May 16, 2019

Ask IH: Skip Every Line with 1 Membership?

Peter Lee @Peter123hi

My friends and I are wanting to create a business similar to Clear (skipping airport lines with biometrics):

  • we partner with events, restaurants and venues that typically have long lines
  • we pay our partners to have an exclusive line for our members
  • our members who pay us a flat-rate monthly membership fee to have access to these exclusive lines and skip the main line

Rough, sample business model:

  • $40 / mo to skip lines to the top 100 events/restaurants/venues
  • 10,000 members in our program
  • $40 * 10,000 = $400,000 generated
  • 80% rewarded to our partners ($320,000) = $3,200 to each partner (on average, distribution will be calculated based on check-in volume)
  • 20% ($80,000) re-invested into our program's marketing, ops, etc.

Potential issues:

  • businesses with long lines don't have incentive to open an exclusive line because they don't need new revenue streams

We're not sure if there are potential problems with the idea or in the business model. Any feedback is greatly appreciated!

#idea-validation

  1. 1

    A few pitfalls I see that can be fixed with more details and more understanding of your customers.

    A. 20% profit looks really low on this and in fact you claim to only need $80k per month for operations. I would do this in reverse. Figure out what you need in Cost of Goods. If you take on the risk and price of physical setup and tech, you should be able to take a much larger cut. The money you are paying is found money for the events.

    B. You may want to pick one of the three because events, restos and venues all operate differently.

    C. As a consumer $40 seems actually cheap to me. But looking at how a consumer may use this.. how many of 100 venues would they really go to each Month? Hard to say that anyone would do more 3 or 4. How does this compare to other options? Disney MaxPass is $15 per day. If I go to disney 3 times thats $45. Compare also to Loyalty cards and Credit Card perks... Coachella VIP are hundreds of dollars more than a reg pass. EDC $319 reg. $499 VIP. Just using these to show that ppl will pay more. Perhaps $100 or $200 per month if the perks are right. Then you can spend well on CAC.

  2. 1

    Sounds like an improved reservation system utilizing more than the standard call ins and web apps. Sounds interesting maybe automate tips and checkout all via the app. Your idea reminds me of Netflix founder idea of moviepass.com which isn't relevant but their idea is very attractive.

  3. 1

    A popular restaurant will have long lines because there are no tables available... So having an "express" lane will not get you seated at a table faster. Plus, one can do "call ahead sitting" and have your name entered on the waiting list before you even arrive at the location.