‘Fyre Fraud’: A Millennial Woodstock

Posted on | January 23, 2019 | 1 Comment

Fyre Festival promoter Billy McFarland.

In October, when Billy McFarland was sentenced to six years in federal prison, prosecutors described his criminal history thus:

“For the past five years, the defendant has been the consummate con artist. The defendant’s actions reveal a profoundly greedy, self-absorbed man focused exclusively on himself. . . . Whenever he needed more money, he lied to investors to get it. Whenever he wanted more money, he gave it to himself from business accounts. Whenever one scheme began to falter, he hatched a newer and more elaborate one.”

It appears that McFarland’s entire career, from the time he dropped out of Bucknell University in May 2011, was a series of scams, frauds and felonies disguised as start-up entrepreneurialism, culminating in the infamous April 2017 “Fyre Festival” in the Bahamas:

This “luxury” event turned out to be a wretched tent city with inadequate toilet facilities, more like a refugee camp than the kind of place you’d expect to find international supermodels hanging out. How bad was it? Promises of gourmet meals prepared by a famous chef turned out to be a cheese sandwich in a styrofoam container.

 

McFarland promised a tropical Coachella — Blink 182! Ja Rule! Bella Hadid! Hailey Baldwin! — and delivered a squalid nightmare. Two new documentaries, one by Netflix and one by Hulu, examine this notorious catastrophe and I watched the Hulu version of the story, Fyre Fraud, over the weekend. What the documentary shows is how the so-called “influencer economy” of social-media buzz was leveraged by McFarland to promote the idea that this event was going to be the hottest ticket of the year, thus appealing to the FOMO (“fear of missing out”) insecurities typical of affluent young hipsters. This reflects a phenomenon I first noticed in the 1980s and have called the “status leisure” mentality.

Pioneering sociologist Thorstein Veblen was the first to analyze how the wealthy of the Gilded Age spent their money in ways intended to display their social status. Middle-class youth of the 1980s were obsessed with designer-brand clothing and expensive sneakers — Nike Air Jordans became de rigueur for teenagers who never played basketball — as a means of displaying the social status to which they aspired. This aspirational aspect of status display reflects a message of upward mobility that young people seek to communicate to their peers. They might be just another suburban high-school kid now, but their upscale clothing conveyed the message that in the future, they would be members of the elite. And their preferences in leisure activity also reflected this status-obsessed mentality. Upwardly mobile young people couldn’t have fun doing things cheap or local; instead, real fun could only be had by spending money to go somewhere cool. Like, you couldn’t just invite your buddies over to play poker, you had to fly to Vegas for a three-day weekend. You didn’t want to go fishing at the nearby lake, you wanted to go fishing in Key West. Taking your kids to the county fair? Not cool. Taking your kids to Disney World? Cool. Taking your kids on a Caribbean cruise? Even cooler. This mentality — leisure activities as a means of status display — has been leveraged by promoters of events like the Coachella festival, where being part of a celebrity-studded scene is, to the Millennial hipster, what attending the Gold Cup at Ascot was for the Victorian aristocracy. But I digress . . .

The superficiality of reality-TV culture in the Social Media Age lends itself to the delusion that any attractive young person can become a Kardashian-like celebrity — “famous for being famous,” as Malcolm Muggeridge said — by shrewd management of their online image. Developing a popular Instagram presence and turning that into a career (e.g., “Caroline Calloway and the ‘Creativity Workshop’ Influencer Tour From Hell”) seems to be an idée fixe for many Millennials, and the Fyre Festival disaster of April 2017 wasn’t Billy McFarland’s first attempt to get rich by exploiting this status-conscious mentality:

What’s the Magnises card? It’s the brainchild of Billy McFarland. You’ve never heard of this 22-year-old college dropout, but he’s cooler than you. (Just ask him.)
Founder Billy McFarland admits that Magnises is “Latin for absolutely nothing.” The Short Hills, NJ, native — the son of two real-estate developers — launched his first startup (a service that matched websites and designers) at 13, and skipped out on Bucknell University during his freshman year to launch a content-sharing site called Spling. From there, it was a short leap to starting his own credit-card company — and only letting in members whom he and his staff of 11 deem cool enough.
Magnises is “Latin for absolutely nothing,” admits McFarland, who launched the company in March. “The name is made up, but it sounds grand, doesn’t it?”
Forged in matte black stainless steel, the credit card is attempting to position itself as the hot new way to spend money among NYC’s young elite. Olympic hopefuls, scenester DJs, tech innovators and socialites like Nick Loeb (Sofia Vergara’s ex-fiancé) are among the 1,200 or so chosen ones who don’t leave home without it.

 

The appeal of the Magnises card — which was actually just a way to upgrade the user’s own debit card — was that it conveyed the prestige of being a member of this exclusive “young elite.” As the Hulu documentary shows, the Magnises scheme launched in 2014 was the platform of fraud upon which McFarland later built the Fyre Festival:

[I]n addition to acting as a “black card for 20-somethings,” the card was also meant to get members exclusive things like access to the Magnises townhouse in SoHo, private parties, and discounts on luxury and designer items. Membership, which cost $250 annually, was also supposed to include a car and driver and a 24/7 concierge to assist users in getting tickets to big events. . . . It was marketed as a status tool for wealthy millennials, but one former employee, Emily Boehm, says in the Hulu documentary that it was actually more for those wanting to join an “out of college frat.”
Fyre Fraud includes interviews with journalists who covered Magnises and the company’s former employees, and more than one person likened Magnises to madcap NBC sitcoms about ineffective workplaces. . . .
Events were often cancelled last minute and the number of actual members was unclear, despite McFarland’s numerous claims that membership was growing, according to a Bloomberg report on Magnises. With numerous customer complaints and conflicting membership stats, it was increasingly difficult to measure the company’s actual success.
McFarland used connections in Silicon Valley, investors, and marketing agencies with good pull and got celebrities to endorse Magnises . . .

One perk for Magnises members was invitations to parties at a private townhouse, but in 2015, McFarland was sued by his landlord who said the $13,750-a-month property, which he had leased “exclusively for residential purposes,” had been “maliciously vandalized” for more than $60,000 in damages as a result of McFarland’s “blowout parties.”

The problems with Magnises were one of the “red flags” about McFarland’s shady behavior that were ignored by those suckered into involvement in the Fyre Festival fiasco. One of the warning signs was the March 2016 indictment of Aubrey McClendon, co-founder of Chesapeake Energy, who had been one of the biggest investors in Magnises. The day after the indictment, McClendon died in a single-car crash that many suspected was suicide, and McFarland needed to find some new source of cash to prop up his business (which looked a lot like a Ponzi scheme). Fashion executive Carola Jain, wife of wife of hedge fund manager Bobby Jain, was one of his new investors. Now, McFarland claimed to be developing an event booking app he called Fyre Media and this led to the idea of the Fyre Festival, conceived when McFarland and Ja Rule visited the Bahamas. McFarland managed to persuade a gaggle of big-name models to travel to the Bahamas to do a video promoting the event and, on December 12, 2016, all of them simultaneously posted the video and photos to their Instagram accounts. Marila Bobila of Fashionista described the effect:

Our feeds were flooded with images of a tropical vacation to a seemingly private island starring Alessandra Ambrosio, Bella Hadid, Hailey Baldwin, Emily Ratajkowski, Elsa Hosk, Paulina Vega, Lais Ribeiro, Rose Bertram, Gizele Oliveira and Hannah Ferguson.

The video promised “An Immersive Music Festival . . . On a Remote and Private Island in The Exumas . . . The Best in Food, Art, Music and Adventure . . . On the Boundaries of the Impossible.” And the online roll-out of the ad was impressive: “I mean, it was perfectly executed. It’s one of the greatest social-media campaigns I’ve ever seen. They got the most beautiful women in the world, with the largest social following. And then the photo shoot . . . It was just incredible.”

Keep in mind that this was barely a month after the 2016 election, when Hillary Clinton’s loss to Donald Trump had left a lot of people in the fashion/entertainment/media world feeling emotionally traumatized, and now . . . this awesome festival with tickets starting at $1,500? The young and hip were excited about it, but the ticket-buyers had no idea that, behind the scenes, people were already warning McFarland that he could never put together such an event on such short notice. McFarland was promising luxury accommodations, and even if he could come up with the money to provide what he promised — a big “if” — the logistics of transporting everything to this island site was problematic. Do the math: Suppose that a total of 5,000 people paid $1,500, that’s $7.5 million. Well, that ticket price included air travel from Miami to Exuma International Airport, which “services mainly light aircraft and regional jets,” in other words, not your big jumbo jets. American Eagle flies a 60-seater turboprop plane for its regular service from Miami to Exuma. So, to get 5,000 people to this festival would require about 80 flights. How are you gonna book 80 charter flights out of Miami?

Never mind that. The lowest-priced regular flight is $335 round-trip, so if you could somehow get charter companies to match that rate — another big “if” — you would have spent about $1.7 million just to deliver the air travel part of the package for your 5,000 ticket holders. That leaves you with $4.8 million for everything else and, even if you’ve got that much money (which McFarland didn’t), remember you not only have to pay off all the performers, the lights, the sound, etc., but you’ve promised luxury accommodations: “Guests will be staying in modern, eco-friendly, geodesic domes.” Good luck building such housing for 5,000 people from scratch in just four months, and what about water, sewage, electricity, etc.? Also, you’ve promised these people gourmet meals, yoga classes, and a bunch of other luxurious experiences. What’s all that gonna cost to deliver on a remote island site in the Bahamas?

People tried to warn Billy McFarland that this was impossible to accomplish in four months, at any price, but . . . grifters gonna grift.

McFarland had claimed Fyre Media was worth $90 million, but as the April date for the festival approached, he was forced to pay exorbitant rates for an emergency loan in a desperate attempt to put together something even remotely resembling what he’d promised. Of course, he failed, and no concerts ever happened at Fyre Festival.

The first ticket-holders to arrive — riding from the airport on a school bus — found a bunch of tents set up with mattresses piled around the site, and very little else. Pretty soon, everybody was trying to escape and Twitter erupted in mockery at the hipster apocalypse.

What wasn’t funny, however, was that Fyre wasn’t merely a bungled festival, it was the culmination of more than three years of escalating frauds by which McFarland had bilked investors of millions.

 

Fyre Fraud features interview segments with McFarland, which often end with him sitting silently, unable to answer the questions. He is not capable of admitting the truth about what he did, and his excuses and rationionalizations can’t explain away the evidence. While I don’t doubt that McFarland believed, in December 2016, that he could actually make the Fyre Festival happen, despite all the warnings to the contrary, as the weeks went by and the evidence of an impending failure accumulated, he could have hit the brakes and postponed it. Why didn’t he?

In a word, money. Because his entire business career was essentially fraudulent — McFarland was a Bernie Madoff in the making — he knew that if he canceled the April date, there would be no chance to do the festival at a later date, because his financial pyramid scheme would soon come tumbling down. McFarland had built a reputation as a whiz kid, a reputation that had enabled him to live large on investors’ money, and he knew he’d be ruined when the chickens finally came home to roost.

Billy McFarland is in federal prison now, but the social-media “influencer” game is still going on, and grifters are still grifting.

The “status leisure” syndrome — the status-obsessed fixation on being perceived as one of the cool kids, conveying an image of upward mobility — is at the root of what made the Fyre Festival such an alluring idea for so many young people. At his sentencing hearing, Billy McFarland claimed he had been diagnosed with bipolar disorder, but it would be more accurate to say he is afflicted with the Millennial mentality, a delusional condition caused by excessive exposure to social media.

 

 

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