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A Case Study on Matt Bowden: Stargate

International | Developed for UoA International


Business 705, by Chelsea Griffin, Jess Maher ,
Øyvind Bjørnsmoen and Samira Ibrahim
10/22/2010

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A Case Study on Matt Bowden: Stargate International
A Case Study on Matt Bowden: Stargate
International

Stargate International was established by Matt and Kristi Bowden.

INTBU FROM LEGAL HIGHS


Matt had two attempts at cracking this industry. The first began in
1997-1998 when he began distributing legal alternative pills in New
S Zealand
705 by both order/delivery based sales as well as stocking to
TO LEGAL REFORM
retail stores. This first stint lasted six months but his second
attempt saw the growth of a successful industry and an eight and a
half 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 goals
of 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.

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A Case Study on Matt Bowden: Stargate International
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 he
exudes 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 alternative
understandings 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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A Case Study on Matt Bowden: Stargate International
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 Matt’s 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 Matt’s 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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A Case Study on Matt Bowden: Stargate International
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. Matt’s
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 I’d last more than six months”1.

A socially inspired return


Later Matt was approached by an Australian investor who
suggested marketing a product that was in an area of Matt’s
expertise. After careful consideration and advice from his
accountants, Matt decided to move to Sydney in 1999. There he
pursued 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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A Case Study on Matt Bowden: Stargate International
previously failed in. He was inspired to try to find some form of
safer stimulant that didn’t 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 the
drug 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 have
been 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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A Case Study on Matt Bowden: Stargate International
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 Bowden’s new product became
a social, legal substance that was been taken by current drug users.
Matt’s 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 pressures


While the business seemed to be flourishing there were other
political issues that needed to be addressed. One of Matt’s 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 that
were 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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A Case Study on Matt Bowden: Stargate International
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... Society’s way of dealing with our
problem is to lock us up in a cage and we think that’s 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 Matt’s focus has been
on harm minimization, with a stated aim at addressing the drug
demand 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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A Case Study on Matt Bowden: Stargate International
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 don’t 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 International’s product instead. 44.1% of
party pill users who also used illegal drugs stated that they now
mainly used party pills instead4. Because of these newfound trends
which supported Matt’s argument, the Government decided to not
prosecute and to instead move toward changing the laws to
accommodate Matt’s vision.

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A Case Study on Matt Bowden: Stargate International
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 Matt’s 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 Matt’s 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, they’re bad, they’ve got to go” (Matt
Bowden, 2010). This was substantiated with the valid argument that
no one had died from taking party pills, a statistic that the liquor
and tobacco industry could not claim. They recognized that Matt’s
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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A Case Study on Matt Bowden: Stargate International
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 pills
were not classified as a food group. Matt’s 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 Matt’s 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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A Case Study on Matt Bowden: Stargate International
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 didn’t 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 a
clear 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 man’s 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 competitor’s 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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A Case Study on Matt Bowden: Stargate International
“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 research
was 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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A Case Study on Matt Bowden: Stargate International
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 people
to 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.

“That’s my feeling, we have just got to stand up and that for New
Zealand as a country we have to stand up…I 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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A Case Study on Matt Bowden: Stargate International
Notes

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A Case Study on Matt Bowden: Stargate International
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 on
the Auckland City Hospital. Emergency Department Overdose Database (2002–2004) 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

4 Chris 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