One college dropout, turned entrepreneur, has engineered a way to attract — and monetize — millennials.
"Urban millennials always want to know where the hot spot is right now, what is trending, and when they can get involved," said Magnises founder Billy McFarland, "Magnises answers those questions."
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But Magnises does more than help 20-somethings network with each other.
According to the company, the 24-year-old founder's inspiration was the ultra-exclusive American Express Centurion (Black) Card. He came up with the idea while out to dinner with friends, where they lamented about how much they all wanted to be black card holders.
Once McFarland found a way to embed a magnetic strip on a metal card, Magnises was born. The founder told CNBC that the start-up transfers data from an existing credit card onto the Magnises black card, which can then be used like a regular charge card.
In addition to its credit card function, Magnises has a mobile concierge app and offers its members access to exclusive events and discounts.
The founder told CNBC that Magnises has 10,000 members in New York and Washington, D.C., but he plans to expand to the West Coast next year. Membership is by referral only, and applicants undergo a vetting process. The annual membership fees cost $250.
Alicia Syrett, a board member of the New York Angels, said she's concerned about the legal risks the company could face as a credit card service.
But McFarland insists Magnises doesn't carry the same risks that a traditional credit card company would. "The biggest legal advantage for us is that we don't have to take any of the credit risk, all the transactions flow through the bank and our members original credit cards, we're just the brand and network that lives on top," he said.
Meanwhile, Patrick Chung, founding partner of XFund, questioned the start-up's overhead costs and profitability.
"Our entire costs are $70 a year to satisfy each user and all of their events and all of the regular partnerships," said McFarland.
And according to the founder, the start-up's ability to mobilize thousands of members allows them to cash in on advertising fees, and brand partnerships. Magnises' partners currently include Tesla, Virgin and Samsung, "who all pay a licensing or partnership fee," McFarland added.
Since its launch in March 2013, Magnises has raised $3 million in funding from key investors including Lance Weaver, the former chairman of MasterCard, and Bill Gray, former CEO of Ogilvy & Mather.
"We've done $3 million in revenue in our first 18 months," McFarland told CNBC. He expects that the start-up will reach a target of over $25 million in revenue in the next 24 months.
— CNBC's Kelly Lin contributed to this report.
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