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June 22, 2009

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“unable to negotiate an agreement with its senior creditor to continue operations.”

165K customers paying $100/year (competitor https://www.flocard.com/corp/why/). Gives them $16.5 million to operate with annually. What capital or fixed costs could have kept them locked to creditors? Startup capital should have long since been repaid. This should be a cash printing machine that I wish I owned.

Reads to me as remarkably poorly managed, debt junkies, or both.

I signed up for Clear as part of a promotion with Starwood (as I suspect did many of their customers; I wonder what their revenue run rate really was) but chose not to renew my membership when I would have had to pay actual cash money. To me, the value proposition that they offered was not that significant. I believe a decision by TSA doomed the company to failure.

The original "deal" that Clear claimed it would offered travelers was compelling: submit to a background check so that we can be sure you're not a terrorist, then prove you are who your card says when you show up at the airport, and you won't need to jump through all the same security hoops that your fellow travelers do. That never happened. At the airport I visit every Monday (ATL), Clear members had to have their travel documents and ID checked by TSA, take their shoes off, take their liquids out, get x-rayed, and experience all the other indignities that accompany air travel these days. Once I declined to renew, I started occasionally beating Clear members through security using the regular lines because they were slowed by the additional biometric screening.

It's a shame that the original vision of the company never came to fruition. It did and still does make sense. Another lesson for entrepreneurs: be very careful when choosing the government as a partner.

I have also been a member of Clear for 1+ year and got the same "We are out of business" email on Monday. I was lucky enough to have Hyatt pay for my first year's fees and SPG to pay for the second. While Kyle was right in that their initial idea didn't come to realization, the card was helpful in certain situations.

For me, it was when I had a 6:30 AM flight out of JFK and I'd get to the airport at 5:55 AM. I'd make the flight in time, and sometimes even made it to the UA lounge to grab some breakfast ! Mind you, this only works when the airport in question has a notoriously long line up for security.

Lastly, alot of airports now offer shorter lines or priority lanes for frequent travellers, and I think this took away from some of Clear's cachet. So, as you can see, the value just got less and less (not available in all airport, not available in all terminals of a particular airport, no ability to bypass TSA screening, not taking into account carriers/airports offering their own line by-pass, over charging customers etc.)

Oh well, c'est la vie.

PS: Some subscribers were complaining that as late as Monday, Clear was persuing individuals to renew or sign up. I personally think it's bad business practice to do that, while knowning that you are about to shut down operations.

As an aside, here is an interesting read:
https://www.businessinsider.com/the-startup-entrepreneur-guide-to-risk-management-2009-6

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