Dr. Vietor, your company, audibene, entered the hearing aid industry in 2012. At the time, the market was considered impossible to digitalize. Why did you decide on this industry, and how did you manage to make digitalization work?
My co-founder Paul Crusius and I were both impressed by the fact that lots of Generation 50+ people now use the Internet – the so-called “silver surfers.” Paul and I knew each other from our days as students at WHU, and we were always discussing interesting topics. Then we asked what topics were relevant for these silver surfers.
Hearing loss affects one person in three over the age of 50, and at the same time it’s a problem affected by high personal barriers to action. Interacting online is one good way to lower such barriers. That’s why we thought about approaches that would combine all of this. And the result that came out of it was the audibene business model.
The audiology sector is very fragmented. In Germany, there are 5,000 shops belonging to 2,500 owners. So for nearly all of the providers out there, it is not really useful to develop in-depth online expertise. We are partners to these owner-managed operations, and we generate additional customers who wouldn’t have acted at all, or if so only years later, if not for our low-threshold offer. This is a benefit to all: our customers can hear (better) again, and our partner audiologists have additional customers in their stores and benefit from the additional revenue that they generate with us. The fact that we are developing a “win-win” relationship here helped us establish audibene.
An important part of the decision to purchase a hearing aid are extensive consultation and a precise fit of the device. How were you able to integrate these areas into the online market?
Our model is more complex. Working purely online, selling or buying hearing aids is actually not how you reach your goal. That’s why with us, “online”" is only the first step – providing general information on the subject and about solutions. But as a customer, that’s the kind of thing I can do anywhere, at any time.
The next step is always the telephone consultation. This is where we go deep into the analysis of the customer’s needs, discussing his or her lifestyle and the things that are important to the customer. This is a very essential step. It’s during the in-depth consultations that the actual value is generated.
To fit the appliances and perform a precise measurement of the hearing loss involved, we then work with our partners locally (800 in Germany, 4,000 worldwide). During the fitting process, we remain in constant contact with the customer and direct this process. So the customer is also buying the device from audibene, and the local partner receives a service premium bonus from us.
We specialized specifically in serving younger, first-time users between the ages of 55 and 65, who have completely different questions and reservations than the classic customer who typically visits an audiologist and has much more severe hearing loss and thus lower expectations in certain respects. Specializing in a certain target group also creates great added value for the customer.
The year 2015 witnessed big changes at audibene. A holding company took over audibene in the course of an “exit” that wasn’t really an exit in the classic sense. Why did you decide for this step, and how did the company gain as a result?
The aim we had and continue to have is to develop audibene into a company that is global and sustainable at the same time. At the same time, independence is very important to us. We have always been interested in the question of how we can best achieve both.
We were approached by EQT, a Swedish group of companies. EQT was about to take over the hearing-aids division at Siemens. With its 6,000 employees, this division, which was renamed “Sivantos,” had a leading position in the market but it had posted considerable losses over a period of several years.
EQT had the vision of creating something that would really be viable for the future. A scalable online approach is a part of any future strategy. For an existing corporate group with a long tradition, such an approach is not easy to come up with. In our talks with EQT, we very quickly realized that we had a nearly identical vision as to how this market will evolve, and how we want to position audibene in the market. As a result, we placed audibene in a holding company that at the same time is a shareholder in the Sivantos Group, and now we’re shareholders in this holding company, alongside EQT.
But we didn’t modify our business plan. We are continuing to implement our plans from 2011, nearly unchanged.
Operationally, audibene and Sivantos are run completely separately from one another. That was important to us. When developing new markets, though, we can enlist the resources and the experience available at Sivantos. We have established offices in five countries in the last two years, including the United States, among others. We’re already bigger there than we are in Germany. During these two years, our team has grown from 150 team members to 600. In this regard, we clearly benefit from market access. The Group also provides us with the financing we invest in and for expansion. So we no longer have to invest any time in the acquisition of growth capital and can turn our entire focus to business development.
But the benefits go both ways. We cooperate with Sivantos in the field of research and development, for instance. This helps ensure that hearing aids are developed that suit the needs of the customer even better.
Can you derive any advice for young entrepreneurs based on the experiences of your “exit?” When does it make sense to think about more major changes for a company, and what things should one always keep in mind?
An “exit” should certainly not be the goal of establishing a business. The point is to build a company that creates jobs, has satisfied customers and, where appropriate, promotes innovations. How the liabilities side of the balance sheet is structured, on the other hand, is completely beside the point at first. There are financing events in the life of a company that actually have no significance for the company itself. We measure ourselves based solely on the achievement of operational milestones – revenue, profitability, customer satisfaction, market relevance.
The principle we apply here is: “Begin with the end in mind.” We ask ourselves, “Where do we want to be in the long term?” And then we figure out what that must be true for this to happen, in three years, in a year, in six months. From this, we derive the things that we need to do today. And if it makes sense to modify structures and work with new partners. The question should not be: “What options do I have today?” That’s thinking too small. Thinking has to begin with the goal!
People are always asking us if we’re still on board. This question surprises me every time. Well, of course we are! Our time horizon is a long-term one. If that’s not how you think, then you shouldn’t set up a business.
At audibene, we've always invested lots of time in relationships – with vendors, with partners, with potential investors. This helps you keep your own horizon broad while developing new ideas at the same time. On the other hand, this approach results in options you never would have thought of beforehand. You shouldn’t hide in your own office and (only) fiddle around with processes. Go out there and delight the people for you and your product!
The holding company that now owns audibene may be going public in the next year or two. What particular steps are critical on the way there?
audibene and Sivantos have great growth potential. We are now represented in 9 markets. So there are still around 180 countries in which we do not have operations.
Globally, there are 600 million people with a hearing problem. 540 million of them are not taken care of. So there’s still a lot that needs to be done. The question is: How do we reach these people? How can we continue to grow audibene?
An IPO is one of several ways in which we can bring new capital into the holding company as a way to tap this potential. As far as our team is concerned, not much would change. We will continue to sell hearing aids, hopefully to satisfied customers, as we continue to drive the industry with innovative ideas. So in-house, the structure of our balance sheet is really not a topic. And that’s how it will stay.
Dr. Marco Vietor earned undergraduate and doctoral degrees at WHU. In 2012, he established audibene together with WHU alumnus Paul Crusius.