Born in Brazil and raised in Switzerland, Patrick Freuler now brings his entrepreneurial spirit to the United States. Founder of the new web-based hearing aid retailer Audicus, Freuler is here to revolutionize the deceptively mundane hearing aid industry. While it’s common practice for Americans to spend thousands of dollars on a single hearing device, Audicus’ products start at $199. The savings stem largely from serving consumers directly and without the traditional costs from intermediaries. Hear it from Patrick first.
What have been some key dates?
The most important date was about six weeks ago, when we launched this company. It’s officially live now and we’ve been selling hearing aids and advising our clients from day one. That’s the first major milestone.
In terms of site sales so far – are sales meeting your expectations? Did you launch the site totally open-minded?
I kind of went into it pretty open-minded and trying to learn as much as possible from users who interact with the site and existing clients. We put a lot of effort in providing a stellar service. So far, we’ve managed to keep all our customers extremely happy and the return rates to a minimum – and I hope we can continue doing so in the future. We’re trying to get customers to be aware that there are high quality, affordable alternatives out there, something that the hearing aid industry hasn’t really been able to provide so far.
Can you talk a bit about the hearing aid industry in the States?
A typical pair of hearing aids in the U.S. can cost anywhere between $3,000 and $8,000. What’s particular about the U.S. is that this exorbitant price tag is typically not reimbursed by any of the big insurance schemes. So unless you’re part of the Veterans Affairs, you’re pretty much on your own. Have you ever seen a hearing aid?
Sure, but I’d love to see one up close…
[pulls out three models] These devices are far less complex than, say, your iPhone. But they cost five times more than that. If you peel the layers, you find that even the most advanced one costs probably less than two hundred dollars to produce. If it costs two hundred dollars to make, the manufacturer will sell it to the retailer for, say, $500, and the retailer will take this $500 and turn it into $2,000. As you can see, there are a lot of mark-ups. What we’re trying to do is offer an alternative to expensive retailers and overpriced established manufacturers. We provide high quality devices from independent manufacturers directly to the consumer. Just by making the process more direct, we’ve managed to bring down the price from 75 to 80 percent and pass on the savings directly to the consumer.
Where are your hearing devices being manufactured?
We have one manufacturer in the U.S. and one in Europe. Both manufacturers have been in business for a few decades. They are very experienced.
Is it possible that, in the past, these manufacturers that you use have sold hearing aids to other retailers who mark them up?
Absolutely. This one here [points to device] sells in Europe for the equivalent of $2,000.
Let’s backtrack a bit. When did this all start?
I’m originally from Switzerland.
I was gonna ask!
Yes, funny accent… My family has three people that wear hearing aids. I always pondered on why they are so incredibly expensive, because they keep on mentioning that they dodged a bullet because they were able to get a partial reimbursement from insurance. I was trained as an engineer at MIT and was then both a consultant and an investor in the healthcare space and did a few intense studies in the hearing aid industry. Since I’ve always been fairly entrepreneurial, at some point I thought that Audicus was a great idea to jump ship for… especially since it was something that could hopefully make a dent and make these devices more accessible.
Did you move to the U.S. because of Audicus?
Yes, you could say that. The U.S. is quite particular in that there’s little to no reimbursement. With 35 million Americans suffering from hearing loss, it’s also a very sizeable market. Moreover, people here are more embracing and active with the internet.
When did you officially dedicate yourself fully to Audicus?
Audicus had been in development for about seven months before I launched it.
Wow. I’m not an expert on start-ups, but that seems like an incredibly quick turnaround time to have already green-lighted the site and be selling inventory already!
The site in itself is not incredibly complex – e-commerce is pretty commoditized. What took a bit of time is really doing a fair amount of market research – running surveys, talking to people, understanding what the problems and needs were.
When you were doing your market research, was it pretty straightforward? Or did anything surprise you?
Since the internet is a pretty new retail channel compared to the traditional retail clinics, sometimes you get a frown. People are just more familiar with the old way of doing things. You have to explain to them why this could work. And then like any start-up you always have the big skeptics. You just have to have a thick skin and do it.
How do you like living in New York City so far?
So far it’s been really good. I love big cities – I love the buzz and the fact that you just have people from all strands of life. Everyone’s doing something different. In addition, New York has a very fruitful environment for startups – everyone seems to be in it together and is willing to help each other out.
How can readers contribute to your success?
Right now I’m looking for advisers and investors who are familiar with e-commerce and healthcare: it’s people who can provide guidance, contacts, and can help us scale this. Besides that, tell everyone to spread the word about what we’re trying to do here… Tell your grandparents, even your parents, and actually all your friends who are “trigger-happy” on the volume knob!