Members of a private club for 'elite' millennials say it isn't delivering on its promises
But three years after the company's launch, some members are complaining that the service hasn't delivered on what was advertised.
Business Insider spoke with seven current and former Magnises members, all in New York City, who recounted similar stories of not receiving tickets on the timeline promised, of having to rearrange plans multiple times because of the startup's scheduling snafus, and of trips being canceled outright - sometimes the day before they were scheduled to take place. Several of the members said they received unwanted charges to their credit cards from Magnises, which in some cases took more than a month to refund their money.
Magnises members pay a $250 annual fee that allows them to attend happy hours and other events. The company works with concierges who can arrange restaurant reservations, book travel, or make suggestions for things to do in your city.
Members make all these arrangements through an app called Magnises NOW.
Since its inception in 2014, the New York-based startup has expanded to Washington, DC, and San Francisco. It now has nearly 40,000 members. Though roughly 60% of those members are still in New York, it's a large increase from just 12,000 members in February 2016.
Founder and CEO Billy McFarland said the startup has raised $3.1 million in venture capital since its founding, and it has been cash-flow positive for the past year. It has 25 employees.
According to accounts from current and former members, Magnises' customer-service reps generally blame the company's shortcomings on its being a fast-moving startup that's constantly responding to customers' requests for new features.
"We've hit some roadblocks along the way, and that's what happens when you grow really quickly, and that's on me," McFarland said.
From the beginning, a place to party
When Magnises launched in 2014, operations were based in a West Village townhouse where the company would host parties and networking events. To join, prospective members would fill out an online application that was reviewed by the Magnises team.
"I brought friends to the townhouse for happy hours and that was really fun," said one former member, who wished to remain anonymous. "People worked all across the board - marketing and finance, or they were entrepreneurs. It was definitely a young professional crowd."
Magnises was originally known for a black card that would be linked with a member's bank or credit card for payment purposes. By flashing your Magnises card, you could get discounts at restaurants, bars, or clubs and reserve experiences like private concerts and luxurious getaways.
"We're building a complete platform that connects millennials with new businesses, online and offline. One thing that everyone carries with them at all times is their debit or credit card," McFarland told Business Insider in July 2015. "So we tied it to that." Since then, the company nixed the black cards in favor of the digital app.
Magnises moved out of the West Village townhouse and into a penthouse at the Hotel on Rivington. Though it still uses that penthouse space for summer happy-hour events, Magnises bases most of its operations out of the Jue Lan Club in Chelsea. Over the years, the company has offered plans that give members access to everything from coworking facilities to the most exclusive nightclubs in New York.
Last year, Magnises started to shift its focus from a club for networking and happy hours to one that could get its members tickets to the coolest events in town. It started offering hard-to-come-by tickets to concerts by artists like Rick Ross, Ja Rule, and, later, bigger names like Beyoncé, Adele, and Kanye West. Magnises would purchase these tickets from a third-party vendor and resell them to members.
For many of those who decided to join Magnises in the spring and summer of 2016, easy access to these in-demand tickets was a major draw.
"We've sent 5,000 of our members to concerts or shows like 'Hamilton' since May," McFarland recently told Business Insider.
But it seemed as more people signed up for Magnises, it became more difficult for the startup to fulfill its ticket requests.
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.
Just before Beyoncé's concert at Citi Field in June, the same member said they received the standard email explaining that Magnises would no longer be able to provide the tickets as promised and offered to switch the tickets for a show the following day. After complaining, the member did end up getting tickets to the original show they had planned for, but they were surprised to see that the tickets they were given had someone else's name on them.
According to accounts from several Magnises members, the startup will often try to placate those affected by cancellations by offering them tickets to future events. And though the members we spoke with did say their issues were ultimately resolved, it was often only after days of rescheduling and back-and-forth with the company. Three of the former members we spoke with said they were asked to delete negative tweets by customer service reps who explained the mix-ups by saying that Magnises was still a startup working out the kinks of its business.
Problems escalated last year when Magnises started promoting tickets to "Hamilton" online and through its concierge app.
"Signing up for it was seamless. I bought four tickets for an October show," Pearce Delisle, a former Magnises member, told Business Insider. "I checked in [with Magnises] multiple times to confirm where the seats were and if they were together. They told me they couldn't confirm the seats until the day of. The friend who I had bought the tickets with had moved away, so they needed to fly in.
"Two days before the show I got the email to cancel," Delisle said.
Magnises' terms of service do warn about the possibility of cancellations: "All tickets for concerts, shows, and sporting events purchased through Magnises are subject to availability. Magnises cannot guarantee that groups of two or more will be seated together ... Magnises is not liable for the cost of travel arrangements or accommodations made as a result of ticket purchases. Tickets may be canceled and the cost refunded in full up to 10 days before the ticketed events, after which time all sales are final."
Several members have said that the point of paying $250 for an annual membership is to bypass the challenges that consumers sometimes face in gaining access to popular events. Some said their tickets have been rescheduled two or three times as a result of various problems Magnises encountered in planning.
Delisle, for example, had to reschedule his October tickets for a December showing of "Hamilton," so the friend who needed to fly in for it rescheduled his flight. The day before the show, Delisle received an email that was nearly identical to the first, saying that Magnises would no longer be able to provide the four tickets he had purchased (for a total of $1,200).
"The whole value proposition is providing access to these events and twice they failed to deliver," Delisle said.
He rescheduled his tickets for a third time and made plans for his friend to visit for the show on January 6. By 3 p.m. on the day of the show, he had yet to receive his tickets from Magnises, which said it would send his tickets by email to print out. After waiting at a FedEx location for an hour, Delisle was told his tickets would be at the theater's will call. When he went to the theater, the tickets weren't there.
The Magnises concierge then helped coordinate a drop-off at the restaurant where Delisle would be eating dinner just before the show.
"I did have a good experience talking with the VP of customer service at that point," Delisle said. "She was very professional and sympathetic and said, 'We'll prioritize yours.'
"It's just so stressful because once you start involving other people, the pressure is on you to deliver."
Delisle did end up enjoying the show, as did fellow member Victoria Reitano, the founder and CEO of the social media marketing agency CreatiVix Media.
"I will say they were a little scattered," Reitano said. "But the tickets were great seats, and it was a great experience."
McFarland, for his part, doesn't seem thrilled with the way the ticket service has worked out for his customers. While he said that most of the ticket sales have been a success, he still wants to make things right for those who have had a bad experience, which he said is about 5% of members.
"Our system was amazing when we had 18,000 members or 20,000 members, but once we got up to 40,000, we ran into some roadblocks scaling with our vendor," he told Business Insider. "We need to figure out a better relationship so that we can get to what we promised. We're having growing pains and it's tough, and we have to get through it."
At the same time customers were experiencing issues with Magnises' ticket vendors, the startup was advertising even more special deals for members.
Two years ago it launched a feature called Magnises Air, which was primarily focused on shuttling members from New York City to the Hamptons on SR-22 planes. McFarland said that 175 of these flights between Manhattan and the East End have taken place.
But last July, Magnises started advertising a new set of private flights, most of which would take members much farther than the Hamptons.
"Introducing Magnises Air: All Access - serving private flights to and from six of the most exciting experiences of the year. Flights are $1,650 each or any four for $4,000," the email read. "You'll be traveling in the SR-22, aka the 'Ferrari of the Sky.' Its size and versatility allow us to access hard-to-reach locations and smaller airports closer to your destination."
According to the promotional email, private flights would be offered to six destinations: New Orleans for a Ja Rule and Ashanti concert, Cuba for Columbus Day weekend, the Outer Banks for a weekend of kitesurfing, Miami for Art Basel, Lake Placid for a weekend of skiing, and a trip for NBA All-Star weekend.
Robert Egan, a former Magnises member who works in private wealth management, decided it was a good enough deal to buy two tickets for two different trips: to Cuba in October and to Miami for Art Basel in December. The four tickets totaled $4,000. Egan said it took several months for Magnises to charge his credit card.
"When they did finally charge me, there were no details at all about the trip - where we were flying to exactly, where we would meet, or anything like that," Egan said. "It was one week before the trip to Cuba, and I still had no information. But then we get an email that the trip was canceled because of Hurricane Matthew, and that it would be rescheduled for the same weekend as the Art Basel trip. They said it wasn't deliberate, and they refunded my $2,000 for the Miami trip within 24 hours."
Then, a month before the trip, Egan said he received an itinerary so detailed that he stopped asking questions about the logistics of the flights. According to the itinerary, the Magnises group would visit the Parque Morro, tour Ernest Hemingway's home, and explore the Viñales Valley by Jeep.
But then, the day before the rescheduled Cuba trip was set to take place, Egan received another email that the trip would be rescheduled yet again, this time because Cuba was in a mourning period after Fidel Castro's death. A representative for Magnises told Egan that there was no travel allowed to Cuba at all during that period.
"I called them out on it, since I knew people who were going to Cuba that week. I told them, 'For me to believe you that this trip was actually going to happen, send me a copy of our visas, or even our visa applications. There should be some kind paper trail,'" Egan said. "And they said, 'We'll provide you with confirmation when it's rescheduled.'"
Around the same time, Magnises charged Egan $250 to renew his membership for the following year, even though it was December, and his membership would not have reached the one-year mark until February.
"That's when I lost it. They said the refunding would take 10 days. I work in finance, and I know no transaction that small would take that long. I reported it to AmEx, and they immediately credited my account," Egan said.
According to The New York Times, it's common practice for organizations planning travel to Cuba to provide those in the group with the necessary tourist cards. When asked whether the paperwork for the Magnises group to visit Cuba had indeed been completed, McFarland told Business Insider, "Yes, the visas exist. We work with a travel-guide company who gets the visas for us."
Magnises did end up refunding all of Egan's money, though the membership-renewal charge took nearly a month to get back. The startup's website is still promoting private flights to Miami and the Bahamas for 2017.
McFarland explained that the trips are being arranged by several Magnises members who are pilots and operate their own planes.
"The Cuba trip is going to happen," he said. "It's in the members' hands now. They just have a list of dates they have to pick."
Early charging of renewal fees
Another member, Elise Omaits, ended up filing a complaint with the Better Business Bureau after Magnises charged her five months early to renew her membership. She didn't receive a refund until a month after contesting the charge with Magnises. Three other former members Business Insider spoke with reported similar experiences.
"I basically wasn't planning to renew because it wasn't really my flavor," Omaits told Business Insider. "Two hundred and fifty dollars is a lot for me - it's basically an entire month's budget of going out. Plus, this was right before Christmas. I'm mad because I didn't feel like I had the great experience that was advertised to me."
In a follow-up call, Magnises told her that about 100 people were affected by early charges because of a problem with Stripe, the payments system that the startup uses to process its memberships. Magnises' customer-service team requested that Omaits take down her Better Business Bureau complaint and added that the startup is growing is so quickly that it didn't have the time to offer proper apologies to each of its members.
The Better Business Bureau lists three resolved complaints on Magnises' profile from the past year.
The startup's terms of service do include a section about membership fees. It reads: "Unless a cancellation request is made ahead of your renewal date, the annual fee, subject to change, will recur in the last week of the month prior to your renewal month. There is no year-to-year cancellation fee."
McFarland blamed the error on technical difficulties: "We've been slowly switching our processors over the last few months since we've grown. We're growing super fast, and we fix things when they go wrong."
Despite the hiccups it has faced, Magnises continues to expand the perks it offers members. In December it launched SportsPass, which offers members lower-level tickets for events at the Barclays Center, including Brooklyn Nets and New York Islanders games. It recently announced a partnership with Glam & Go, which aims to give members discounted pricing on blowouts as well as other wellness perks like discounts at Cyc Fitness and personal training at Equinox.
Its planned events in December included a shopping experience with Shinola, and McFarland said the team is working with Lululemon on what he described as a wellness kickoff to 2017.
"Our general theme now is how we can impact the member on a daily basis," McFarland said.
Of course not all services offered by Magnises have caused headaches for members. Reitano, for example, has attended a number of the startup's free events, and Delisle did use Magnises' concierge service to book restaurant reservations. But he said that Magnises typically uses the booking app Resy to make these reservations, and even asked Delisle for his login information so they could do it for him.
"There's really no added value there," he said.
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