Unless you have blocked all social media channels at once for the past few days, you have heard of Fyre Festival: a luxury, millennial-focused music festival (tickets sold for up to $12,000) that quickly turned chaotic.
— CNN International (@cnni) April 29, 2017
The now-cancelled festival organizers are currently facing a $100 million class-action lawsuit.
Among those founders is Billy McFarland, a 25-year-old founder of several startups, including Magnesis.
The company originally started as a luxury, invite-only black card, which was supposed to give millennials the “white-glove” treatment that is usually provided by, for example, Amex for Centurion Card members (that millennials can’t afford). The card was intended to provide millennials with perks that they can actually benefit from — like restaurant reservations, gym memberships, or luxury travel points. The card, however, was a kind of a fancy metallic “wrapper,” which still linked back to your regular bank card via a magnetic strip. The membership cost users $250 a year.
In the early days of Magnesis, McFarland told Bloomberg:
All these financial institutions that are based on debit and cards have become a commodity, and don’t really affect the lives of millennials. So, we saw that as a huge opportunity to build this product that affects, enhances, and really improves your everyday life in the city.
Soon after, the company turned Magnesis into Magnesis Now — a mobile app that lets users buy tickets, book restaurants or travel, and includes the same perks of the discontinued black card. However, that venture did not go very well either; reportedly, a lot of customers complained about not receiving their tickets on time, or having them cancelled last-minute (yes, just like Fyre). Besides, sans the fancy-looking card, Magnesis became just another ticket-buying, restaurant booking app, of which there are many (and for free).
So why didn’t this luxury card (or Wallaby card, or Coin, or Stratos) stick around?
For the past 3 years, our mission here at Plastc was to build and deliver the most technically ambitious smart card on the planet. After making enormous leaps in development, product innovation and progress towards our goal, Plastc has exhausted all of its options to raise the money it needs to continue.
As one reddit user notes, the technology of those products is becoming obsolete:
This technology could have been cool a couple of years ago, when it was initially supposed to launch. But with the ever increasing penetration of paying by phone into the marketplace, this type of technology is practically obsolete. Stratos was another company trying to bring this technology to the marketplace the same time as Plastc. Stratos quietly went under. Same deal, little hope of a refund. Especially if you made a pre-order early on.
Lesson learned…..pre-orders are for suckers. Wait until the product is actually in the wild and evaluated before putting your money in.
As for McFarland:
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Plaintiffs: We're suing you for $100mm because you and #fyrefestival are a fraud
Defendant: Can I charge that to my Magnises card? pic.twitter.com/lYYyX6CPQc
— Kenny (@mkenny654) May 1, 2017