Starkey Hearing Aid Founder Becomes Minnesota BillionaireAnnelise Alexander
Getting rich wasn’t a priority when William Austin opened his first hearing-aid shop in 1967.
“I never had a burning desire to own a business or make a lot of money,” he said in a phone interview.
Austin did both. Since founding Starkey Hearing Technologies Inc. more than 40 years ago, the 72-year-old has turned the Eden Prairie, Minnesota-based company into the world’s fifth-largest hearing-aid manufacturer, according to Sanford C. Bernstein Ltd. analyst Lisa Clive.
Starkey pioneered a number of hearing-aid developments, including the first in-canal devices and products that can be controlled by a smartphone. The company had $840 million in revenue in 2012, according to the Minneapolis/St. Paul Business Journal, making Austin, the company’s chief executive officer and sole shareholder, a billionaire.
The company, which has factories in 26 countries, sold almost 900,000 hearing aids last year, according to Clive, about 8 percent of the global market. The World Health Organization says 360 million people have disabling hearing loss.
Austin was born in 1942 and raised in Garibaldi, Oregon. His boyhood role model was Albert Schweitzer, and he dreamed of becoming a missionary doctor. He left home in 1961 to study medicine at the University of Minnesota, and paid for tuition by taking a part-time job making earpieces at his uncle’s hearing-aid shop.
Austin soon realized he could have a bigger effect on people’s lives by leveraging an entire business rather than working as a doctor in a single village. He dropped out of college and opened his own hearing-aid shop.
“I wanted to be part of a team,” he said. “Whether I owned it or not was totally irrelevant to me.”
Austin purchased a struggling ear-mold manufacturer named Starkey Laboratories Inc. for $13,000 in 1970 and merged it with his audiology shop. Over the next two decades, the company developed the first completely in-canal hearing aids and the first devices to use nanotechnology. Among its clients: five U.S. presidents and two popes, entertainers Steve Martin and Dolly Parton, and Dole Food Co. billionaire David Murdock.
In March, Starkey released Halo, a device tailored for Apple Inc.’s iPhone. Halo enables users to control their hearing aids from their phones, allowing them to geotag specific locations to automatically adjust sound levels, such as a loud restaurant or a quiet office, and gives them the ability to stream movies, music and phone calls.
Halo is the first Starkey product targeted to customers that might not have impaired hearing, according to Austin. The company will introduce similar products in the future, he said.
Austin has a net worth of $2.7 billion, according to the Bloomberg Billionaires Index. The company’s valuation is based on the average enterprise value-to-sales and enterprise value-to-earnings before interest, taxes, depreciation and amortization multiples of three publicly traded peers: Sonova Holding AG, William Demant Holding A/S and GN Store Nord A/S.
The company has allowed Austin to pursue a lifetime of charitable giving. From the outset, Starkey provided free hearing aids to any patient who couldn’t afford the cost. The philanthropic work is what distinguishes the company from its competitors, according to Kathleen Mennillo, Executive Director of the International Hearing Society, a Michigan-based membership association of audiology professionals.
“Through the foundation, they’ve gone above and beyond in addressing health care,” she said in a phone interview.
The billionaire, who keeps a mold of U.S. President Ronald Reagan’s ear in the company’s Minneapolis office, says he has poured $100 million of his own money into the Starkey Hearing Foundation. The organization delivers more than 100,000 free devices each year to people in the U.S. and in countries such as Rwanda, Ukraine and Vietnam.
The foundation has drawn the support of volunteers such as Laura Bush and Chelsea Clinton, as well as several athletes and recording artists, who have joined Austin on mission trips around the world to provide hearing aids to those in need.
“What was good for the patient was good for the industry, and what was good for the industry was good for Starkey,” Austin said.
The billionaire works almost full-time for the Starkey Hearing Foundation and is minimally involved in Starkey’s for-profit operations. He doesn’t attend the company’s budget and sales meetings and stays as far away from money matters as he can.
“I haven’t written a check since August of 1970,” he said. “I have no idea who pays my bills and I don’t care.”
Austin has received several offers to buy his company and says selling it is out of the question. He doesn’t want a new owner to stray from Starkey’s “values philosophy,” where patients come before profit. He intends to continue working at Starkey as long as he’s able.
“I want to contribute,” he said. “I will be useful as long as I can stand and work.”