Clear Conquered U.S. Airports. Now It Wants to Own Your Entire Digital Identity.

image

Illustrations: Viktor Hachmang

‘You are your driver’s license, your credit card, your health care card, your building access card’

In March, the air travel industry ground to a halt.

The coronavirus pandemic was spreading, and both airlines and passengers were caught unprepared. Most of the world, including the United States, began turning away foreign visitors, not wanting to bring more of the virus past their borders. Some airplanes were turned around in midair and sent back to where they’d come from.

By April, airlines and airports faced a grave reality: Nobody was flying, and revenue was plummeting. Scenes of empty airports became common in the news. At Los Angeles International Airport, the second-largest in the U.S., the number of departing passengers dropped by 95% compared to the same time period in 2019, according to an internal message obtained by OneZero via public records request. Airline stocks plummeted, and some cities began bailing out airport concession stands and car rental companies.

For Clear, an identity verification company that serves airline passengers, the slowdown seemed like an existential threat. Clear’s 5 million members pay for an annual subscription that lets them travel through security lines faster at more than 60 airports and sports arenas around the U.S. Members pay $179 a year to access kiosks where they verify their identity via iris or fingerprint scanners in order to skip long lines at security checkpoints, and anyone can sign up for the app’s free tier, which grants them this preferential treatment at stadiums. Clear’s revenue from some of the airports where the company operates more than halved during the month of April, according to documents reviewed by OneZero. It would take at least three months for Clear to resume generating revenue close to what it was before the pandemic.

But more than 3,500 documents and emails obtained by OneZero through public records requests shed light on how the company used the pandemic to pivot and help expand its business model beyond getting fliers to the front of the line. Clear’s vision for its fingerprint, iris-scanning, and facial recognition business goes beyond kiosks in airports or sports areas — it wants to be a holistic identity verification platform, covering more intimate moments in our everyday lives. The company has already amassed troves of personal data on its customers, especially for Clear customers who use the service to buy concessions and enter sports stadiums. The company has even explored sharing that data with partners for marketing purposes. In return for cutting to the front of the line unimpeded, customers handing over vast swaths of biometric and travel data.

At its core, Clear monetizes trust. When the company verifies a person’s identity, whether that be to enter an airport, a stadium, or buy a beer at a concession stand, Clear is affirming that they are who they say they are. Right now, this verification process means priority access to an airport or stadium security line as a trusted Clear member. But in the future, documents and slideshows reviewed by OneZero suggest Clear plans to be the company that verifies your identity every time you would have swiped a credit card, shown your ID at a door, or handed over a health insurance card.

Caryn Seidman-Becker, the company’s CEO, has said as much. (While Clear’s head of public affairs Maria Comella answered questions over email, the company did not make Seidman-Becker available for this story.)

“We are a platform company… think about it like Amazon. Once you register, you’re tapping One-Click all the time,” Seidman-Becker said during an on-stage interview at a U.S. Chamber of Commerce event last year. “Enroll once at the airport: now you can use it at Hertz, now you can use it at the sports stadium, now you can use it at the Seahawks to buy a beer. That is the power of a platform. Now you think about adding hotels, now you think about ride-share… You are your credit card when you enroll.”

[Clear] wants to be a holistic identity verification platform, covering more intimate moments in our everyday lives.

To that end, Clear announced a new product called Health Pass in May. It takes Clear’s main identity verification service and attaches a person’s health information to their profile. Clear has pitched the product to businesses that it never had formal relationships with before, including the National Hockey League, restaurant firms like Founders Table, and the 9/11 Memorial and Museum, according to the company’s press releases.

The Health Pass pitch went to familiar clients, as well. On July 7, Clear sent an email to executives at Los Angeles International Airport, according to documents reviewed by OneZero, establishing its vision for global security during the pandemic across a 16-slide presentation.

The deck was called “Helping Get America Moving,” and it laid out how Clear’s new product would work. Through self-administered health quizzes and integrations with Covid testing labs, Clear’s app would allow companies to monitor the health of staff and patrons of office buildings, hotels, restaurants, hospitals, sporting events, and of course, airports. Only those who are able to prove good health would gain access to these realms of public life, with Clear’s app as the arbiter.

image

Clear was born of disaster. Founded in the wake of the 9/11 attacks, Clear — originally known as Verified Identity Pass — rode a wave of new funding from Congress allocated to secure American airports from terrorist plots.

That history isn’t lost on the company. In its recent presentation on Health Pass, Clear compared coronavirus’s impact to the terrorist attacks of 9/11.

“CLEAR [sic] was founded in the wake of 9/11 to help Americans feel safe and secure getting on airplanes. Our trusted opt-in service is well positioned to meet the challenge of screening 2.0,” the presentation said.

In the mid-2000s, the TSA needed help launching “Registered Traveler” programs and outsourced some of the prescreening of travelers to private companies. This is where Verified Identity Pass, which originally operated the Clear program, got its start. (Today, Clear is the only company approved in the TSA’s Registered Traveler program.)

Verified Identity Pass, or VIP, was the brainchild of Steven Brill, a former law and security journalist and entrepreneur, who also happened to found Court TV.

“In the post 9–11 era, we had to take new measures to protect ourselves yet not destroy our way of life by strangling the free flow of people and commerce,” the company’s website said in 2007. “Somehow, we had to find common sense solutions to security bottlenecks that make everyone a suspect. To be blunt, that meant we needed a fair, sensible way not to treat everyone the same when it comes to terrorism protection.”

VIP looked a bit different from what Clear is today. Instead of verifying your identity with an iris or fingerprint scan, members carried a special card that they would insert at kiosks in an airport. Brill raised more than $100 million, and an estimated 200,000 people joined the VIP program by the late 2000s, according to Business Insider. At its peak in 2008, VIP operated in more than 20 airports.

But that year, the company stumbled. An unencrypted company laptop containing the personal information of 33,000 members was stolen, and the TSA suspended the company’s ability to register new customers in airports for about two weeks. (Seidman-Becker now says this episode is an “urban myth” and that there wasn’t any personal information on the laptop.)

Brill left the company in March 2009, and by the end of the year, Verified Identity Pass had filed for bankruptcy.

Months later, two former billion-dollar hedge fund managers, having closed their fund in the wake of the recession, bought VIP for just $6 million with a novel idea: rehabilitating the service as a luxury tech brand. The Clear program would no longer just save you time — now, it would unlock a lifestyle. Caryn Seidman-Becker and Ken Cornick, now the company’s CEO and president, respectively, changed the name of the company to Clear, and registered it under a parent company called Alclear.

Clear also brought on a number of advisers to bring credibility to its role in the airline industry. In a 2016 presentation to Minneapolis-Saint Paul airport, the company said its security advisory board included former director of the Secret Service Mark Sullivan, former FBI director Tim Murphy, former deputy administrator of the TSA Gale Rossides, and Kenneth Wainstein, the first assistant attorney general for national security and homeland security advisor to George W. Bush.

Since its rebirth, Clear has been lauded as a quintessential business success story: In 2018, Seidman-Becker was named one of Fast Company’s Most Creative People and hailed as a Condé Nast Traveler Innovator. She was also the subject of an article on Forbes’ contributor network headlined “Superwoman Does Exist, And She Looks A Lot Like This CEO.”

image

Today, Clear operates in 35 airports in the U.S., where its kiosks scan the irises and fingerprints of customers and send them to the front of security lines. The service is billed as a luxury time-saver during one of the most stressful points in a long trip.

Documents gathered by OneZero reveal details behind the company’s unique business model. Clear offers airports a cut of the revenue earned when a traveler signs up for a subscription. These deals typically range from 10% to 12% of Clear’s revenue at the airport, and include Clear sign-ups outside of the airport’s doors within a specific geographic zone, according to revenue sharing agreements between Clear and five major airports obtained by OneZero. And it’s not just a one-time cut: As long as the customers maintain their Clear subscription and fly from their home airport, the airport gets a piece of the fee every year.

These revenue sharing agreements have the potential to bring in millions every year for an airport. In 2019, according to documents reviewed by OneZero, the company gave $35 million of its revenue back to partner airports.

For example: According to an email from September 2019 obtained by OneZero, Clear projected that it would earn $25 million from subscriptions at Los Angeles International Airport that year, $3.1 million of which would be sent back to LAX. The smaller Minneapolis-Saint Paul airport earned Clear more than $8 million in 2019, about $1 million of which was paid out to MSP.

The company has also been partnering with stadiums since at least 2015 when it launched a free tier to its app that would allow users to more quickly enter the San Francisco Giants’ ballpark.

image

A slide from a 2015 presentation to LAX airport obtained by OneZero, showing what data Clear collects for potential marketing use.

According to documents reviewed by OneZero, the company has previously considered monetizing this customer data that it obtained from its free and paid users. In a 2015 presentation to LAX, Clear showed off all the data that it collected on customers who enter stadiums, with the title “Identity Dashboard — Valuable Marketing Data.” That data includes favorite foods and beverages at sports stadiums, when they arrive at games, what kind of credit card they have, whom they attend games with, and how often they fly first class.

Similar information could be obtained within the partnerships Clear has with airlines, airports, stadiums, and concession stands. Here’s an example: In a 2018 partnership with concession stands at the Seattle Mariners’ T-Mobile stadium, Clear users could verify they’re over 21 and pay for a beer with their fingerprint, as long as the card and fingerprint had been previously registered with Clear.

Clear told OneZero the company would never sell or rent any user information, or send information to partners, without asking users permission. The company’s terms of service echo this line, but does say the company can use your personal data to market products to you that they think you might like. This is similar to the way that Facebook doesn’t sell data, but instead offers access to its users via ads, and tailors which users see those ads based on its own internal system.

“If any personal information is shared with a partner, it is only with the user’s consent,” Maria Comella, Clear’s head of public affairs, told OneZero.

A 2015 presentation to win LAX’s business illustrates that Clear’s push to expand beyond airports began even before some of its biggest airport contracts were signed. In the presentation, Clear started pitching itself as a platform rather than just a way to skip the security line.

In the pitch, Clear emphasized an “ecosystem” for its customers, meaning a local expansion of where Clear customers are able to use the service.

The slides pointed to what it called the Bay Area “ecosystem,” a series of regional partnerships starting in 2012 when Clear installed kiosks in the San Francisco International Airport. In 2013, Clear added kiosks to San Jose Airport, and in 2014, touch-to-pay kiosks at the Napa Farms Market concession stand at SFO. In 2015, Clear partnered with the San Francisco Giants and Alaska Airlines to add Clear’s quicker entry to baseball games and replace some flyers’ boarding passes with their fingerprints through Clear.

image

A slide showing the evolution of Clear’s San Francisco ecosystem, from a 2015 presentation to LAX airport obtained by OneZero.

Since then, Clear has added access lanes for members at the RingCentral Coliseum, home of the Oakland Athletics, and San Jose’s Earthquakes Stadium.

Last year, at a U.S. Chamber of Commerce event, Seidman-Becker announced that the company had even partnered with Budweiser to make a “Bud Now” machine. “Fingerprints down, checks you are you, you are over 21, and you have an authenticated payment, and it delivers you your beer, all in less than 20 seconds,” she said.

“We believe any place that you are whipping out your wallet and taking out a card to prove that you are you is a place where Clear has big opportunities,” Seidman-Becker told CNBC in May 2019. “Think about the age validation for e-cigarettes, beer, and online gaming.”

Analysts say the potential for the identity verification market could be huge.

C. Maxine Most, principal analyst at Acuity Market Intelligence, which focuses on tracking the biometrics industry, says that there’s a wide opportunity for Clear to become its members’ digital identification card, the one place that holds all of its members’ credit cards, government documents, health care information, and more. To pay at a convenience store would be scanning your face or fingerprint, and Clear would verify your identity and supply your credit card information. Because right now, there’s really no competition for an identity platform that doesn’t rely on a smartphone.

“We believe any place that you are whipping out your wallet and taking out a card to prove that you are you is a place where Clear has big opportunities.”

The idea goes a step beyond Apple Pay or tap-to-pay credit cards, says Alan Goode, biometrics analyst and founder of Goode Intelligence. It’s what biometrics wonks call “tokenless” or “naked” verification because the only thing you need to prove your identity is your face or your fingertips.

That might seem frivolous when talking about concession payments, but the idea scales to any kind of identification or card that you might carry around in your wallet.

Seidman-Becker has spoken around this very idea before, and last year even predicted the end of wallets, saying in five to seven years they wouldn’t serve a purpose anymore.

“You are your driver's license, your credit card, your health care card, your building access card — why are you whipping all these cards out?” she said.

Clear’s 2015 presentation illustrates that the platform could be integrated with building access, employee screening, the gig economy, and even peer-to-peer lending. All of these use cases rely on the idea that an identity needs to be verified.

Now in 2020, there’s a piece of identity that Clear is verifying that’s more timely than a credit card or boarding pass: a person’s health.

The company’s latest product, Health Pass, is a separate app built by Clear that allows a business to track whether employees have reported coronavirus symptoms or received a positive Covid-19 test.

image

A flyer sent to LAX airport detailing how Health Pass works for airline employees obtained by OneZero.

“Just like screening was forever changed post-9/11, in a post-Covid environment you’re going to see screening and public safety significantly shift,” Seidman-Becker said on CNBC in June. “But this time it’s beyond airports. It’s sports stadiums, it’s retail, it’s office buildings, it’s restaurants.”

According to documents obtained by OneZero, Clear is pitching a world in which Health Pass could be installed in hotels, hospitals, or any business or location that wants to keep track of the health of its customers, employees, or residents, according to the presentation sent to LAX.

“If the Health Pass is getting them into the enterprise space, that’s huge,” analyst Most says. She adds that biometrics companies have been trying and failing to get fingerprint and facial recognition to work for these kinds of uses for years.

image

Clear sent LAX airport details of its future plans for its platform, including an unannounced product called Clarity.

Seattle Mariners’ T-Mobile Stadium offers a vision for what Clear’s future offers could look like. Back in 2018, the Mariners allowed Clear to set up security lanes, where members were able to get priority access to the park. At the same time, some of the ballpark’s vendors used Clear to verify customer age. The system integrates Clear’s biometrics and payment data, and lets members pay for concessions like beer, which no longer requires a cashier to look at an ID, with their fingerprints.

As of this summer, the stadium has also integrated Health Pass. Every morning, staff who commute to the stadium have to log into Clear’s Health Pass app and take a short health quiz, according to Trevor Gooby, Mariners VP of ballpark operations. If they don’t report any symptoms, and haven’t received a positive Covid-19 test, they get a green check mark, which they will have to show security when they arrive at work.

In July 2020, the NHL also adopted Health Pass to track testing and self-reported health screenings. The program was lauded as successful at keeping players and staff safe and a model for other leagues. As of July, New York City’s 9/11 Memorial Museum is also using Health Pass as well as fast-casual restaurant chains Chop’t and Dos Toros. And in promotional materials sent to OneZero by Clear, the company promises that new partnerships are being announced every week.

Speaking at a U.S. Chamber of Commerce event last May, Seidman-Becker measured Clear subscribers as percentages of the total city population. In San Francisco and the Bay Area, 6% of total residents were Clear members. In Denver, it was more than 5%.

It served as a reminder that Clear isn’t simply competing for a share of the airport line. Clear is signaling that it intends to be part of the fabric of Americans’ daily life, and the coronavirus pandemic’s creation of a “new normal” has, for the company, a silver lining.

“When I look at our opportunity set, it is enormous,” she said. “Identity is fundamental and foundational to so many industries. You check into a hotel and they ask you for your driver's license and credit card over and over again. You are you. And once people adopt that, it’s powerful.”