Case Study on Matt Bowden: Stargate International UOA-705 by Chelsea Griffin, Jess Maher , Øyvind Bjørnsmoen and Samira Ibrahim

8/7/2019 Case Study on Matt Bowden: Stargate International UOA-705 by Chelsea Griffin, Jess Maher , yvind Bjrnsmoen a

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A Case Study on Matt Bowden: Stargate International2

A Case Study on Matt Bowden: StargateInternational | Developed for UoA InternationalBusiness 705, by Chelsea Griffin, Jess Maher ,

yvind Bjrnsmoen and Samira Ibrahim


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A Case Study on Matt Bowden: StargateInternational

Stargate International was established by Matt and Kristi Bowden.

Matt had two attempts at cracking this industry. The first began in

1997-1998 when he began distributing legal alternative pills in New

Zealand by both order/delivery based sales as well as stocking to

retail stores. This first stint lasted six months but his second

attempt saw the growth of a successful industry and an eight and ahalf year business. Witnessing horrific incidents around the use of

methamphetamine Matt recognized an opportunity to provide a

safer legal alternative for drug addicts. After spending some time in

Australia after his first failure Matt returned to New Zealand in 2000

and began producing and distributing party pills with the chemical

Benzylpiperazine (BZP). Matt was met with many legal issues

throughout his time in the industry. However his overarching goalsof harm minimization prevailed until 2008 when legislation banned

party pills in New Zealand. This case talks about opportunity

recognition and legal reform in the party pill industry of New

Zealand. It explores how a social entrepreneur can drive change in

a small economy, upholding a strong sense of motivation and

determination in the face of adversity.


INTBUS 705

FROMLEGALHIGHSTOLEGALREFORM


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Introduction

Those who have not had the chance to meet Matt Bowden may

perceive him and the industry he is affiliated with as getting away

with the unthinkable, literally selling you legal speed. However, this

is a far cry from the truth, evident in the charismatic persona heexudes not to mention his passion for social change. He is now a

stay at home family man who works with what he is truly

passionate about, his music and his children. The experiences he

has had paint a rather tumultuous picture of his life in the party pill

industry and is the main opportunity recognition point in his career.

With various tales of drug abuse, violence, prostitution, crime and

even death, Matt found himself reaching some alternativeunderstandings and perspectives on the matter of drug reform. Matt

is a true social entrepreneur who believes that he was put on the

earth to achieve a purpose which has overrode a lot of the

obstacles and challenges he has faced in his life.



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Background: The first pursuit of the legal drug

alternatives

In the midst of 1997 1998, Matt was advertising for Performance

Car Magazine when a client with a business proposition approached

him. This was the first opportunity point in Matts entrepreneurial

expedition. The product was a stimulant that upon testing, Matt

realized was not your everyday pill. Matt instantly saw an

opportunity, realizing that this pill had a purpose and could be used.

He saw it as a potential safer legal alternative to drugs in a society

where a methamphetamine explosion and an accompanying surge

in violence was prevalent. This idea came to fruition when he began

importing merchandise from England and distributing it to his

known target market, those suffering from drug addictions. He

began by advertising on websites and on the radio, with call centre

and courier deliveries set up to facilitate sales and distribute the

product. A support line and a F.A.Q were also set up. To spark retail

interest Matt offered businesses such as The Hemp Store a 100%

mark up on the pills. This strategy saw Matts product rapidly

become a significant contributor to their cash flow, to the point of

reliance on it for profit. At this point the venture began to attract

media attention. He was approached by a journalist, named Greg

Boyd who conducted an interview with Matt regarding his new

venture. Unfortunately this first media contact was not the ideal

coverage he was hoping for. His statements regarding the

substance he was marketing were taken out of context and a

misrepresentative story was portrayed to the public. The power of

editing demonstrated statements being made about what the pills



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were capable of doing. This became problematic for Matt as under

the Medicines Act 1981 law, it was illegal to make any claims

regarding the effects of a substance. Media pressure drove the

Ministry of Health to take the issue to the courts. Matt substantiated

his claims with both legal and scientific facts. However on

investigation, the pills were found to contain a substance called

ephedrine and a nationwide recall of the product ensued. Matts

first attempt at cracking into a legal drug substitute market was

only a six-month stint, but a profound interest was sparked in the

legal side of this industry. However, this was not last both the

government and the industry would see of Matt Bowden.

I vowed in my heart that I would never be steamrolled like that by

the government again, and that next time I would come back with

something better and Id last more than six months1.

A socially inspired return

Later Matt was approached by an Australian investor who

suggested marketing a product that was in an area of Matts

expertise. After careful consideration and advice from his

accountants, Matt decided to move to Sydney in 1999. There hepursued the idea of again providing a cheaper and legal alternative

to harmful drugs. While amidst this environment he was exposed to

a darker, unregulated side of the industry that shocked and moved

him. He witnessed a number of terrible incidents involving

methamphetamine, some concerning people close to him. This was

the motivation he called upon to return back to the industry he had



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previously failed in. He was inspired to try to find some form of

safer stimulant that didnt result in the horrific effects seen with

methamphetamine use.

With the strength of his convictions Matt Bowden believed that if

we could meet the consumer need without the harms, we could

build a better society. Adopting the motto that if you believe in

something strongly enough, you can do anything he began to

pursue this idea.

Bringing BZP to the market

While still in Australia, Matt aligned himself with a neuro-

pharmacologist and together they began to search for an alterative

drug that they could use to fill this niche. Soon they discovered thedrug Benzylpiperazine, a non-addictive euphoric stimulant and so

they began the pursuit to transfer this into a marketable product.

Known colloquially as BZP this substance had been scientifically

tested through clinical trials and was proven not to be a danger to

consume. Research also indicated that in 1973 trials that were

conducted with amphetamine users, they had indicated a liking of

the drug BZP2

. They knew that with this compound they might havebeen on to a winner in their search for a legal alternative substitute.

They attempted to approach the Australian government, but they

were not receptive to it.

In order to tackle the escalating methamphetamine problem that

was in existence in his home country, Matt returned to New Zealand



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in 2000. He was then able to gain access to the substance BZP and

began to make some pills. He decided to make a product for

people that are choosing psychostimulants like amphetamines and

give them a safer alternative. Soon Bowdens new product became

a social, legal substance that was been taken by current drug users.

Matts product was meeting the same stimulant need to keep them

awake between the desired hours of 12 am and 6 am in the

morning. It became evident that consumer and behavioral trends

were changing, seeing a shift away from the intake of harmful

drugs. Research was reporting the pills to be a success, with

around 20 million tablets consumed in New Zealand and no

reported fatalities3.

Media and government pressuresWhile the business seemed to be flourishing there were other

political issues that needed to be addressed. One of Matts major

retailers The Hemp Store was part owned by a member of the

Green party, Nandor Tanczos. The Sunday Star Times published an

article that involved Matt and his business, with the main goal of

having a go at Nandor Tanczos. The article attempted to

discredit the politician by associating him with selling drugs thatwere illegal overseas. The media had its own agenda regarding the

politician and thus Matt became once again caught in the middle of

media and political cross fire. The New Zealand government and the

Ministry of Health again got involved with the claims and started an

investigation. This time around Matt had learnt a bit about how to

deal with the media and government and attempted to go straight



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to the source of the problem. Matt and his wife, Kristi, traveled

down to Wellington and explicated his mission.

He spoke to the government and said; This is what we are trying

to do, a lot of our friends are addicted to methamphetamine, some

of them are actually dying around us as methamphetamine users,

we can't really put up our hands and ask for help because we are

technically criminals now... Societys way of dealing with our

problem is to lock us up in a cage and we think thats wrong, so

what we are doing about it is we are making a safer alternative.

The laws of supply and demand

The objective of Stargate International and Matts focus has been

on harm minimization, with a stated aim at addressing the drugdemand reduction strategies; his product was a addressing demand

reduction. This aligned with the New Zealand National Drug Policy,

which has three pillars, Matt felt that short comings of this policy

was identified ultimately at demand reduction, which his product

was addressing harm minimization.

If you reduce the supply without reducing the demand, the quality

comes down, or the price goes up. Now once you put the price up

and it's worth more, then even though you might have been

thinking about the fact that it's a couple of years in jail if you get

busted, you might think more about that it might be worth it. The

demand's going to stay there, because users are going to run out

and want more...eventually you're going to get to the point where



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it's worth it to crank out a few more grams, if they're worth

thousands of dollars each.

When these pressures exist the quality of the drugs is reduced and

therefore more health risks emerge for people. This trend happens

all around the world, these laws or trends are basic laws of

economics. They are as set in stone as the laws of gravity and so

politicians trying to ban substances and effectively start a drug war

have proven to be a totally ineffective policy (Matt Bowden, 2010).

He also identified another document, which aligned with his

purpose. The Methamphetamine Action Plan was an initiative, which

invited community groups to come forward with solutions regarding

demand reduction. Matt proceeded to identify himself as a

representative of the dance community a group who dont like to

drink alcohol but instead prefer to take stimulants and socialize

from late in the night until early in the morning. He indicated that

this community would not be able to stop and believed that the use

of a demand reduction strategy for them was offering a safer

alternative. They responded by researching further into the topic.

Research showed that people had stopped taking illegal drugs and

in fact were using Stargate Internationals product instead. 44.1% ofparty pill users who also used illegal drugs stated that they now

mainly used party pills instead4. Because of these newfound trendswhich supported Matts argument, the Government decided to not

prosecute and to instead move toward changing the laws to

accommodate Matts vision.



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The turf war begins

Competition arose when rival industries such as liquor stores began

to feel an economic sting. The booming party pill trend was seeing

in some cases, that half the money usually being spent on alcohol

going into the pockets of Matts industry. At the same time as this

Matt states that Research started coming out from the fingers of

the liquor industry, alcohol advisory groups and so on, saying party

pills and alcohol shouldn`t be combined.

A turf war was happening between the party pill and liquor industry.

However with Matts excellent legal representation he again fought

back. A rival industry, missing out on its revenue started pushing

back and silently behind the scenes driving the whole campaign

that party pills are dangerous, theyre bad, theyve got to go (Matt

Bowden, 2010). This was substantiated with the valid argument thatno one had died from taking party pills, a statistic that the liquor

and tobacco industry could not claim. They recognized that Matts

industry had sold 26 million pills in New Zealand, which were

consumed over eight and a half years by 400,000 consumers with

no deaths and no lasting injuries5.

Matt then withdrew some of his brands from the market, having

disagreements with his distributors in the process. This was

because the industry became too widespread with pills being sold in

dairies and to the general public, no longer just to his original target

market. As he had not put any patents on his intellectual property,

the marketplace had exploded with competitor products. He had

begun to feel that it was working contrary to the original mission.



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His original mission was still strong in his heart and so he identified

a way to continue with this while not having his products sold within

the industry. He approached all his competitors and negotiated

arrangements so that they would help establish a collective fund to

pay the legal fees for the industry, as Stargate had effectively been

dealing with the government on behalf of the whole industry, not to

mention that the industry was based on intellectual property

developed by Stargate.

Establishing Class D

In return he hoped to stop the government from shutting the

industry. At this point the industry was facing an imminent shut

down with the government preparing for a nationwide recall of the

products due to the pills apparently breaking food safety

regulations. The food safety authority was arguing that the pillswere not classified as a food group. Matts defense was that this

was not the case and ingeniously relabeled the products as social

tonics and wrote on the back that this is a harm minimization

initiative so that it was really clearly labeled not as a food or dietary

supplement.

The result of this was in Matts favor, with a new class of drug being

implemented by the government as opposed to an industry

shutdown. In 2005 the restricted substance category or Class D was

put in place, as a regulatory tool for lower risk substances deemed

not harmful enough to be illegal. Class D could regulate it being

illegally sold to someone under the age of 18, not being allowed to



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advertise on the TV, radio or magazines and putting limits to how

strong the drugs are allowed to be.

They were lacking in a category for them so they wrote one up and

put it in place As a result of this action it became apparent that the

industry didnt fall under a specific jurisdiction and instead needed

a new category with the Misuse of Drugs Amendment Act 2005. By

taking this action, the NZ Government accepted that there was aclear need for ensuring that some kinds of standards and

regulations were to be in place. Yet after creating the laws, they still

developed a type of no mans land for the product where no formal

regulations were in place.

By 2006 BZP pills were a commercial success with the industry

estimated at being worth 8 million annually6. As the industry and

markets for it grew, so did the evidence of unethical behaviors.

Without restrictions on the strength or quality of these products,

there was evidence of some competitors pills being up to 16 times

stronger than Stargate Internationals. Matt formed The Social

Tonics Association of New Zealand (STANZ).

After seeing a surge in the number of competitors, the party pill

industry grew, broadening markets and uncovering some

unfortunate events which were a result of youth combining the use

of alcohol and BZP. This was also a cause for media to pressure the

government for further attention and enquiry. A request for

research was arranged which was enthusiastically supported by

Matt whom had already extensively researched the cost to benefit

analysis of this approach and product. Clearly the lesser harm of the



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social tonics industry products when compared to alcohol was

something he was excited for the researchers and policy makers to

explore.

All the independent research came back confirming that the pills

were of very low or as low as practically possible risk, but one

commercial institute with strong ties to government came back with

claims of serious adverse events. Matt suspected that this researchwas somehow flawed or misrepresented, which became clear at a

later stage when a whistleblower leaked information about the

research. The research failed at peer review stage but was used as

a political and media tool. The ban happened as part of a lead up to

an election. Before Matt and his lawyers could counteract this, Jim

Anderton passed a new piece of legislation banning party pills and it

was voted through in 2007 and came into force in 2008.

Onwards and upwards

Having set backs is not a concept unfamiliar to Matt Bowden. Now

days his expertise in government lobbying and intellectual property

on the relative issues of legal alternative drugs has been in high

demand. Other countries facing similar issues such as Canada and

the United Kingdom have called upon him for help. His

entrepreneurial actions have transformed New Zealand into a

representative sample. Now other countries are able to learn from

New Zealand in the battle to minimize the harm caused by illegal

drugs. He is also continuing to build New Zealand regulation

systems by keeping a safe natural drug within the Class D category.



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The aim of this is to eventually set international standards around

drug policies

He is very proud to have had this entrepreneurial experience in New

Zealand, remarking on how cool it is that you can just pop down to

parliament and with time and patience you can have some impact

on laws and regulations for the better of the country. This is not

something that can be done in larger countries so he urges peopleto take responsibility. He hopes that people try out new policies and

do things that are quite progressive, as we have a small enough

infrastructure to allow this to happen.

Thats my feeling, we have just got to stand up and that for New

Zealand as a country we have to stand upI feel like in a sense we

have done that and I think that the mission worked in that sense.

Now in 2010, he is in the process of recording a rock album, which

will continue to carry on his message. He feels that if he has music

out there he can be perceived more like an artist. Then when he

makes a media statement he will be seen differently, as there is a

different facet between being a businessperson and a rock star. He

believes that having a commitment to social responsibility through

regulating and operating to best safety standards, you can end up

with an industry that is not only sustainable but also beneficial to

society.



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Notes



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1 The authors wish to thank Matt Bowden for his valuable assistance in the

preparation of this case. All direct quotations were taken from interview with Matt

Bowden, at his home on the 28 September, 2010 - unless otherwise stated.

2 Lynn Theron, Karl Jansen, Jennifer Miles (2007) Benzylpiperizine-based party pills' impact onthe Auckland City Hospital. Emergency Department Overdose Database (20022004) compared

with ecstasy, Retrieved from: http://www.nzma.org.nz/journal/120-1249/2416/

3 Lizzi May (2006) This Man wants to sell you legal ecstasy, Remix magazine , Retrieved from:

http://www.mattbowden.com/Rebirth/wordpress/?page_id=105

4Chris Wilkins, Melissa Girling, Paul Sweetsur, Taisia Huckle, Dr. John Huakau (2006)Legal party pill use in New Zealand, Centre for Social and Health Outcomes Research

and Evaluation & Te Ropu Whariki, Retrieved from:

http://www.shore.ac.nz/publications

5 Peter Cresswell (2008) Retrieved from: http://pc.blogspot.com/2008_03_09_archive.html

6Lizzi May (2006) This Man wants to sell you legal ecstasy, Remix magazine , Retrieved from:

http://www.mattbowden.com/Rebirth/wordpress/?page_id=105
http://www.nzma.org.nz/journal/120-1249/2416/http://www.nzma.org.nz/journal/120-1249/2416/http://www.mattbowden.com/Rebirth/wordpress/?page_id=105http://www.shore.ac.nz/publicationshttp://pc.blogspot.com/2008_03_09_archive.htmlhttp://www.mattbowden.com/Rebirth/wordpress/?page_id=105http://www.mattbowden.com/Rebirth/wordpress/?page_id=105http://www.shore.ac.nz/publicationshttp://pc.blogspot.com/2008_03_09_archive.htmlhttp://www.mattbowden.com/Rebirth/wordpress/?page_id=105http://www.nzma.org.nz/journal/120-1249/2416/

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Case Study on Matt Bowden: Stargate International UOA-705 by Chelsea Griffin, Jess Maher , Øyvind Bjørnsmoen and Samira Ibrahim