Wednesday, June 24, 2009

Clearly flawed business model

On Monday night, the airport express security program “Clear” went out of business. As the website says

Clear Lanes Are No Longer Available.

At 11:00 p.m. PST on June 22, 2009, Clear will cease operations. Clear’s parent company, Verified Identity Pass, Inc. has been unable to negotiate an agreement with its senior creditor to continue operations.

What will happen to my personal information?

Applicant and Member data is currently secured in accordance with the Transportation Security Administration’s Security, Privacy and Compliance Standards. Verified Identity Pass, Inc. will continue to secure such information and will take appropriate steps to delete the information.

Will I receive a refund for membership in Clear?

At the present time, because of its financial condition, Verified Identity Pass, Inc. cannot issue refunds.
Memo to TV airheads: of course they won’t pay refunds, because they’re broke. If they weren’t broke, they’d still be in business.

USA Today reports that the company was started by Court TV founder Steven Brill and attracted strategic investments from Lockheed Martin and GE Security in additional to VC firms. Apparently the company attracted about 250,000 customers before it died.

If I claimed “I hate to say I told you so” I’d be lying. A year ago, I didn’t see the revenue model: not customers willing to pay a large enough premium to solve the travel checkin hassle problem. (It doesn’t help that the most price-insensitive segment of rock stars and athletes never fly commercial.)

As I said back then:
It’s not clear (all pun intended) whether the problem is market size (of people willing to pay anything) or the revenue model (no ala carte pricing). It’s also not clear if (ala Iridium and Globalstar) they have a graceful fallback position short of bankruptcy. But if they can’t find significant paying customers in tech-wealthy Silicon Valley, they are not long for this world.

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