The verdict is in: Millennials like "black cards."
Just 18 months after launching, New York City-based membership organization Magnises is gaining traction with young professionals who value perks similar to those offered by American Express, but it instead links directly to members' existing debit and credit cards. It's also attracting big brands such as Samsung and Tesla that want to connect with these elusive but aspirational consumers.
Founded by 23-year-old entrepreneur Billy McFarland, Magnises charges its members $250 a year to attend exclusive events, conduct meetings in its private spaces, and use its "digital concierge" mobile app. The app lets members send text message requests for things like restaurant recommendations and uses an algorithm, based on their stated preferences, to match people with places they'll enjoy. Some of the perks members can expect when they arrive at restaurants include complimentary dishes or a bottle of champagne.
Magnises has more than 8,000 members in New York City, more than 1,000 in Washington, D.C., and $3 million in revenue since launching last year. On Monday, the company announced it will expand its services to Boston and Chicago before the end of the year. It is also introducing a $25 monthly membership fee as an alternative to the $250 annual fee.
The key to Magnises's business model, according to McFarland, is having the ability to help large brands market their products and services to young people. "They need to do it, and they're not sure how," he says.
McFarland had the idea to start the company when he realized he was decades away from being able to afford an Amex black card, a coveted item for many Millennials. He also felt the traditional concierge model was due for a digital upgrade.
A freshman-year drop out from Bucknell University, McFarland is also the founder of content-sharing site Spling. He raised the startup capital for Magnises from Deep Fork Capital, and has attracted a total of $3 million from investors including New York City-based Great Oaks Venture Capital.
Along with its Boston and Chicago launch, Magnises is also opening seven private member spaces Monday--three in Washington, D.C., and four in New York City. The company opened its first private location for members, the Hotel on Rivington penthouse in downtown Manhattan, in June. The spaces operate essentially as clubhouses where members can work or socialize over a free drink.
McFarland says Magnises's main competitor is American Express, but that Millennials prefer more local, community-based services. Magnises offers this by hosting weekly networking events and by having companies sponsor exclusive parties for its members.
Brands that want to gain exposure to Magnises's membership base can advertise by hosting events or through push notifications sent through the company's app. Around 70 percent of Magnises's revenue comes through membership fees, with the rest coming from advertising and event partnerships.
When it comes to word-of-mouth advertising, "it's our most powerful marketing tool," McFarland says. "It turns all of our members into salespeople for us."