In case you missed it, the internet's favorite obsession last week was engaging in schadenfreude via following the #fyrefestival hashtag on social media - the result of a lavishly expensive music festival in the Bahamas going disasterously awry, with scores of trust-fund Millennials ending up stranded on a desolate Bahamanian beach with no music, scant food and shelter, dangerously inadequate security and infrastructure, and even packs of feral dogs roaming the beach. The ostensible purpose of the Fyre Festival - to extract ridiculously high ticket prices (anywhere from $1,000 to $250,000) from the Millennial 1 percent - highlights other entrepreneurial attempts to part Millennials from their money. Bloomberg details the rise of Millennial social club cards, which offer credit card-like perks to wealthy Millennials looking for exclusive VIP experiences.
By Rick Ferguson
By Rick Ferguson
The Fyre Festival was the brainchild of rapper Ja Rule and entrepreneur Billy McFarland, who also founded Magnises, a members-only benefits card program that caters to well-heeled Millennials. Along with similar card programs Select and Founderscard, these programs offer exclusive VIP travel, club, dining, and entertainment experiences to an exclusive group of cardholders. Memberships are invitation-only and - for now at least - offer benefits only in top-tier cities like New York, San Francisco, Los Angeles, Chicago, and Miami. Each card program has its unique niche:
- Magnises, with approximately 30,000 members, has a $250 membership fee and offers an app-based concierge service to provide insider access to exclusive events and a "Clubpass" for no-wait entry into the hottest clubs.
- Select Card features 10,000 members and a $300 annual fee; the benefit are similar to Magnises but require members to link a credit or debit card to their Select Card accounts - although why that linkage is required, it's hard to say, since the program offers no promotional currency or other benefits in exchange for the linkage. According to Bloomberg, the average annual income of Select's members is $280,000.
- Founders Club caters to Silicon Valley entrepreneurs, promising them exclusive access to events that allow them to mingle and network with potential investors around the globe. The program currently boasts around 20,000 members, with a $795 annual fee.
All three programs provide luxe metallic cards as well as the requisite apps to access offers, benefits, and concierge services. While none of the programs are spending programs per se, the companies see themselves competing with credit card reward programs for Millennial mindshare. Money quote from Bloomberg:
"Asked who he sees as Magnises' rivals, CEO Billy McFarland named rewards credit cards; Select CEO Carlo Cisco also sees the cards as stiff, if indirect, competition. And like those competitors, the clubs each offer a sleek membership card. Employees and members of all three described theirs as 'sexy.'"But beyond the parties, deals and alluring cards, millennials say they're joining the clubs for the sense of community. 'This group is a unique group,' explained Jerome Hardaway, the 30-year-old executive director of the nonprofit Vets Who Code and a Magnises member. 'They've earned it. It's not just the hoity-toity, old-money field. It wasn't the events that brought me in; it's the way they were catering to millennials.' He uses the club to reach out to likeminded entrepreneurs and build relationships with members interested in his charity work, and he plans to re-up his membership next year."
While none of the programs offer age restrictions on membership, don't expect swift approval of your application if you're old enough to remember watching Seinfeld or Friends as an adult. Whether Millennials age out of these programs to be replaced by Gen-Z trusties remains to be seen.
What insight can we take from the rise of these progams? Perhaps this: When traditional upscale retails currently watching their sales shrink precipitously wonder where their customers have gone, these social card programs provide a clue. They cater to young adults who don't care about owning the latest Robert Graham shirt or Louis Vuitton handbag, but are willing to shell out thousands of dollars for a chance to party with Ja Rule on a remote stretch of Bahamanian beach. The Fyre Festival may have been a disaster, but it is an object lesson: Millennials prize experiences above all else - and they're willing to pay for the privilege.
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.