Caryn Seidman-Becker: Rebuilding CLEAR - [Invest Like the Best, EP.432]

When we started Clear 15 years ago, our vision was to evolve from a travel-centric company into the de facto secure identity platform for leisure access and commerce. We didn't initially envision healthcare. This bold vision stemmed from my Wall Street experience, observing products transform into platforms. The core idea behind Clear was using identity to make physical and digital experiences safer and easier. It's about enrolling once and using it everywhere. As a woman, I constantly dig through bags for plastic cards to prove my identity and access. This is ridiculous because no one truly checks, and it's clunky, expensive, inefficient, and insecure. That's the foundation of Clear.

I invested in a broad spectrum of companies, starting in risk arbitrage, then moving to asset management and hedge funds. In 2002, we launched Ariance Capital, which stood for "art and science." This reflects my investment philosophy: highly quantitative and highly qualitative. We were fortunate to invest in Apple, Amazon, and Priceline in 2002, though it didn't always feel that way. At the time, Apple had signs in their boardroom saying "5 down and 95 to go," referring to their market share. They had candy-colored Macs and an iPod with a large white dial that many thought the Zune would crush. Amazon, initially focused on books, music, and video, expanded into more categories. Many believed they would fail; it was even on the cover of Time magazine. Priceline, known for opaque travel, nearly went bankrupt after 9/11. These were all products that evolved into platforms.

When I discovered Clear, a company that had previously subcontracted for us, I immediately saw its potential. It was a product that could evolve into a platform, enhancing national safety and simplifying consumers' lives. It leveraged biometrics, which I strongly believed in, and embraced consumerization. The subscription-based model was also incredibly appealing. Essentially, it represented the convergence of my entire professional career. My husband, my co-founder, some advisors, and I gathered in a law office, bidding against a group of former Clear employees. We had funds in escrow, reviewing documents to strategize our offer. We had a maximum bid in mind and ultimately offered $6 million in cash. Although slightly lower than the existing bid, it was 100% cash, paid that very night. We won. We spent about 10 hours in that room, strategizing and negotiating, unable to eat or drink much. Leaving felt like bringing home a new baby. The immediate thought was, "Now what do I do with it?"

Working with the government can be challenging. The last four years with the Biden administration were particularly difficult. They implemented policies that significantly impacted our throughput and customer experience. We've since moved past that. When you can innovate to improve throughput and leverage technology at the speed of the private sector, you can resolve bottlenecks with willing partners. We didn't have that with the Biden administration, but we certainly feel we have it with the Trump administration. They clearly prioritize making airports excellent, focusing on throughput, customer experience, and security. They believe in private sector innovation and partnership. I've been very public about our customer experience degrading in '23 and part of '24, which led to throughput issues. This wasn't due to volume, but rather policy decisions that hindered customers.

As an investor, I used to advise management to leverage up and buy back stock, questioning why they weren't more leveraged. I believed in an optimal capital structure. However, when you run a business and are responsible for employees, investing, or maintaining cash for potential M&A, leveraging up doesn't always feel right. Free cash flow and the optionality it provides allow for clearer thinking. When COVID hit, it was transformative for Clear. We immediately cut our $20 million marketing budget to zero. By February 25th or 26th, we reduced salaries to zero and created a leave of absence plan for our ambassadors. This preparation meant that when the full impact hit on March 12th, we were ready. We pivoted to creating Health Pass, connecting people to their test and vaccine information. We linked this data to professional sports leagues like the NHL, enabling them to hold the Stanley Cup, which they've never missed. We also partnered with OpenTable and Resy for dinner reservations. This financial flexibility allows you to be offensive, not defensive, a massive mindset shift.

First, we can significantly improve the travel experience, focusing on an end-to-end journey from home to the gate. This includes reserved parking, Uber integration, and concierge services guiding travelers to automated lanes or directly to their gates. As a parent, I know how much help is needed with kids and luggage. Streamlining this journey is a major opportunity. We can also transform travel within stadiums and arenas, especially with the World Cup and Olympics approaching. For instance, we've partnered with the Clippers for facial age verification to buy beer. Steve Ballmer's arena offers valuable lessons. Guests should have a seamless experience, avoiding long lines for concessions or privacy concerns when sharing IDs and credit cards. Creating better, safer experiences in sports stadiums is crucial. Our new capability to read passports and E-chips, which is Real ID compliant, will welcome both domestic and international fans. Beyond travel, healthcare presents an extraordinary opportunity to create safer, easier, more compliant, and efficient experiences for both workforce and patients. This includes check-in processes and accessing digital health records. My personal experience with my husband's cancer diagnosis highlighted the maddening difficulty of obtaining health records. It was incredibly hard to get his data, even from a top hospital. This inefficiency affects both patients and healthcare employees, who waste valuable time logging into multiple systems daily. Cyberattacks on healthcare data are also a concern. There are many ways to transform the workforce and patient experience. Medical bankruptcy is a huge problem due to unclear coverage. My husband passed away 20 months ago, and I still receive bills; it's a terrible experience. Our healthcare system desperately needs help to create connected, safer, and easier experiences, especially considering telehealth and rural areas. A secure, multi-use identity platform is essential for this industry, which operates on slim margins. Clinical trials are another area ripe for transformation. It's maddening to navigate NIH.gov to find relevant trials. The opportunity for transformation and better, more cost-efficient outcomes is here. Identity is foundational across many industries. We're not trying to solve everything at once, but we are focused on key areas that will expand over time.

My husband's brother was diagnosed with pancreatic cancer in April 2021. We then discovered he was BRCA positive. My husband was screened, and in June 2021, he told me he was also BRCA positive. We immediately had him screened for skin cancer and underwent a CAT scan to establish a baseline for his organs, as his brother was eight years older. Everything came back clear in July 2021. However, they missed something, and in January 2022, he was diagnosed with stage 4 pancreatic cancer that had metastasized to his liver. We learned that 2.5% of Ashkenazi Jews are BRCA positive—one in 40 people. This was a shocking statistic. Early genetic screening allows for monitoring and proactive measures. The BRCA mutation significantly increases a woman's risk of ovarian, breast, and skin cancer, and for men, prostate cancer. My husband's father had prostate cancer years ago, but was never tested for BRCA. Our Warrior Mensch Foundation, honoring my husband's legacy, aims to promote genetic screening. We purchased 2,000 kits for our synagogue. For the High Holidays, 300 kits were picked up. The rabbi, a close friend, spoke about it, and we distributed flyers. While 320 kits have been returned, this represents only 25% of those taken. Of the 320, seven were positive, confirming the 2.5% prevalence. These positive results led to more family members testing positive, as there's a 50% chance of passing on the BRCA mutation. Currently, 10 or 11 people will now be proactive in their health screening, hopefully avoiding cancer or detecting it early. It's devastating that 1,000 people took kits—a $250,000 investment—but haven't returned them. This means 25 people may have the mutation and are unaware. Early intervention through genetic screening is crucial, not just for cancer, but for other conditions. Ignorance is not bliss. We don't want to be victims; we want to be change-makers.