America is moving, as reflected by data from the Transporation Security Administration on their TSA checkpoint travel numbers webpage. According to the administration, for the week of July 5 – July 11, 2021, an average of 2.04 million travelers passed through TSA checkpoints, 193.98% better than for the same week the previous year. Compared to 2019, the average number of travelers was 20.95% lower. What should be encouraging should be the recovery in the overall number of travelers compared to 2020, when airports were mausoleums housing empty luggage belts and displays broadcasting a singular word, CANCELED.

Image from FRED, Federal Reserve Bank of St. Louis. Click on the image to learn more.Image from FRED, Federal Reserve Bank of St. Louis. Click on the image to learn more.
Even though the industry has not recovered to pre-pandemic levels as reflected by the following graph from FRED, Federal Reserve Bank of St. Louis. It is worth noting that airline travel is picking up. Instead of focusing on the debt-ridden Airliners for opportunities, Clear Secure Inc. (NYSE: YOU) is a stock I am buying that offers a solution and has Delta Airlines and United Airlines listed as their partners. The answer- an expedited, seamless, and frictionless process at the airport. I previously wrote about how the airline industry faces a labor shock in the post-pandemic world in- Airlines Said We Are Open, the Only Issue- They Forgot Their People and How To Clear The Process?. In that essay, I briefly mentioned Clear Secure Inc. (NYSE: YOU) and its kiosks to expedite the clearance process through biometrics. According to their How it Works page, travelers engage with the booth by standing and allowing for a facial scan which is cross-verified against an encrypted code containing the user’s voluntarily submitted biometric information. If the system correctly identifies the identity, the individual can skip through the many lines and head directly to the boarding gate. This seamless and frictionless entry would benefit since it preserves more time for the traveler to attend to other issues that might arise, especially international travelers who are recommended to arrive at the airport three hours before boarding time.

Brenda Flanagan for NJ-TV highlighted Clear Secure’s kiosk’s introduction at Newark Liberty International Airport with Sarah McKeon, Deputy General Manager Port Authority NY & NJ, saying, “this innovative approach to getting passenger processes improved is aligned directly with the Port Authority’s mission of providing a high level of service to our passengers, in infrastructure that was built years and years ago, and we are struggling to keep up with the passenger demand of today.”

It is pronounced that the modern American infrastructure was not updated long enough to keep up with a globalized economy. Compared to Incheon International Airport in South Korea, Changi Airport in Singapore, or Haneda Airport in Tokyo, any American International airport is a relic required to function well beyond its retirement. Without being a frequent air traveler myself, it is easy to understand why 5.6 million members, as of March 31, 2021, have enrolled in Clear Secure’s services.

On February 28, 2019, Madison Square Garden added Clear Secure’s kiosk at its site allowing “fans fast, easy access into Rangers and Knicks games, as well as concerts and special events at the World’s Most Famous Arena” [1]. Madison Square Garden is not the only New York location that includes the kiosk as an entry point, with Citi Field and Yankee Stadium serving as the others. In tangent, the kiosks can also be found in Globe Life Field in Dallas, Coors Field in Denver, AT&T Center in San Antonio, Oracle Park in San Francisco, and Earthquakes Stadium in San Jose. The same principle of expedited, seamless, and frictionless entry probably served as a catalyst for adoption at such significant stadiums in the United States. It would not be outlandish to say that nobody likes waiting in lines. Newton’s Law of Inertia postulates that a body at rest or in motion remains in that trajectory unless a force is acted upon. Waiting in lines is the complete antithesis of Newton’s postulate, since the force being relied on to move the line are multiple parties ranging from the social distancing measures, the stride length of the person standing in front to the attendant at the counter. By eliminating all those variable factors, a robust kiosk that uses the power of biometrics would be valuable in offering an easy entry to the sporting or music event without the unpleasant memory of waiting in line.

Clear Secure is not limiting itself to airports and stadiums. According to their S-1 registration statement released on June 23, 2021, the company identifies two other opportunities as “addressable market” opportunities, which offers a broader perspective to identify the company- Location Access and Hospitality. The company identifies 115 million knowledge workers and approximately 1.3 billion hotel room nights occupied in 2019 as data points for potential in other fields. In essence, the company is looking to serve as a reliable partner to consumers looking for more accessible and frictionless entry into experiences using visible biometrics and not material identifiers.

Since the company went public on June 30th, 2021, there are not many press releases to evaluate financial performance. Although the company started in 2010, its S-1 statement includes financial data for the Fiscal Year 2019 and 2020. For FY 20, the company generated $230.80 million in revenue compared to $192.28 million in FY 19. Net Loss for FY 20 was $9.31 million compared to $54.22 million in FY 19. Free Cash Flow at the end of FY 19 was $4.82 million and rose to $21.71 million for FY 20. Due to the limited financial data, it is challenging to claim solid or weak financial history. So reading up and listening to current management was helpful.

The current Chief Executive Officer, Caryn Seidman-Becker, was titled “The Fixer” by NBC News in The 7 Most Powerful Women to Watch in 2014. Ms. Seidman-Becker purchased the previously bankrupt Clear platform for $6 million in April 2010 and has turned it into an investible publicly traded company. In the 2014 publication by NBC News, Ms. Seidman-Becker mentioned, “We saw that Clear could be very successful if we ran it like other businesses that we had been involved with, and that’s about thinking about the lifetime value of a member … and how to run an efficient organization.”

In 2019, Ms. Seidman-Becker presented at the U.S. Chamber of Commerce, where she mentioned one pronoun and one noun consistently- “you” and “platform.” Even though the presentation is two years removed, the enthusiasm surrounding the platform and interface by Ms. Seidman-Becker should be encouraging since she speaks to building an ecosystem. An ecosystem that doesn’t rely on material identifiers like identification cards to verify identity. But an ecosystem that accepts every individual using the characteristics that make them unique.

I’m not sure where the share price will be moving forward since share prices fluctuate on a given day. However, what I am sure of is Clear Secure Inc is a platform and not a software/application. Much like the ecosystem of Amazon Prime or the Apple/Google App Store, Clear Secure is a platform enabling others to create seamless and frictionless experiences. Overall, it just seems like an exciting stock not to miss with a current market capitalization of approximately $4.0 billion. I would not be surprised to hear the inclusion of such technology in industries such as movie theatres and amusement/theme parks.