The Disastrous Fyre Fest Isn’t the First Sketchy Business Venture From Co-Founder Billy McFarland
Much has been made of the fact that Fyre Festival, the luxury music fest turned Lord of the Flies scenario going down in the Bahamas this weekend, was backed in part by Ja Rule. But Ja isn’t solely responsible for the nightmare, and the business history of Billy McFarland, his Fyre Media cofounder, might provide some insights as to what went wrong at the festival.
Fyre Festival, a weekend-long event in the Exuma Islands of the Bahamas, was billed as a “a cultural moment created from a blend of music, art, and food,” with tickets that sold for up to thousands of dollars each. (Read more about it here.) On social media Thursday evening and Friday morning, attendees posted about cancelled flights, limited access to food and water, and nasty-looking cheese sandwiches. Blink-182, one of the top-billed performers, has already dropped out. It’s still not exactly clear what went wrong, but it seems likely that Fyre’s organizers were in way over their heads–a hypothesis that was being put forth in gossip publications like Page Six weeks before the festival even began.
This isn’t McFarland’s first poorly planned venture. The 20-something entrepreneur also founded Magnises, a kind of social club that originally aspired to be the American Express “black card” for millennials. New members paid a $450 entry fee for the privilege of carrying around a credit card-sized slab of shiny black metal in their wallets. But it wasn’t really a credit card: as the New York Times noted in a 2013 piece about Magnises, “It is just a way to dress up your everyday Wells Fargo or Bank of America card. Magnises simply transfers the data from the magnetic strip of that old card onto its blank metal card, like copying a CD, and then the Magnises card can be used in place of the original.” At some point along the way, Magnises nixed the black card idea in favor of an app, transitioned to a $250 annual fee, and got rid of an early provision that allowed members to sign up by referral only.
If not for access to funds, what’s the point of signing up? Magnises promises its members “valuable benefits and members-only offers.” The company’s website currently advertises small discounts on services from startups like Cleanly and Handy, plus a list of past Magnises perks, such as access to reserved tables at the season-opening night of the Southampton nightclub AM last year. Many of the listings on the site are for offers that have already expired.
Earlier this year, Business Insider published a detailed story headlined “Members of a private club for ‘elite’ millennials want their money back.” Based on interviews with seven Magnises members, it alleged that Magnises didn’t quite live up to the top-dollar experience it offered. Members said events they’d purchased tickets to were frequently canceled or rescheduled on very short notice, and that they sometimes received unwanted charges on their credit cards that took multiple weeks to be refunded. One member’s story, via Business Insider:
One former member, who also spoke on condition of anonymity, said that they bought several tickets for several events — including Beyoncé’s concert at Citi Field, one of Adele’s shows at Madison Square Garden, and a performance of “Hamilton” — soon after joining Magnises in February 2016.
This member claims to have had logistical issues with nearly every event for which they had purchased tickets. Each time, just before the show (often the day before the event or even the day of) a representative for Magnises would send an email explaining that the startup would no longer be able to provide the purchased ticket and offer to help reschedule the seat for another date.
“They send the same email for every problem, but it’s like fill-in-the-blanks for what the problem is,” the person said.
In summer 2016, the company began offering private flights to exotic locales. One such trip was to New Orleans, where members would attend a concert by Ashanti and… Ja Rule. A former member named Robert Egan said he booked trips to Cuba and Miami via Magnises, and that after a series of cancellations and rescheduled flights, he came to believe that the company had not even secured the necessary visas to travel to Cuba. He ended up taking neither of the trips, and the experience prompted him to cancel his membership.
Based on testimony from Magnises members and Frye attendees, it sounds like each business operated on a similar model: promote an aspirational lifestyle of glitz and exclusivity, charge a lot of money membership, and fail to deliver on the promised experience. We look forward to seeing whatever scheme McFarland comes up with next.