Billy McFarland was all smiles as he walked into a holiday party in December 2015, flanked by an entourage decked out in blazers and puffy coats. The DJ cranked tunes, a snow machine spit out flakes and his business partner, rapper Ja Rule, grabbed the mic for a throwback set. McFarlands Black Card-like club, Magnises, had just expanded to the nations capital, its first foray outside New York. Next up was San Francisco, with plans for Chicago and Boston. It was time to celebrate.
And for a little while, he did. Over a few years the credit card-thin idea had attracted millions of dollars of investment capital and some favorable press. Parties, special events and some big names helped push McFarlands brainchild past initial hurdles. But in the end, it was not to be. Another McFarland idea, one for a Bahamas music festival to hype his talent-booking service, Fyre Media LLC, would help bring it all tumbling down.
In late April, thousands of moneyed millennials flocked to the Caribbean for Fyre Festival, expecting a beach bacchanal. Instead they found “Lord of the Flies,” replete with a scramble for food and shelter that was picked apart in a global media frenzy. For McFarland, then 25, it ended even worse: He was charged with wire fraud and faces a dozen lawsuits. Federal prosecutors alleged he cheated investors in the startup out of $1.2 million by luring them in with bogus documents overstating its revenue.
Now, with McFarland exploring a possible plea deal with the government, expansion plans for Magnises have been scrapped. Theres little left of the company today, according to people familiar with its operations. Executives have departed for other jobs, the customer experience team fled to a former business partner andwhile the website is still existstheres no way to sign up.
Magnises, a word that doesnt really mean anything, was meant to be a passport to everything. For $250-per-year, members would gain entry to exclusive celebrity events, a concierge service to score hard-to-get concert tickets and restaurant reservations, and access to a swanky, shared hangout pad. Theyd also get to meet up with other wealthy young folk who like to party: entrepreneurs, businesspeople and entertainers.
The idea, McFarland has said, was that millennials want exclusivity, parties, accessnot airline miles or discounted appliances. So he came up with something to give the veneer of status with the ability to networkbasically an Amex Black Card for the man-bun set. Only the Magnises card isnt a credit card at all. The metal rectangle simply duplicates the magnetic strip from your actual credit card so you can swipe with style, as opposed to fishing out some pedestrian, bank-issued plastic from your wallet.
Still, the Black-Card wannabe did deliver some New York swank, from the hottest hotels to the most exclusive clubs. Magnises hosted gatherings at such chic venues as the Hotel on Rivington and the Gansevoort. Rapper Wale headlined the companys first holiday party. A Magnises fashion show attracted actress Rosario Dawson, Richard Fortus from Guns N Roses and Cobra Starship front-man Gabe Saporta. A Brooklyn party featured rapper Rick Ross with fire dancers. The startups first anniversary blowout at Space Ibiza starred Juelz Santana and Ace Hood. Shaggy even played downtown Manhattans luxe Tao restaurant under the disco ball.
Despite the hype and the stardust, though, it was never clear just how well Magnises was doing. In 2014, Magnises told the press it had around 1,200 members. The companys WeFunder page claimed over 10,000 members. In September 2016, McFarland said he had 30,000 cardholders. Two months later, at a conference in Portugal, he claimed 100,000 customers, which would mean Magnises had staggering annual growth in just two years. McFarland said last year that his goal was to attract 1 million members across 50 markets by 2019.
McFarland, who is free on bail, and his lawyer didnt respond to multiple requests for comment about the fate of Magnises.
McFarland appeared on the New York startup scene in 2011, when he was just 20. Raised in New Jersey, he had attended a prestigious preparatory school before going to Bucknell University. During his freshman year , he dropped out and founded a company called Spling, a platform for online advertising, and was accepted into startup accelerator Dreamit.
In 2013, Magnises was born. Early on, McFarland met Ja Rule, whose real name is Jeffrey Atkins, while booking the rapper for a show. (As McFarland tells it, they met while sharing a helicopter ride.) Atkins joined Magnises in a creative role before going on to help McFarland start Fyre Media. A representative for Atkins said the musician had no operational role in Magnises.
McFarland surrounded himself with characters, famous and attractive, but spent little time running his startups, according to a former co-worker who requested anonymity. Colleagues described him as uncannily persuasive, easily earning the trust of investors. With McFarland as pitchman, Magnises and its dozen or so employees raked in cash from Deep Fork Capital, an early stage fund based in Menlo Park, California, and New York-based Great Oaks Venture Capital. They injected as much as $3 million into Magnises, according to the startup, though neither firm now lists the company on their websites. Advisers with a variety of backgrounds hopped aboard, such as socialite Dori Cooperman and Avi Savar, who runs Dreamit, according to their LinkedIn pages. Matt Morchower, formerly an executive at a private-jet card company, joined up as chief operating officer, though he left within a year. Morchower declined to comment, while the rest didnt respond to requests for comment.
When McFarland wasnt pitching insiders, he was pitching the public. He went on Fox Business, CNBC and Bloomberg TV. His company was also profiled by the New York Times. Sometimes appearing alongside Ja Rule, McFarland was continuously puffing up his product, using the same talking points almost verbatim. He speaks with a rapid staccatoevery phrase ending abruptly as he hopscotches from one marketing buzzword to the next.
“Its less a calling card,” he said in a 2014 Fox Business interview, a wide grin splashed across his face, “and more of an on-demand experience platform.”
Early on, home base for Magnises was a townhouse in Manhattans West Village, which was used to host parties and dinners for members. The well-appointed building was a co-working space by day, with tables to spread out laptops and papers, and a fancy frat house by night, replete with booze for carousing. McFarland conducted business meetings at the location, and he even made all the Magnises metal cards on site.
The landlord wasnt pleased. In a $100,000 lawsuit filed in 2015, the owner alleged that McFarland used the residential space to conduct commercial business, leaving the building “trashed.” McFarland “damaged and destroyed several windows and virtually all the kitchen appliances” and left the townhouse “in a state of total disrepair, rubble, and disarray,” according to court papers. McFarland largely denied the main allegations in court filings. The case was settled in January 2016. Magnises subsequently decampedfor a more traditional office some blocks north, in Manhattans Chelsea neighborhood.