Caryn Seidman-Becker thinks she can do what media impresario Steven Brill could not: transform Clear, the program that allowed members to pass quickly through airport security, into big bucks for its backers.
It isn’t a terribly far-fetched scenario, considering her starting point.
As readers will likely remember, Clear was at the fore of a spate of services that began providing front-of-the-line service to business travelers. Founded in 2004, it seized an opportunity born of the Department of Homeland Security’s Registered Traveler Program, which was designed to speed along “road warriors” by providing them special clearance in exhange for submitting to elaborate identification and background checks. The TSA ended the program in 2008, but even without it Clear customers — who paid $199 a year for a biometric-based photo ID card — eventually numbered around 200,000.
Investors were smitten by its growth, including Spark Capital, RRE Ventures, and others that eventually invested around $54 million in the company. No doubt they were also swayed by the vision of founder Steven Brill, who’d famously founded the American Lawyer while still in his 20s, and later CourtTV, which was sold to Time Warner in 1997.
Yet just as Clear was gaining velocity, it was abruptly done in – killed by an economic downturn, as well as its own overly ambitious expansion plans. By June of last year, the company was forced to shutter, unable to negotiate an agreement with its senior creditor, Morgan Stanley, over approximately $33 million it owed.
Now it’s back, with three Clear lanes opening in Denver on Sunday. That means go time for Seidman-Becker, whose investment firm, Algood Holdings, paid just $6 million to Morgan last summer for Clear’s assets, later reorganizing its operations under the name Alclear.
Naturally, as Alclear’s CEO, Seidman-Becker believes strongly in Clear’s potential to transform the way people travel.
“Clear went away in the most ungraceful of ways, but its 200,000 members were passionate about the service. This wasn’t a bankrupt company that didn’t have a reason to exist. It failed because it had a lot of debt and no one was willing to let it renegotiate its financial terms,” she says.
In contrast, Alclear has “excess” capital, Seidman-Becker says, further observing that for $6 million, she’s already gotten a hell of a deal, including proof of concept, technological assets, and a brand and logo that are already widely recognized.
The question is whether the Clear brand and logo — not to mention the concept behind them — are still viewed in a positive light.
I’d guess Seidman-Becker will convince most of Clear’s prior customers to rejoin if they haven’t already. They have little reason not to, as Alclear is honoring the remaining terms of their memberships. More, memberships aren’t reactivated until a member uses a Clear lane, so the clock doesn’t start ticking until that person is able to directly benefit from Clear’s revival.
Newer customers will be far harder to convince. There’s that troubling track record, and it’s not limited to Clear. Soon after Clear went out of business, another competitor, Flo, followed suit. (Flo, too, has also been resuscitated this year, under the brand IQueue.)
That the TSA walked away in 2008 doesn’t help matters, given the institutional credibility it lent to such programs. In fact, even a once-passionate Clear user like blogger Danny Sullivan has argued that without the TSA, frequent flier lines make more sense, including because they involve fewer hassles like “slow, inconvenient fingerprint scanning devices before I can even go through the express security lane.”
Even travelers intrigued by the Clear concept aren’t necessarily going to subscribe to Alclear, given the choices available to them today. In addition to Clear and IQueue, which currently gives its customers “priority access” at Indianapolis International, the former staff of Clear recently formed JetLanes to regain some of Brill’s old business. (They have zero airport partnerships to date, but they’re working on it.)
Indeed, Alclear’s biggest issue is that more than a year after picking up Clear’s assets, it has signed just two airports: Denver and Orlando, where Clear lines will open for business next month. At its peak, Clear travelers were able to access special lines at 21 airports around the country.
These aren’t deterrents to Seidman-Becker, a dynamic personality who’s intent on turning around naysayers. For starters, at $179 a year, the service is cheaper than it was when Clear went out of business. (I’m sure many would argue that it should be far cheaper still, given its lack of ubiquity.)
The technology is far more advanced, too, she says. “A lot of people used to get halfway through the enrollment process and stop.” Meanwhile, Alclear has changed the software so that potential subscribers can “enroll online in 90 seconds,” she says, making it “easier to buy a Clear membership than a sweater.”
More, instead of housing all the biometrics machinery at airports and directly outside them, as Clear once did, Alclear has inked agreements with select partners in Denver and Orlando, including real estate offices and shopping malls, to make the card production process more accessible.
About those frequent flier programs that whisk people to the front of the line, Seidman-Becker says that 60 percent of the original Clear system had access to elite lines, but that they aren’t always quick. Further, she says, people fly different airlines to different places, whereas “what Clear offers is a neutral airport. We’re Switzerland.”
At least, in Denver and Orlando, which isn’t a lot of neutral territory, of course. A far bigger selling point to harried travelers may simply be the cost of canceling a ticket when they’re running too late to catch their flight. The penalty these days? Around $150.