Envoy Esteem, Story of American Capitalism [Part 1]

January 11, 2012

Perhaps this post should be titled, “Bob Dylan, Occupy Wall Street and the Envoy Medical Business Plan”.  It is a story of smalltown Americans whose efforts to achieve success and help others are on the road to success.

Bob Dylan

Hibbing Minnesota, a city of less than 20,000 along the Mesabi Iron Range in northern Minnesota is most famous for being the hometown of Robert Zimmerman, better known as Bob Dylan.  I had Hibbing business acquaintances from The Ryan Companies They built 15 million square feet of Targets, Best Buys, Kohl’s and others including a 12,000 seat arena, the Sears Centre, in the city I represented for 35 years.  They still have summer homes there.  Hibbing athletes?  How about Roger Maris and Kevin McHale!

McHale married his high school sweetheart, Lynn Spearman.  Lynn’s brother, Patrick Spearman,  is the CEO of Envoy Medical. Another brother Michael is CEO of Ototronix and an investor in Envoy Medical.  Ototronix is another non-microphone hearing system and the home office is in the Woodlands in Houston.  Not surprisingly, Envoy Medical has established “the premier international center for the implantation of the Esteem hearing restoration technology” in the Woodlands.

Patrick, Michael, and a third brother Daniel had $5.25 million invested in the company as reported a year ago. The Spearmans are veteran entrepreneurs who sold their first company, filter maker Porous Media, to Minneapolis-based Pentair for $225 million in 2007. Their second, Lexion Medical, has 100 employees and shares a building with Envoy Medical, the more universal-sounding name that St. Croix Medical assumed in 2006.

Houston media says: “The Spearman brothers work to bring the world of sound to those who have difficulty hearing, using remarkable technology that exists no where else in the world.”

They said when McHale was named coach of the Houston Rockets: “It seems Hibbing, Minn. has a habit of producing one-of-a kind individuals, whether it is legendary musician Bob Dylan or Kevin McHale, a tremendous big man who made it all the way to the Naismith Hall of Fame...the move to Houston to begin his new job as head coach of the Rockets will be a little like coming home away from home for he and his wife Lynn.”

It is reported that the Spearman families split time between Minnesota and Houston. I would bet Houston is the home of all during the winter.


Occupy Wall Street



The folks down at Zucotti Park decry the 1% and espouse redistribution of wealth.  Most millionaires in this country, the one percent, were not born into wealth.  They worked hard and took risks.  Some fail but those who succeed receive great rewards due in part to a tax system that does not penalize success.  We would not have Envoy Esteem but for a system that rewards entrepreneurship. The Envoy Medical story is a continuing one—a lot of capital is invested and rewards have not yet come to them but the investors believe they will.  The investors would not invest unless they were assured they could keep a fair amount of return for the risk taken.

Before the Spearmans, there was Roger Lucas.  Lucas is currently Chairman of the Board of Directors of Envoy Esteem. He is also currently Vice Chairman and Chief Scientific Advisor to the Board of Techne Corp. (NASDAQ:TECH and  a Forbes top 100 mid-cap), a biotechnology company that he co-founded in 1985 and developed into one of the world’s largest suppliers of genetically engineered immuno-modulatory molecules. The story goes (from Twin Cities Business) that Lucas, “stumbled across the company and its technology while looking for something else. In November 1995, he was chatting with an independent technology broker working for the University of Minnesota. That discussion was interrupted by an incoming call that Lucas needed to take. The next day, when Lucas called to continue the conversation, the broker mentioned he had just returned from showing office space to Ted Adams and Bruce Brillhart, two former Medtronic employees who had founded a new company called St. Croix Medical. Adams and Brillhart told the broker they owned a technology that could restore hearing.


Intrigued, Lucas got in touch with the start-up’s founders. ‘They had this device, and they drew it out on the back of the proverbial napkin,” he recalls. Lucas was impressed and says that he ‘kept falling more and more in love with the company.” He kept pouring more and more money into it. Today, he owns about 18 percent of the company,”

Other investors include Minnesota Timberwolves owner and billionaire Glen Taylor with 15 percent of Envoy; former Medtronic Inc. vice chairman Glen Nelson, a prolific investor, owns a little under 1 percent. The late Ken Dahlberg, founder of Miracle Ear and inventor of the first in-the-ear hearing aids was an early investor with 3%. Dahlberg said “I think [this technology] will replace a substantial share of the hearing aid market, but it will be gradual...once people buy this, they are off the hearing aid market forever”. It has been reported that Starkey Laboratories have invested $10,000,000 last year and that Allen Lensmeier, former Vice Chairman of Best Buy has also made a substantial investment. in this hearing aid alternative. Patrick, Michael, and Daniel Spearman have, at last report, 34%.. Cofounder Adamshas cashed out, while Brillhart retains a small stake.

In August of 2010, Twin Cities Business reported that “in May 2000, McHale invested $200,000, then watched as the company faltered the next few years. “I thought, ‘There’s some good money that went bad,’” he recalls. “But I knew the technology was still good.”  He kept his shares. He and his immediate family now own about 1.5 percent of the company”. 



Glen Taylor was reported as saying: “It tickles my heart emotionally to hear the stories of people who have been helped by the technology...It is life-changing for people.”   Taylor also was impressed with the other investors: “The three Spearman brothers were nuts-and-bolts type of people. They watched expenses. They thought long-run, and there was a place and a need for someone like myself. I could help in the business practices.”

MedCity News reported in 2010 that Roger Lucas, said he believes Envoy will go public in two years and reach a $3 billion to $5 billion market cap.  As the Esteem reports more success and the economy improves, an IPO may be on the market this year or next.

Another Google or Apple?  No, but an endgame of three billion dollars would not have happened if our capitalistic system followed the European model to redistribute investor gains.  American capitalism is not political, it is American!

[Attribution and Disclaimer-- Sources used for this post were: Twin Cities Business, Hearing Aid Home, Med City News, Forbes, Medical Device Daily, Fox 26 Houston. The information herein is from reliable sources and deemed to be accurate.  If any information is believed to be inaccurate, please notify and corrections will be made]