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Summary:

Updated on 6/23: Thanks to those of you who emailed or tweeted back, the Clear fiasco is a much bigger problem than most people realize. This email pretty much sums it up: They just sold me a renewal. Worse, they sent lots of solicitations to buy […]

Updated on 6/23: Thanks to those of you who emailed or tweeted back, the Clear fiasco is a much bigger problem than most people realize. This email pretty much sums it up:

They just sold me a renewal. Worse, they sent lots of solicitations to buy Clear cards as gifts (!) That must border on fraud since presumably they knew when they were selling me and doing those solicitations that they were “in the zone of insolvency” or whatever that legal term is.

I couldn’t agree more. Any company that is about to go belly-up should know not to be actively solicit new business from unsuspecting consumers. I have also heard they were pushing “Clear cards” as Father’s Day gifts. Now imagine if you gave one of those cards to someone!

Original Post: It was one of those logical ideas that couldn’t go wrong. Tightened security at the airports meant that one had to spend extra hours going through security checks, something that wasn’t convenient for busy executives, who didn’t want to waste hours standing around in lines. From that inconvenience came the idea — what if you got registered as a traveler, got approvals from all the right authorities, and received a special Clear card that would allow you to get through a special security check line called the Clear Lane?

clearlanes In 2004, founder & media magnate Steven Brill started the company, Verified Identity Pass, and over its lifetime convinced a stellar line-up of investors such as Lockhead Martin and Spark Capital to pump as much as $54 million into it. Today the company shut down — as much a victim of the economic downturn as it was of its perceived value. The downturn has led to travel budgets shrinking drastically and with it the number of executives in need of a Clear-type service. Many of the everyday travelers actually cared about the service that cost about $200 a year. The company managed to sign up just over 250,000 subscribers.

By Om Malik

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  1. Artruro Jayson Monday, June 22, 2009

    This is bizarre. The idea, you would think, is actually good. Maybe they were worried about the forging and theft of the cards and accounts. We all think about that with our other cards, so maybe investors and prospective users started dismissing the service as similarly vulnerable, and, hence, a danger?

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    1. As I said… this seems so logical that it is bizarre that it is failing. But the reality is that people would rather put up a few extra minutes in the line than spend $200 a year. Not sure…about the forging and theft aspect.

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      1. The service wasn’t actually valuable. From the WSJ, “But TSA never was comfortable with the notion of “trusting” any travelers, and so the security benefits of a Clear card boiled down to getting a special lane and some staff to help carry plastic tubs for you. For some people, moving to the front of a line was worth the price. But many travelers now receive that benefit with special lines for elite-level frequent fliers.”

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  2. unregistered traveler Monday, June 22, 2009

    Wonder what this means for their competitor FLO?

    Couple of other thoughts:
    Frequent travelers may not have a need for this since various airports offer expedited security lines for those with higher end freq flyer status (gold card) anyway.
    It would have been interesting to see if the Registered Traveler program is affected/aligned with the recent TSA Secure Flight rollout.

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    1. The enefit I saw in clear was that you could get the status w/o having to be loyal to one airline, that was worth something to me and I daresay a few hundred-thousand other folks. . .

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  3. Dan Davidson Monday, June 22, 2009

    WTF! I want my money back. It’s a bummer, because it was really nice to skip the long lines in Atlanta.

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    1. I have been a CLEAR member for two years, and if you travel a lot, and I do, the 10-30 minutes I save 1-4 times a week is EASILY worth $200. My company reimburses it happily, because the cost of one missed flight is WAY more than that. CLEAR was in all the markets I travel to/from: Bay area, DC, NY, ATL. I had renewed through 2011. Hopefully they will compensate the loyals.

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  4. I will miss the service — key being the concept of “service”. Speedy aside, the folks working the Clear lanes are courteous and cheerful. The premium lanes at major airports are getting pretty congested, too. So this toll road is actually a nice little perk that I value. It is really too bad.

    I just hope they follow thru to destroy all the personal identifiable information I gave them. And it would be nice if TSA hire some of their well-trained staff as coaches.

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  5. Cynically one could say that the main purpose of more onerous security procedures is the perceived improvement in security. People like putting up with the process because they feel safer.

    Their target market was limited to those frequent travels with the money to get around procedures they judged to make a marginal improvement in safety.

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  6. $54m total investment. 250000 subscriber paying $200 per year = $50m revenue per year. Is that bad revenue and need company shutdown?

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  7. Jose Domingo Tuesday, June 23, 2009

    Om, do you have some more details around their numbers? The numbers don’t make a lot of sense – 250,000 subscribers at $200/year translates to $50 Million/yr in revenue which is nothing to shake a stick at. It would be crazy to think their costs are anywhere close to that number – esp. since they were only operating in a limited number of airports. Assuming they’re growing subscribers/revenue at a rate of 10%/year (not hard to imagine) – I can’t see why this business wont be valued for AT LEAST $100 M? Thoughts? Guesses?

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  8. That’s a sad end to a good idea. I think it was a good service but due to it’s limited market focus couldn’t recover it’s costs well. It could have been better if it would have received some help from the Airport authorities as it was adding onto the value of customer satisfaction.

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  9. The lesson here is crystal clear: Steven Brill must stop starting companies and failing so hard — please! The VC world cannot take another one of his spectacular failures. Geez.

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    1. Hear Hear ;-)

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  10. I’m a little upset, I used this service often, there used to be plenty of people who use this service at my local airport. Why couldn’t they have offered it in fewer airports? Also not offering a refund? Are you kidding me?!

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