Interview with Stephan Sagolla President and CEO, Interton
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AO/Beck: Hi Stephan. Thanks for your time today. I'd like to start with a little background on you, and then we'll get to the corporate profile. If I may, I'd like to start with where you were born and where you went to school please?
Sagolla: Good morning Doug. I was born in Germany in 1952, went through school and joined the army in 1972. I served for eight years. While I was in the army, I also went to the University of Mannheim and earned a master's degree in economics, that was in 1978.
AO/Beck: And someone mentioned to me that you were an Olympic athlete?
Sagolla: Yes, in 1972 I was a member of the German Olympic team in Munich. I competed in the 100 meters.
AO/Beck: Oh my goodness - that's amazing. What was your best time?
Sagolla: 10:58
AO/Beck: Wow. That's pretty impressive. I don't think I could drive it that fast. Where did you go after you left the army?
Sagolla: I left the army in 1980 and joined Smith-Kline, the pharmaceutical company, which was Smith-Kline-French at that time and I was with them until 1988. After that, I started a business for a California based implant manufacturer doing silicone implants and urological products. I stayed with them until 1995. At that point, I joined a Danish company; they manufactured a wide variety of healthcare products. I was responsible for European sales until I left in 1998 to join Philips. I was managing director for Philips and, as you know, we joined with Beltone in 2000.
AO/Beck: Did that impact the European market or was that pretty much an American event?
Sagolla: That's kind of interesting. It was more of a merger of equals. Philips had nothing in the U.S. before joining with Beltone. And the Beltone business model was different from anything that was really happening in Europe. I want to emphasize that there is no European market. Each country is really a single market. All the rules, the regulations, the education of the dispensers, everything varies from country to country. There's no single European organization for that at all. In some countries you have to have your own subsidiary, otherwise you're not abiding by good business traditions. In other countries it's enough to have distribution through a second-party distributor in that country. Beltone's business model would not have worked well in Europe because they were a manufacturer working hand in hand with retail outlets, and throughout Europe, that would be perceived by the dispensers as a threat.
AO/Beck: I see. So you were the managing director at Philips. And how long were you with Philips?
Sagolla: I left in 2001. Other corporate mergers and acquisitions were occurring in the industry and I had been aware of Interton for quite some time by then.
AO/Beck: Please tell me a little bit about the history of Interton?
Sagolla: Interton was started in 1962 by two brothers, Hellmuth and Hans-Herbert Tuerk. They were manufacturing hearing aids as a family owned business and it is still family owned today. Both brothers are still very active in the business and are now 65 and 66 respectively. They each have three kids in the business as well, so there are 8 members of the family in different areas of the company. I was in contact with the Tuerks because I was representing Philips-Beltone at the EHIMA meetings.
AO/Beck: And for those not familiar with it, EHIMA is the European Hearing Instrument Manufacturers Association.
Sagolla: Correct. I had contact with Interton, which turned into more detailed discussion about how to grow an international business. When the idea to get involved in the U.S. occurred, I said I'm going to work for you. We decided to push forward and make it happen. That was in the spring of 2001.
AO/Beck: And so you had the idea to do business in the States but you didn't really have a foothold at that point?
Sagolla: That's right. We met with AHS, Authorized Hearing Systems, during the 2001 AAA convention in San Diego and had our first discussions and negotiations. Eventually we reached an agreement and we now had our US business foothold. Before jumping in, I had a great chance to study the US market in depth and worked with the people at AHS to learn what they do, how they do it, and how it intermixed with the Interton model. We came to the conclusion that there was going to be very little that needed change. There was no change needed in terms of personnel in fact every single person at AHS at that time of the acquisition is still with us. We kept the business going as it was.
AO/Beck: What's happened since that point? How has the business done?
Sagolla: We have more than doubled the business since then. I strongly believe we are really the only growing company in the US hearing aid industry.
AO/Beck: What do you attribute that growth to? Why do you think your business has doubled in two years?
Sagolla: There are two elements: Products and management. We have new products in the US from Interton and we develop and manufacture our own proprietary circuits and components, and we also have our own algorithms.
AO/Beck: And Interton basically built it's European reputation on BTEs prior to coming into the US?
Sagolla: Yes. Interton had been a BTE company with expertise in engineering. Interton is so good at engineering that our BTEs are worth their weight in gold. It's so solid that when you look inside everything is in order and our customers like that. It's good old German engineering and strong US craftsmanship. And with our products, we do all of our casting ourselves in Germany.
AO/Beck: What are the primary products for the U.S. market? What are you the most enthusiastic about?
Sagolla: We're a global player. We have everything from analog BTE technology that can be sold in very poor countries, to the new IQ circuit, which is a state of the art, high-end hearing aid, built into a wonderful new little case called the Nano. We call it Nano because it's so small. Nano with the IQ circuit is not a fancy device but a very ergonomic device. People appreciate the comfort of this BTE. The in-the-ear is small too, and people really enjoy the quality and the features. It has an Adaptive Feedback Management that is tremendously fast. You're not going to hear any feedback because it's acting faster than you can detect feedback. Most feedback managers allow some kind of feedback before they address it. Ours is so fast that any feedback pattern is countered in the aid before it becomes an issue for the user.
AO/Beck: And you also make a directional canal aid right?
Sagolla: Yes. We have a directional canal aid and as of January, 2004 we'll have directionality with Adaptive Beam Forming. It is a fast acting directionality with a pattern that changes with the acoustic environment. Some other manufacturers say they have adaptive directionality, but what they do is they switch directionality on and off. We went a different way to produce an adaptive beam forming technology that creates different patterns whenever it's needed.
AO/Beck: All right, before we run out of time, can you please tell me a little about the Focused Factory?
Sagolla: Sure. We have embraced the Focused Factory concept that was developing at the time of our acquisition. We have teams that are dedicated to regions and to customer groups. These Focused Factory groups are not just the inside or outside reps, they include customer service people and production people too. So the customer always has someone personally responsible for everything. Our Focused Factories have turned out to be a perfect system here because the US market is a very service oriented market. There's a high expectation of service in the U.S., and we meet that expectation.
AO/Beck: I think you're right. The business in the U.S. is built on personal relationships and high intensity service. That's why people come back.
Do you have any goals you'd like to share for the next 3 to 5 years?
Sagolla: Yes. Like many companies, we want to play a major role in this market. We want to build the company further and continue our growth curve. We have a chance to grow the business internationally as well and we'd like to apply all we've learned and all we've accomplished toward international growth; and we see the U.S. as key to all growth. We will continue to concentrate and focus on the U.S. market. We want to develop and market more and more state-of-the-art technology. We have set the goal internally that no one in the industry will provide anything that we cannot provide.
AO/Beck: And lastly, please tell me about Silflex? I know other companies have tried to produce and market soft custom made products, and basically that has not been well accepted.
Sagolla: Well, recall from our earlier discussions that I was in the silicone industry? When I heard about technology which allowed us to fabricate components completely in silicone and produce a soft, yet solid hearing aid, I was very excited. I made contact with the people who developed this special silicone and we worked together for about a year from concept to launch. It's the first truly soft in-the-ear product that is soft and stays soft, but without all the problems the other soft products had in the past.
AO/Beck: Does Silflex cost more than the standard products?
Sagolla: It does cost a little more than the standard products.
AO/Beck: Is it available in all custom products, including CICs?
Sagolla: It is available in all custom products, even CICs.
AO/Beck: And how long do Silflex custom products last?
Sagolla: The first data we have indicates four years duration. But even after four years, they still look new and resilient; they're not cracking or fading.
AO/Beck: And how does the consumer clean the instrument? That's been a problem in the past because sometimes cleaning them has degraded the plastics.
Sagolla: It's a pretty easy matter with Silflex. You just take an alcohol wipe and clean it off. You don't put anything else on it. It's the best and easiest way to go.
AO/Beck: I guess you've done studies comparing the Silflex product with the standard hard shell plastic as far as patient comfort and outcomes?
Sagolla: Yes. We've done a study and there's another one on the way. The first study showed 85% of all customers preferred the Silflex.
AO/Beck: That's amazing. Do you mean 85% preferred the Silflex product based on comfort or sound quality, or another factor?
Sagolla: It was a combination of factors. The happiest were the patients who forgot they were wearing hearing aids, essentially due to physical comfort. Your ear canal moves 8 to 10 thousand times a day and if you feel the hearing aid 10 thousand times per day, you're not going to be happy. If the fit is so comfortable that you forget the hearing aid is in your ear canal - that's a world of difference. Silflex moves with the ear canal without creating a leak and it's not forced out of the ear canal by movement.
AO/Beck: If I wanted to order Silflex, would I take a standard ear impression?
Sagolla: Yes, it's the same impression. The internal process of making the silicone shell is more complicated than a regular shell because the components are actually embedded in the material; this affords even more protection for the unit if it were dropped or accidentally crushed etc. Nonetheless, the repairs are very simple. You can just cut the silicone with a knife, pop out the component, put the new one in, solder it, and close the incision with a little primer and you're done.
AO/Beck: It's been a pleasure Stephan. I know you have to get going. Thank you for your time and happy holidays to you.
Sagolla: Thank you, Doug. Happy Holidays to you too.
Click here to visit the Interton USA website.
Sagolla: Good morning Doug. I was born in Germany in 1952, went through school and joined the army in 1972. I served for eight years. While I was in the army, I also went to the University of Mannheim and earned a master's degree in economics, that was in 1978.
AO/Beck: And someone mentioned to me that you were an Olympic athlete?
Sagolla: Yes, in 1972 I was a member of the German Olympic team in Munich. I competed in the 100 meters.
AO/Beck: Oh my goodness - that's amazing. What was your best time?
Sagolla: 10:58
AO/Beck: Wow. That's pretty impressive. I don't think I could drive it that fast. Where did you go after you left the army?
Sagolla: I left the army in 1980 and joined Smith-Kline, the pharmaceutical company, which was Smith-Kline-French at that time and I was with them until 1988. After that, I started a business for a California based implant manufacturer doing silicone implants and urological products. I stayed with them until 1995. At that point, I joined a Danish company; they manufactured a wide variety of healthcare products. I was responsible for European sales until I left in 1998 to join Philips. I was managing director for Philips and, as you know, we joined with Beltone in 2000.
AO/Beck: Did that impact the European market or was that pretty much an American event?
Sagolla: That's kind of interesting. It was more of a merger of equals. Philips had nothing in the U.S. before joining with Beltone. And the Beltone business model was different from anything that was really happening in Europe. I want to emphasize that there is no European market. Each country is really a single market. All the rules, the regulations, the education of the dispensers, everything varies from country to country. There's no single European organization for that at all. In some countries you have to have your own subsidiary, otherwise you're not abiding by good business traditions. In other countries it's enough to have distribution through a second-party distributor in that country. Beltone's business model would not have worked well in Europe because they were a manufacturer working hand in hand with retail outlets, and throughout Europe, that would be perceived by the dispensers as a threat.
AO/Beck: I see. So you were the managing director at Philips. And how long were you with Philips?
Sagolla: I left in 2001. Other corporate mergers and acquisitions were occurring in the industry and I had been aware of Interton for quite some time by then.
AO/Beck: Please tell me a little bit about the history of Interton?
Sagolla: Interton was started in 1962 by two brothers, Hellmuth and Hans-Herbert Tuerk. They were manufacturing hearing aids as a family owned business and it is still family owned today. Both brothers are still very active in the business and are now 65 and 66 respectively. They each have three kids in the business as well, so there are 8 members of the family in different areas of the company. I was in contact with the Tuerks because I was representing Philips-Beltone at the EHIMA meetings.
AO/Beck: And for those not familiar with it, EHIMA is the European Hearing Instrument Manufacturers Association.
Sagolla: Correct. I had contact with Interton, which turned into more detailed discussion about how to grow an international business. When the idea to get involved in the U.S. occurred, I said I'm going to work for you. We decided to push forward and make it happen. That was in the spring of 2001.
AO/Beck: And so you had the idea to do business in the States but you didn't really have a foothold at that point?
Sagolla: That's right. We met with AHS, Authorized Hearing Systems, during the 2001 AAA convention in San Diego and had our first discussions and negotiations. Eventually we reached an agreement and we now had our US business foothold. Before jumping in, I had a great chance to study the US market in depth and worked with the people at AHS to learn what they do, how they do it, and how it intermixed with the Interton model. We came to the conclusion that there was going to be very little that needed change. There was no change needed in terms of personnel in fact every single person at AHS at that time of the acquisition is still with us. We kept the business going as it was.
AO/Beck: What's happened since that point? How has the business done?
Sagolla: We have more than doubled the business since then. I strongly believe we are really the only growing company in the US hearing aid industry.
AO/Beck: What do you attribute that growth to? Why do you think your business has doubled in two years?
Sagolla: There are two elements: Products and management. We have new products in the US from Interton and we develop and manufacture our own proprietary circuits and components, and we also have our own algorithms.
AO/Beck: And Interton basically built it's European reputation on BTEs prior to coming into the US?
Sagolla: Yes. Interton had been a BTE company with expertise in engineering. Interton is so good at engineering that our BTEs are worth their weight in gold. It's so solid that when you look inside everything is in order and our customers like that. It's good old German engineering and strong US craftsmanship. And with our products, we do all of our casting ourselves in Germany.
AO/Beck: What are the primary products for the U.S. market? What are you the most enthusiastic about?
Sagolla: We're a global player. We have everything from analog BTE technology that can be sold in very poor countries, to the new IQ circuit, which is a state of the art, high-end hearing aid, built into a wonderful new little case called the Nano. We call it Nano because it's so small. Nano with the IQ circuit is not a fancy device but a very ergonomic device. People appreciate the comfort of this BTE. The in-the-ear is small too, and people really enjoy the quality and the features. It has an Adaptive Feedback Management that is tremendously fast. You're not going to hear any feedback because it's acting faster than you can detect feedback. Most feedback managers allow some kind of feedback before they address it. Ours is so fast that any feedback pattern is countered in the aid before it becomes an issue for the user.
AO/Beck: And you also make a directional canal aid right?
Sagolla: Yes. We have a directional canal aid and as of January, 2004 we'll have directionality with Adaptive Beam Forming. It is a fast acting directionality with a pattern that changes with the acoustic environment. Some other manufacturers say they have adaptive directionality, but what they do is they switch directionality on and off. We went a different way to produce an adaptive beam forming technology that creates different patterns whenever it's needed.
AO/Beck: All right, before we run out of time, can you please tell me a little about the Focused Factory?
Sagolla: Sure. We have embraced the Focused Factory concept that was developing at the time of our acquisition. We have teams that are dedicated to regions and to customer groups. These Focused Factory groups are not just the inside or outside reps, they include customer service people and production people too. So the customer always has someone personally responsible for everything. Our Focused Factories have turned out to be a perfect system here because the US market is a very service oriented market. There's a high expectation of service in the U.S., and we meet that expectation.
AO/Beck: I think you're right. The business in the U.S. is built on personal relationships and high intensity service. That's why people come back.
Do you have any goals you'd like to share for the next 3 to 5 years?
Sagolla: Yes. Like many companies, we want to play a major role in this market. We want to build the company further and continue our growth curve. We have a chance to grow the business internationally as well and we'd like to apply all we've learned and all we've accomplished toward international growth; and we see the U.S. as key to all growth. We will continue to concentrate and focus on the U.S. market. We want to develop and market more and more state-of-the-art technology. We have set the goal internally that no one in the industry will provide anything that we cannot provide.
AO/Beck: And lastly, please tell me about Silflex? I know other companies have tried to produce and market soft custom made products, and basically that has not been well accepted.
Sagolla: Well, recall from our earlier discussions that I was in the silicone industry? When I heard about technology which allowed us to fabricate components completely in silicone and produce a soft, yet solid hearing aid, I was very excited. I made contact with the people who developed this special silicone and we worked together for about a year from concept to launch. It's the first truly soft in-the-ear product that is soft and stays soft, but without all the problems the other soft products had in the past.
AO/Beck: Does Silflex cost more than the standard products?
Sagolla: It does cost a little more than the standard products.
AO/Beck: Is it available in all custom products, including CICs?
Sagolla: It is available in all custom products, even CICs.
AO/Beck: And how long do Silflex custom products last?
Sagolla: The first data we have indicates four years duration. But even after four years, they still look new and resilient; they're not cracking or fading.
AO/Beck: And how does the consumer clean the instrument? That's been a problem in the past because sometimes cleaning them has degraded the plastics.
Sagolla: It's a pretty easy matter with Silflex. You just take an alcohol wipe and clean it off. You don't put anything else on it. It's the best and easiest way to go.
AO/Beck: I guess you've done studies comparing the Silflex product with the standard hard shell plastic as far as patient comfort and outcomes?
Sagolla: Yes. We've done a study and there's another one on the way. The first study showed 85% of all customers preferred the Silflex.
AO/Beck: That's amazing. Do you mean 85% preferred the Silflex product based on comfort or sound quality, or another factor?
Sagolla: It was a combination of factors. The happiest were the patients who forgot they were wearing hearing aids, essentially due to physical comfort. Your ear canal moves 8 to 10 thousand times a day and if you feel the hearing aid 10 thousand times per day, you're not going to be happy. If the fit is so comfortable that you forget the hearing aid is in your ear canal - that's a world of difference. Silflex moves with the ear canal without creating a leak and it's not forced out of the ear canal by movement.
AO/Beck: If I wanted to order Silflex, would I take a standard ear impression?
Sagolla: Yes, it's the same impression. The internal process of making the silicone shell is more complicated than a regular shell because the components are actually embedded in the material; this affords even more protection for the unit if it were dropped or accidentally crushed etc. Nonetheless, the repairs are very simple. You can just cut the silicone with a knife, pop out the component, put the new one in, solder it, and close the incision with a little primer and you're done.
AO/Beck: It's been a pleasure Stephan. I know you have to get going. Thank you for your time and happy holidays to you.
Sagolla: Thank you, Doug. Happy Holidays to you too.
Click here to visit the Interton USA website.
