurity caused by pulse oximeters erroneously reading low when people move, when babies move, and by solving that problem, we've virtually eliminated that, but yet we still couldn't break into the US hospitals Because of the greed that was unfortunately ruling the day. Well, at the very first Senate hearing, things changed. We got blackballed by one GPO for a long time, but the rest of them worried about the next Senate hearing, decided to put us on contract, and it literally in matter of two to three years, our business grew 10,000% and more importantly, the market opened up to other innovative medical technology companies, and I think many, many more people benefited. I'm sharing the story with you because I think sometimes the unintended consequences of what we do are greater than the consequences of what we try to do and and I think as long as we keep our compass to do what's best for patient care, good things can happen. Our company eventually went public in 2007 after actually beating Nell cor in a very successful patent trial that brought us about nearly a billion dollars in damages and royalties. We also enjoyed the infringing product. We also won the anti trust trial that also helped shape the market. But when we went public, our early investors made about 2000 times our money back, and our public investors got somewhere between the 2010 to 20 times our money. So I'm very proud of that, because I can tell you the investors that believe in what we as entrepreneurs try to do are maybe at least as important, if not more important, than what we try to do. And it's really important we give back to those people. I when we won the big trial against Nell cor They wired us a check for $330 million now that was that was beginning of 2006 it happened that the mandatory redemptions for all the money I'd raised were due literally two months later, and those of you in the crowd are nodding your head, you know what that means when venture capitalists usually invest at some point

they put a date when that investment can be converted to common stock with interest. You. Uh, instead of the usual capital back and at the time that happened that tells you two things. One, it took us a long time to to get there, and thanks for their patience, but, but the other thing is that I was being urged by one of our early investors to buy everybody out, buy all the investors out, because I could, I really thought long and hard about it, and I didn't think I was fair. I thought that these investors had stood behind us for such a moment not to get paid back with interest. So instead, we divided out the money and we started planning to go public. And not only we dividend out the money to the shareholders, we also surprised the whole team one day, walked in with a suitcase of about $35 million and handed out checks to every employee as though they had shares in the company. And many of them at that time, were able to buy their first homes. And you know, it was just really fun to see the fruits of the labor of this whole team come together for everybody. And I look about, I look at kind of, maybe, what's happened since we went public, and some people say, Well, you regret doing that. Maybe you should have taken the money and not gone public. But I don't, I don't for many reasons. One of them is that, you know, you have to do the right thing. You don't get to live forever. Everything is here on a lease. But you know, this whole journey teaches us something, and the lessons I've learned in the past couple of years have been priceless. At still an age that I can do something with it. I'm now at Willow. I'm really excited what we're going to do at Willow.

Many new angels have joined me there, like hung like Josh, like Roger, like Zappa, like Diane. And these people are amazing. They're purists. They're excited about our mission. We want to hopefully revolutionize diabetes care the way we revolutionize patient monitoring, and we want to hopefully impact many other people's lives, beyond people with diabetes, keeping people healthy, we spend so much money at the end of our lives trying to live another year or two, we could invest in our lives by eating healthier, by exercising more, By staying away from things that are not good for us, and not only will make our lives better, but it'll probably reduce the cost of healthcare, which is skyrocketed. So I'm excited about the future. We just launched our first product new to it's nudge and Latin new to to hopefully nudge people to better health, nudge people with pre diabetes to not become diabetic. Some of you know this, but people with pre diabetes, if they just lose 5% of their weight, they will reverse the condition, the fat around the pancreas disappears, and your pancreas works better. At least I play doctor at my company. Hopefully I won't play doctor for any of you, but long enough to understand some of the medical things. So we have the exciting product portfolio behind it. We're private company. I don't have to raise money anymore, so I'm not going to tell you what they are, but needless to say, we hope we're going to help revolutionize diabetes care. And you know, I, I was supposed to tell you things about how to make a successful medical technology company, I think, attract purists around you, people better than yourself, people that really care about their chosen field. And it's not about the money, it's about what they want to do every day. Obsess about what you're doing. If you're not waking up, thinking about it, falling asleep, thinking about it, you're probably doing the wrong thing. I think you've got to have strong guiding principles, because along the way, a lot of things can trigger. You, the day you become practical is the day you will lose yourself stay principled. It doesn't just make your lawyers rich. It helps you look at yourself in the mirror and feel good about who you are and what you're doing. And I also think you know to really succeed being smart. Being intelligent is not enough. You got to work hard. There is no no other, no other recipe to success. I'm working really hard. I came across my high school yearbook, and I know I didn't come up with this myself. I must have read it somewhere, but I had in there is my senior, senior quote. The only times, the only time success comes before work is in a dictionary. Now that's really the truth. It's hard work, and I don't know at 1415 why was I thinking that, but I wasn't that much of a hard worker there. My sister was doubtful I'll ever get anywhere but, but, you know, speaking of my sister, it's what got me into medical technology, what got me into patient safety. My sister had a medical issue as a child that really didn't have to be an issue. She had a hip displacement, and these days, if they just put the diaper the right way, the hip goes right back where it needs to be, but it became a lifelong issue for her. And I'm not exaggerating, I used to spend my summers when I was 678, years old, in the lobby of the hospital as my parents would be up in my sister in the I guess, recovery room, I knew wherever she was post surgeries, and I got to see how hard it is, not just to the patient, to the families. I really wanted to make a difference to patients lives, and I really saw for myself how medical errors can become so hard. I I encourage you to invest in great entrepreneurs that are passionate about what they're doing. I invest I encourage great entrepreneurs to attract incredible team members and investors and and I want to thank everyone who has helped me get here. But I also want to tell you I learned this from a 17 year old champion at the tennis games. She thanked herself. So I'm going to thank myself, you know, for for not giving up.

So I did a few things right too, but thank you so much for this honor to be here with you today. Thank you so much for fighting the good fight until you solve cancer, heart failure, stroke, patient safety, all the medical errors, we haven't done anything yet. So the future is bright, and we got to get there fast. A friend of mine had this saying, the best medicine is innovation. So keep innovating. Thank you so much. Thank you. Any questions. I can take some questions if you want me to. Well, I think probably the most painful lesson is you can't give up control of your company. I used to think that when you're really good at what you do, it's all the control you need. Because why would anybody want to change anything? What I learned from the capital markets is that, unfortunately, some of the funds are doing portfolio management. It's not you as a company that they're trying to maximize. They're trying to maximize their portfolio. I want to I went against some incredibly powerful companies. I went against nelcore, which was part of Tyco at the time, and we won. I went against Philips and we won. I went against Apple and we won. We're the first company to enjoin apple. You know, Apple didn't just do this to us. They pretty much everything you see in their products is somebody else's. They give it the name efficient infringement. That is more efficient, better for their shareholders if they infringe, than if they actually license or buy companies. But it's really predatory infringement. But the problem is, my investors, they owned over a trillion dollars of Apple shares, and what I was doing to Apple, I don't think they liked. The day we got an injunction, their stock fell 2% that was a $60 billion hit to their stock. Like, we went up, I think, 10% but that was like $700 million gain with our stock. So I think a lesson maybe for investors and entrepreneurs is, you know, it's one thing to give up control to people you know, people you trust, but when you go public, don't give up control. You can have two classes of shares. These days, it's more common and you can go public by not giving the public the ability to change things around on your company. I can't tell you how upset it makes me when I see products we spent years developing to help babies, like stork opioid Halo to deal with the opioid epidemic, where people were dying from opioid overdose. They killed them all. They came in and just killed them all. Not just new projects that were being developed existing projects. They let go of hundreds of incredible people that stuff hurts. It's one thing for me not to be there anymore, but it's another thing to see the things that society needs, people need just being tossed out. So don't give up control. Yes,

Audience Question  21:13  
We've worked together on the MDMA board for years. It's obviously a challenging time with the Trump administration. You've been a fighter throughout your career. What are the things we need to be focusing on to fight for today, for patients, relative to this administration, what's going on with the FDA, etc?

Joe Kiani  21:34  
Yeah, I some problems are bigger than me, and I'm first to admit it, I appreciate our colleague from Canada standing here, almost acting like one of our adversaries, asking for the right things. Everything's a little scary right now, I think, to see, to see people being thrown out of the country without due process to see a court ordering them not to do it, and if they still do it, it's crazy, you know, they there's an old saying they first came for the socialists. You know, we might not like the gang, but that rule of law, that due course, that recourse to the law is what America is supposed to be, you know. So it's scary. The first four years, I was really scared of Trump, is what got me to go get a place in Vancouver. And nothing bad really happened. So maybe nothing bad is really going to happen, but everyone should have their plan Bs and but I think, you know, we should fight for our country. I'm so upset to see Schumer Fetterman, all these people just not fight for us. But at some point, you know, in the 70s, like the hippies did. We got to take to the streets, right? You got to take to the streets. It's still a democracy. I think I was hearing about the fires and how in January, and I was thinking, My God, is that when democracy also burnt down? But look, we can't solve all the problems, but we can solve the medical problems. There are big, big gaps in the best care and the care people get today, and we need to go fix those. So I encourage you don't fully put your head in the sand and work on medical problems, because the world might need you to get out there and march in the streets. It's really all that's left but, but Let's also not forget what our jobs are, and work on the innovations that people expect us to come up with. Got a question for you, as you grow from your garage to the multi billion dollar organization you built. How do you retain the passion of the team? What leadership attributes do you think led to that? Because Massimo is a passion. Was passionate organization. I think first people gather around worthy things, if you can give them a worthy vision of how you can help people. Everyone, I think, wants to do good. And so I think having a vision for the company that's making people better, and I think being honest with people, being direct with them, you know, nothing I think, is more more defeating for a team member than when they're lied to. You know, we can stand here and say all the lofty things, but when we don't walk the talk, we look like hypocrites. And nobody wants to follow a hypocrite. I think we just have to be authentic. We have to be real. We have to be honest. You know. I said business has to be our business has to be strong between Mother Teresa and maybe the Standard Oil Company. But I really believe that getting rid of weak people, not tolerating mediocrity, recognizing strong people doing more things for them. You know, if you're Michael Jordan, you should make a lot more money than other people on the team. People want to know that the leadership understands the difference. So this isn't the Kumbaya. This is business, while our country's for everybody, I think our companies are not, our companies are for meritocracy, for great people that do great things. And you got to get rid of the weak people, promote the strong people. And you have to be tough about it. You know, I got rid of my own sister that I talked about that some point in my company, I got rid of my own brother at some point in the company, but I still love them. They love me. They know why it wasn't. It's about what's right for the team, not what's right for each individual. Yeah, please.

Audience Question 2  26:15  
Joe, So like, your history, you fought a lot of battles where the odds were stack kind of against you. And like, you know, the common wisdom would have been to avoid the battle. You know, the classic advice of choose your battles wisely, but you fought the battles and won them. I guess the question is, how?

Joe Kiani  26:31  
How do you fight the battles and want them by never giving up? Yeah, I think even in the nalcor battle, our first battle, we lost, I couldn't believe it. We went for preliminary injunction. Instead, the judge and summary judgment threw out our patent, and the Court of Appeals agreed with them, so we could have packed our bags and went but we didn't give up. It took seven years, but we won. Same thing with GPOs. It wasn't overnight. It took years before we could win. And you know, every battle, there is no such a thing. Nothing good happens in five years. You want to get something really good to happen. It takes 10, if not 15, years. You just can't give up.

Audience Question 3  27:17  
Hi, Joe, thank you so much for your time. This morning, you talk a lot, especially on social media, about patient centered focus, and a lot of entrepreneurs that I've worked with over the years, often when they get their heads down into their technology, they kind of start to lose some of that patient centered focus. What I guess, suggestions do you have for people to make sure that you're always keeping that top of mind, because I think a lot of companies end up not getting to product market fit because of that lack of patient centered focus.

Joe Kiani  27:44  
Thank you. Thanks for asking that question. You know, I believe in this concept of enlightened selfishness, so in this case, I'd imagine my kids, my mother, my wife, my family, in the hospital. Whenever I'm working on anything, I used to be called recall happy, because if the product could hurt one person, not statistically, one person, I would recall it. Because I'd ask myself, What if it was my kid? So I think you've got to imagine yourselves. You got to imagine the people you love or the people you're developing your products for. And if there's any clinicians here too, patient centered focus also means that it takes a team, not just the best surgeon or the best ICU doctor, not just even the nurses or the janitors keeping the rooms clean, you've got to also get the families involved. You've got to give them a voice. Plato used to say the best doctors are the people who get sick the most. So families and patients who are know about the illness of their loved ones, they can be the best part of the team. So that's that's patient centered focus. Well, thank you so much. Have a wonderful day, and I wish you all really good luck and great success. Thank you.