People love convenience, right? You can always count on people who will pay for the benefit of stepping up, past, and through others, eh?
Not necessarily.
Verified Identity Pass Inc., the company behind the CLEAR card has shut down. This was the trusted traveler card that essentially was a line cut card for airport security. The company couldn't reach a deal with one of her creditors and, buh bye.
The basic premise of the company was that business people would pay for this bad boy to cut down on the time in line. Combine this with a NEXUS Card and you were rocking when it came to going over borders and through security at special airports. It all made sense and I, along with a couple hundred thousand of my friends ponied up the cash.
Unfortunately, the basic bet ran smack into the realities.
1. Signing up was a bit of a hassle. Fingerprints, eye scans, etc.
2. It wasn't available at every airport so you had a a narrow field of paying customers that were road warriors between to clear cities.
3. The road less traveled, aka, the economic hairball didn't help a bit.
Personally, I admire the people who tried it, the money folks who backed it, and the customers to signed up and (for the most part) loved it.
Lesson to you: People, habits, and friction to get that transaction completed. Pesky but deadly details.
RIP: CLEAR
“unable to negotiate an agreement with its senior creditor to continue operations.”
165K customers paying $100/year (competitor http://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.
Posted by: Chris | June 23, 2009 at 03:45
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.
Posted by: Kyle S | June 23, 2009 at 07:54
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:
http://www.businessinsider.com/the-startup-entrepreneur-guide-to-risk-management-2009-6
Posted by: Harrison | June 24, 2009 at 15:18