by Brendan O’Connor
On Wednesday night, around a hundred or so good-looking and successful twentysomethings (“Millennials”) gathered at a penthouse twenty stories above the Lower East Side. The majority of them were members of something called Magnises, a kind of social club for the aspiring entrepreneurial class. Magnises was founded two years ago by the broad-shouldered and affable Billy McFarland and the equally broad-shouldered but quieter Martin Howell. Until last month, Magnises operated out of a townhouse in the West Village; two weeks ago, they moved to the Hotel on Rivington, the penthouse of which was already being used as an event space.
“Our sunset cocktail hours have obviously been a huge hit, because — well, for obvious reasons,” Howell said, nodding to the view of Manhattan as we stood on the penthouse balcony. “People like to come down here, enjoy the sunset, enjoy the air of exclusivity. People love to bring their friends along too, because they know, without me, you wouldn’t have access to this. You know what I mean? It’s the kind of thing, we allow members to bring guests and then that makes the member feel all the better — in a Soho House way.”
“It’s been sort of interesting for us, as influencers,” Howell told me. “A lot of the members haven’t really been exposed to the Lower East Side at all, or in a very limited way,” he continued, “so the feedback’s been great: ‘Wow, we had no idea that the Lower East Side was, like, up and coming.’ Which is also why it’s great for us to work with local partners, with local small bars and stuff where we’re having one-off events, trying to bring the whole area up with us.”
A photo posted by spoiled nyc (@spoiled_nyc) on Jun 17, 2015 at 8:25pm PDT
Both Howell and McFarland went to prep schools in New Jersey: Howell, who is from Zurich, to the prestigious Lawrenceville School — when I told him that I went to a nearby, less prestigious boarding school, he grimaced, and then we laughed — and then on to the University of Virginia; McFarland, who is from Short Hills, to the Pingry School, and then on to Bucknell, although he famously dropped out after a year.
According to Streeteasy, the lot at 107 Rivington Street was sold in 1998 for just under a million dollars, at sixteen dollars per square foot. Then, in 2000, it was sold for 3.8 million dollars, at sixty-three dollars per square foot. At the time, according to the website of Eastern Consolidated, a real estate investment service who represented both the buyer and the seller in the deal, there was a two-story building on the lot with over nine thousand cubic feet of air rights. Now, there is the glittering, twenty-story Hotel on Rivington. At 139 Ludlow Street, no more than a block away, the venerable Soho House is renovating a historic funeral home, where it will open its second location.
The original idea behind Magnises had been to provide twentysomethings with a more accessible (but still exclusive!) version of the invite-only American Express Centurion card — the so-called “black card” — that carries a five-thousand-dollar initiation fee, twenty-five hundred dollars in annual dues, and a reported quarter-million-dollar annual spending limit. “I was at dinner at La Esquina with friends, and we were all talking about how much we wanted a black card,” McFarland told the New York Times in December 2013. “So, that night, I did a ton of research on how to add a magnetic strip to a metal card without demagnetizing it and ruining data,” he said. “I got ahold of a place in China that could embed the magnetic strip onto the metal, and I had one made.”
Most coverage of Magnises thus far has focussed on this: that it is “the hot new way to spend money among NYC’s young elite,” as the New York Post described it last August. The Magnises card — which is, of course, black — is not actually itself a charge card, but can be used, for two hundred and fifty dollars per year, following an application process heavily reliant on referrals, in place of one’s normal debit or credit card; it is, essentially, a clone of an already existing card. (Disclosure: I applied for a Magnises membership about a year and a half ago in order to write a story about the process, but didn’t get a call back after my first interview — how embarrassing.) “If you think about it, the bank that you have doesn’t really matter. You probably picked whatever was closest to your apartment, or your school, and never really changed,” McFarland suggested to me. “Why not make that brand represent who you are, more relevant to you?”
A video posted by Karina Mejia (@anirakdesigns) on Jun 11, 2015 at 4:53pm PDT
But McFarland went on to de-emphasize the importance of the card in what Magnises is looking to do. “The card is a lot of fun, and is probably the best marketing tool we ever could have had — because it’s a physical, tangible thing, because it reminds you of the brand — but the brand is about the community of people, and how we connect,” he said. “That’s the real value.” Later, Howell said, “It’s a business card that no one ever throws away.”
Like any good entrepreneur, McFarland’s ambition is to weave a “fabric” that clings to every aspect of people’s lives — or at least the lives of Magnises members. “The key,” he said, “is that we’re with them everywhere they go.” Late last year, he told me, the company closed a round of nearly three million dollars in funding; in the next twelve months, Magnises plans to open up spaces for its members to use in ten new cities — they’ve already launched in Washington, D.C., while Boston and Chicago will follow, in July — and release an app. “We have the Magnises card, so we’re constantly in their wallet; we’re on their phone, through the Magnises app; and then we’re in their city, with a physical space,” he said.
“When we first launched the card, we noticed that whoever had the card, they wanted to sort of identify with each other — they considered themselves cool or whatever it was, they wanted to bond with each other, but there was no community,” Howell said. “We needed to create a space for them to all increase their networking potential.” That was when Magnises decided to start renting out a townhouse in the West Village. “This was not the plan on Day One,” he added.
Soon enough, Magnises outgrew the townhouse — the organization currently boasts nearly seven thousand members. (Most of those are in New York, McFarland said; there are around five hundred in D.C.) Magnises has access to the penthouse at the Hotel on Rivington from 12 P.M. to 9 P.M. almost every day: In the afternoons, it functions as a kind of co-working space; at night, it’s used for events and networking. “We have people that come in, they’re in the Lower East Side, they want to use the Wi-Fi, shoot a couple emails. We have people that come and have full-on meetings, that come do interviews. We have people that come to impress clients. We have people that are just coming because they’re new to New York — we have a lot of internationals that are new to New York and want to meet new friends,” Howell said. “So we have sort of the full mix, which is also what makes it so exciting. We’re not just a business networking organization, and we’re not just a social club. We cover the full spectrum.”
McFardland was reluctant to disclose how much Magnises is paying in rent for the sprawling penthouse, which, including the balcony, comprises three floors. “It’s hefty,” he said. “More than we were paying before,” for the townhouse at 22 Greenwich Avenue, which was listed at nearly fourteen thousand dollars per month when it last rented in January 2014. “It’s tens of thousands a month. More than ten, less than fifty.”
Access to the penthouse is not exclusive to the Magnises, however: The hotel can still use it to host events for other clients. According to nytix.com’s guide to New York City hotels that host bachelor parties — apparently there are not that many! — the average nightly rate for the penthouse is seventy-five hundred dollars. When that happens — or when a member wants to use the space for a private events like “birthdays, private brand launches” — Magnises members are offered a special corner of the restaurant on the ground floor of the hotel, as well as access to a large, private dining room. “It’s a better situation than it was before. In the old space, when there were private events, we had to turn people away at the door, whereas now we just redirect them to another space,” Howell said. “That’s a big step up. We don’t have any off days.”
To pay that “hefty” rent, in addition to its annual membership fees, Magnises also pursues partnerships with brands who seek access to the kind of young people who would pay two hundred and fifty dollars a year to be a part of something like, well, Magnises. “So, Tesla will pay us to do a car-racing experience with all of our members. Samsung will pay us to have their engineers come and talk to us about the new Galaxy phone to all of our iPhone users,” McFarland said. “Our concept is, you can advertise to people on our web platform and our physical space — through these events and experiences. There’s all these touch points for brands to advertise.”
Rather than seeking those partnerships out, Magnises is able to generate them from within, using its membership’s connections. “Almost every partnership comes from a member,” McFarland said. “Whether a member works there or has a friend who works there, almost every event or partnership we make is from an inbound member saying, hey, we really gotta do this, I work at XYZ, let’s do it.”
“We’ve created this platform where members feel truly comfortable bringing their own ideas and contributing in their own ways, and encouraging them to do so,” Howell said. “It’s been working beautifully, as members come back every day and try to contribute more to the community.” The DJ playing music at the party on Wednesday was a Magnises member, as is the rapper Wale, who performed at the recent D.C. launch party. (“The team behind Magnises are some real Zuckerberg types. They know what’s up and they know how to make stuff happen,” Wale told Billboard. “Once I met them I knew they would be blowing up, so that’s why I got involved.”) Reportedly, French Montana is also a Magnises member.
Magnises members who facilitate these kinds of deals, however, do not receive any part of the revenue generated as a result — there is no commission, or finder’s fee. “The cool factor is enough for them,” Howell said. One member, Greg Willyboro, who works in fashion, told me that of all the social clubs he belongs to — Ivy, Select, and one for French business people in America — Magnises is his favorite. “The people feel familiar,” he said. “We’re all entrepreneurial.”
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