A Clear Lane to Nowhere

21 Comments

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 (s lmt) 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.

21 Comments

Jai

I got my money back, I contacted chase my credit card company that I used to pay for clear. They gave me a prorated refund.

Maria

I worked very closely with Verified Identity Pass and they really screwed their employees as well. They were told on 6/22 at 5pm via a conference call that they were closing that evening. No severence, no vacation pay out…nothing!

Shawn Rapier

One thing that may make more sense of the economics is that many of the 250,000 members did not pay for the service. I am a Platinum member with Marriott. They offered me a free one year membership as a gift. I assume that Marriot did not pay either. It was more likely a way for Clear to reach frequent travelers. It was great. I did renew for $200. I guess I can kiss that money goodbye. I talked to several other Clear members over the past year plus who also got their membership free.

Pat

So let me see if I understand Clear’s “great” idea:

* Federal government creates a mess with slow security lines and stupid useless “anti-traveler” annoyances like 5 people to look at your (fake) id and your (fake) boarding pass.
* Clear says “we will make the trip through the security process just as fast as it was before the Federal government Keystone Kops got a hold of the process.”
* Clear relies on the Feds continuing kabuki theater to convince the traveling public that they should sign up with Clear if they want to get through the line before next Tuesday.

How about this as a radical idea: Lets just speed up the security process for everyone?

msk

I think the TSA should hold themselves responsible for this failure. How can you knowingly do business with a provider and not be cognizant of their financial picture?? How will we know that all of our private information is destroyed properly – the TSA should oversee this. How do you know a disgruntled employee will not take data?? The government should stand up and take some ownership of this issue – they sanctioned this organization and allowed them to usher folks to the head of “their” line!! Unbelievable!

Andy Abramson

Om,

It was an enormous time saver, especially in SFO and San Jose on Fridays. It literally meant I had an extra hour of time to see clients, or could sometimes even make an earlier flight that may have been delayed at either airport.

For anyone who signed up in the last thirty days, i suggest they contact their credit card company, especially if they never used the service. Since the service wasn’t “delivered” there’s a good chance they can get their money back.

Jai

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?!

Jenkins

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.

Sonal Maheshwari

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.

Jose Domingo

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?

anonymous

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

Allen

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.

Wing Lee

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.

Dan Davidson

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

Clear member

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.

unregistered traveler

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.

Marcio

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. . .

Artruro Jayson

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?

Om Malik

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.

Matt Liotta

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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