I Join the Carnival
This is Part V of “An Audiologist in the Wilderness” by James Curran. This entire series by Jim, including those from other “first” audiologists in the industry (and mine, which will follow Jim’s) chronicles the introduction of audiologists into the hearing aid industry and the trials and events that helped shape the way for audiologists today functioning in these capacities.
James Curran, M.S.
I received offers the next few weeks from other companies, but I really only wished to work at one, Qualitone in Minneapolis. I wanted to work at a company that did not exert tight control over their dealer organization. It seemed to me that Qualitone had the right marketing approach. In those days the vast majority of dealers signed agreements with one manufacturer and sold that company’s products almost exclusively. The dealers were more or less tightly bound to the company, were awarded exclusive rights to a given territory, and in return were expected to meet sales quotas. The dealers depended on the manufacturer for advertising, leads and other selling and business assistance. Two companies who had relatively recently entered the market, Qualitone and Audiotone, broke that mold and essentially sold to everyone, as long as the dealer met the company’s minimum requirements – usually that the dealer had a decent credit rating and no legal issues.
No territories, no leads, no quotas; just good hearing aids at a good price. Qualitone’s basic selling strategy was to provide one free hearing aid for every five the dealer bought, a very nice discount. But since the free aid arrived at the dealer’s office with minimal paperwork, more than one of the dealers would turn around and sell it without entering it into inventory. No records, just cash transactions. Qualitone’s attitude was that what happened to the aid after it left the factory was of no concern to the company. If the dealer was caught evading taxes, theoretically, Qualitone had clean hands. Dealers loved this arrangement, obviously. But I was not aware of all this when I first started working there.
Parenthetically, Qualitone, Audiotone and then later Starkey were primarily responsible, in my view, for the eventual eroding of traditionally structured dealer organizations.
Dick Burger, the founder and President of Qualitone offered me a job (1974) although at lesser pay for the first three months. I jumped at it. He was one of the shrewdest but also one of the most interesting and charming CEOs I ever worked for. It was at Qualitone that I really got my feet wet in the industry and learned the ropes, and at the same time, had the most fun. Dick had many irons in the fire including banks, real estate and a shopping center development, so he spent a good deal of his time attending to outside interests. He had four right hand men, Vice Presidents Al Schaefer, Chuck Hinz and Johnny Macken, all seasoned hearing aid veterans, and Mas Harada, the chief engineer who co-founded the company. Dick’s son, Lane Burger acted as an informal general manager. In addition, there was Terry Griffing, an audiologist who had left the Mayo Clinic to join Qualitone about a year before I arrived. Despite their titles and individual responsibilities, the executives were all treated the same by Dick: occasionally shabbily, even the Vice Presidents, wonderful older guys who had the most seniority and who carried the biggest load.
Some of the situations we found ourselves in were comical in retrospect. Whenever a few of us get together we just howl at the crazy stuff we experienced. For instance, in those days the national dealer conventions were always held in Chicago and all the hearing aid folks from the Twin Cities flew down. Except for us. Dick would borrow a station wagon from somebody, and the three vice presidents, the chief engineer and Bill Ely (who joined Qualitone shortly after I did) and I would cram into it, with our luggage piled on top, and drive down to Chicago. We pulled up to the hotel entrance and unloaded, looking like the Joad family in the film “The Grapes of Wrath.” We slept during the conventions in bunk beds, three or four to a room. However, Terry Griffing was crafty enough to schedule himself on sales trips so he could fly to Chicago from wherever he was and avoid the car trip; Dick was grudgingly impressed by Terry’s stratagem, for this was the kind of game he liked to play himself.
We would have executive meetings on Monday evenings at the factory starting about 5:45 P.M. after the last West Coast calls were answered. Sometimes the meetings lasted nearly two hours, and we would all be starving. Once in awhile Dick would take us to dinner but more commonly we went home unfed. From time to time Dick would excuse himself from these meeting and go into his private office for a few minutes on some excuse or another. Someone once went to get him, and there he was, stuffing down a sandwich. We found this hilarious. So we decided to order in pizzas next time at 5:00 PM without telling him, and we sneaked into an empty office to grab a bite before the meetings. This worked beautifully for about a month and then he got wind of it. At 4:50 PM one Monday he had one of the secretaries notify us that the meeting would start at 5:00 PM instead of later, so the pizza sat there getting cold for two hours while our stomachs growled. He couldn’t handle being outsmarted.
One of my most lasting memories was the demeanor of our wonderful chief engineer, Mas Harada, at these meetings. He was a short, even-tempered Nisei who was at Fort Snelling at the end of WWII. When the war was over he was hired at Maico in the engineering department, and after some years joined Dick in founding Qualitone. Dick never acknowledged this, but we knew that Mas had lent him a considerable amount of money during the start up. But when Dick finally got around to paying him back, we found out to our joy that the check had bounced! And that explained why Mas would sit placidly in the back at these meetings, hardly ever speaking, slumped back, eyes half closed as Dick carried on. He looked like an oriental Buddha, with his arms folded in front of him. It made no difference to him what Dick was pontificating on, for Mas knew he had Dick by the shorts and he was going to continue on doing whatever it was he had decided to do anyway. I’m sure Dick repaid Mas, and they both ended up millionaires in the end, and that was all that really mattered
Whenever one of us went out in the field it was expected we’d sell enough aids to pay for the trip. Once I was sent out on a sales trip that took me down to Tennessee, across Arkansas and Louisiana and down to the tip of Texas and back. I learned how to get orders when I called on dealers. In fact, Dick’s policy was so famous that some of them actually saved a few when they knew one of us were on the way. Dick wanted me to use my family car for the trip and he’d pay me for mileage, but the mileage allowance didn’t cover the wear and tear on the auto in my estimation. So I called around and found a small local agency that furnished a very good older model auto for about the same amount that I would have been reimbursed. Dick was delighted with my plan, for he admired anybody who could beat the system.
Dick had figured out a way to save money on long distance calls that I never fully understood. But I remember the times I stood in a telephone booth hot and sweaty, or shivering with cold somewhere out in the sticks. For when we called into the company from the field, we’d announce that we were calling for “Mr. Green” and they’d say he wasn’t there. Then we’d leave the number of the pay phone and wait for that call back, sometimes up to a half an hour later.
Once, when sales were slow, Terry and I organized a record-breaking series of presentations. We traveled to 21 cities in 23 days, non-stop, starting on the West Coast, across the country to the East Coast and then back across the South and up through the Midwest. Schlepping five boxes of advertising/display material and hearing aids plus our luggage, we’d arrive in a city late in the evening, set up a display table the next morning, host a luncheon for the invited dealers, give a two and a half hour series of talks, take orders, phone in the orders to the factory, pack up and head for the airport. We considered writing a book about the best hotdogs in America’s airports, for that’s what we usually had in the evenings.
Prior to the trip, Dick suggested in a meeting that to encourage orders during the trip we should raffle off a brand new RCA color TV. Color television had just been introduced to the market, and this was considered a very desirable prize. The idea was that for each BTE or eyeglass hearing aid purchased a ticket would be entered in a drawing in the dealer’s name at the end of the trip. We cleaned up, obtaining over 850 orders, which was pretty remarkable for the time. At the first meeting after returning I asked Dick when we’d hold the raffle. He told me to wait a little. The same thing happened at the next meeting, and dealers began calling us up wanting to know who had won. Finally, about one month later, I brought the subject up again for the fourth time. Dick stood up behind his desk, shook his finger at me and in a loud voice said: “Look Curran, you may know a lot about audiology, but believe me I know how to make money, so I’ll tell you when and that’s final.” The raffle was never held.
Dick could dismay me with a decision, such as deciding to continue shipping eyeglass aids after it was learned that the tool that stamped out the temples was broken, causing them to be crooked. It was hard to overlook that, but I later learned he might have been under a lot of pressure. He had sold Qualitone to the Seeburg Company, who manufactured jukeboxes, a dying business. In turn, Seeburg, I was told, was pretty much controlled by the mob in Chicago. Seeburg considered Qualitone a cash cow, and I would assume, if the stories were true, and I think they were, that Dick was under the gun to keep his end up.
We all put up with this stuff because deep down, beneath his parsimonious ways, Dick was unusually congenial, fun, and compelling to work with. If any of us needed help, financial or otherwise, Dick quietly helped out. And although he treated us all cavalierly occasionally, we all were included in every company discussion and decision, which especially delighted me. This was because I was learning more every day about the business, and my goal was to eventually find myself in a situation where I could more directly influence events.
The four executives of the leading companies in Minneapolis, Ansel Kleiman of Telex, John Kojis of Maico, Ken Dahlberg of Dahlberg and Dick Burger of Qualitone constituted a formidable group within HAIC, the industry association. Although they never were known to sit down together privately and discuss policy, they were pretty much of the same mind about things and held sway when the association made policy decisions. This comfortable arrangement was upset by a newcomer to the industry, Bill Austin, who founded Starkey. Bill had started a small hearing aid repair business in the basement of an office building in Minneapolis about the same time I began dispensing. I did business with him, and then even as today, he spent hours at a Red Wing motor buffing and polishing aids. If you visit Starkey today and Bill is in town, he will as often as not be found working at a bench personally fitting hearing aids, even though his company is now a behemoth within the industry.
Bill began to sell custom in-the-ear hearing aids built by the former employees of the failed Goldentone Company, one of the two companies to first manufacture custom aids. Eventually he bought their business and began to manufacture the aids himself. In my opinion, Bill single-handedly saved the industry during one of the worst times it ever experienced. During the Seventies, both the FTC and the FDA cited the industry for false and misleading advertising, and as a result six of the leading companies eventually signed cease and desist orders prohibiting them from advertising for leads using the methods to which they had been accustomed. This left many dealers in serious trouble, for they relied on leads from their company to grow their business. Industry sales plummeted about a couple hundred thousand in one year.
Bill introduced a revolutionary concept. He told dealers to forget about leads, and instead to contact their list of previous customers and resell them with the new custom aids. He gave the dealers a ninety-day trial period and took the aids back if they didn’t stick, an unheard of proposition. Up till then the usual industry practice was not to take back aids that had been worn previously, leaving the dealer on the hook. I listened to Dick angrily fuming and ranting about Bill’s business strategy. Bill was essentially building hearing aids one at a time, each one different from the next. But the traditional companies had been manufacturing aids in large batches, all of the aids the same. This new product and new return strategy was a serious threat to every company’s profitability, necessitating a complete overhaul of their manufacturing methods and policies. But the dealers loved it, and began to desert the old-line companies. Starkey became a big player nearly overnight, and won the affection and allegiance of legions of dealers that lasts to this day.
I testified for the industry during the hearings held by the FDA and FTC. The FDA decided to regard master hearing aids as deceptive devices used to mislead customers, and proposed to make them illegal. I knew this mistaken idea came from uninformed audiologists within ASHA and that it was wrong, for they were a useful adjunct to fitting and their elimination could hamper dealers in the future. During my testimony I wrongly cited a paper that I thought supported the usefulness of master hearing aids. When the hearings were over a report was issued that characterized me as being improperly motivated, unethical and essentially uninformed, consequently my testimony was to be disregarded. I felt humiliated even though I recognized the report was biased against the industry and I knew my mistake was due to ignorance, not inappropriate intentions. A few years later I received a letter from someone in the FDA apologizing for miss-characterizing me in that report. I subsequently learned that the lawyers for HAIC and the dealer organization lobbied on my behalf with the FDA for an apology for they felt I had been unfairly and badly treated. This generous, thoughtful and unexpected effort by them made me feel a lot better about the whole episode.
I didn’t think a lot of custom aids then because they were fitted with small vents and essentially closed molds, and I was firmly in the open mold camp. But one could hardly deny their success, and later at the next company I joined, Maico, I participated in open houses and saw to my amazement how useful they could be. At the same time, I was not making much headway with Mas Harada, the chief engineer, to design aids having wide range adjustments that I believed were useful in most fittings. He believed in electrical feedback in the circuit, for this reduced distortion, a good thing, but it also resulted in minimal low cut possibilities. So I was becoming frustrated in my ability to influence product design.
Because we had no dealer network and did little advertising, we were relatively highly thought of by audiologists. In fact, we had to turn down some clinics that wanted our aids placed with them because the expense was becoming a serious burden. Although Qualitone had a better reputation with audiologists, there was not much change in how they regarded me or the other audiologists who had joined companies. By this time there were about seven or eight of us in various companies, including Dick Scott, Bob Briskey, Wayne Staab, Bob Rutledge, Terry Griffing and a few more I’ve forgotten, and we laughingly named ourselves SCABS: the Society of Corrupt Audiological Bastards. However it would not be long before things would be changing as the ASHA was compelled by events to finally abandon their stance against audiologists dispensing. But that was a few years in the future.
After about two years at Qualitone I was called into Dick’s office, and he congratulated me for he was going to promote me to Vice President. It was a bittersweet thing to find out, for Bill Ely and I at that very moment were in discussions with Bob Ilfeld, who had become President of Maico, about joining them. Ilfeld promised us free reign in product design, which would put us smack dab into the power center of the company. This appealed very much to us both, as we had concluded the hierarchy at Qualitone was going to remain in place for some years. So I had to regretfully tell Dick I was going to be leaving. In retrospect, I think he had heard rumbles about our Maico flirtation, and was trying to head it off.
So Bill Ely and I left Qualitone in 1976 with Dick’s blessing. He did try to talk us into remaining, but he knew he could not match Maico’s offer. It was a difficult leave taking, for I had grown fully comfortable with the Qualitone approach and the folks who worked there. But I was all hopped up over the possibilities and promise that the Maico adventure was offering.
The next and final part of “An Audiologist in the Wilderness” by James Curran will be published in a future blog and is titled: “The company that lost its way.”
