Justin Singer - How Regulation Unlocks Opportunity - [Founder’s Field Guide, EP.2]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founders Field Guide. Founders Field Guide is a series of conversations with founders, CEOs and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. You can find more episodes at investorfieldguide.com.

**SPEAKER_2** (1:56)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (2:21)
My guest today is Justin Singer, the founder and CEO of Caliper Foods and Stillwater Brands, two leading companies in the cannabis industry. We start our conversation with a fascinating discussion on how regulation creates or destroys business and investing opportunities and then go on to discuss the ins and outs of the cannabis industry in detail. You'll be able to tell quickly how high quality Justin is as a thinker and operator and you'll learn a ton about this nascent business. Please enjoy our conversation.
So Justin, I thought that an interesting place to begin our conversation is with your prior life and this interesting view you have around changes in regulation creating market opportunities. Maybe you could highlight what you mean by that relative to say new technologies creating opportunities in the early stage space or in the nascent equity space. Why is regulation so important and what are some of your favorite examples of that?

**Justin Singer** (3:14)
I am a little odd in that I've got the classical business and legal education sort of the antithesis of what the last 15 years have driven people towards, but it's actually given me I think a much more holistic view of where markets come from. It's not inside out from a technology perspective. It's much more outside in like what else is involved in creating this market that started the initial interest was in the mid 2000s, late 2000s when I was in law school, I was looking at telecom market. So there was all the spectrum auctions going on. There was where did the property rights in the advertising time reside? Are they owned by the content owner? Are they owned by the cable provider? Are they owned by somebody else? These were all big questions and they all determined both the quality of what was going to be able to produce, what the axes of competition were and what the ultimate growth potential of the market was.
So you put that all together, add in a little mix of time spent in early stage seed stage stage venture at IA Ventures and the synthesis of all that is my belief the best venture opportunities are where you have the overlap of massive extent demand, known demand and some sort of regulatory unlocking event. Some of my favorite examples, I mentioned things with telecom, the broadband spectrum auctions back in the 80s to 90s. Those really opened up a whole marketplace where lots of fortunes were made, lots of economic activity. You look at the inversion of the capital gains tax rate versus ordinary income, and you saw the explosion of the funds industry that comes after that. Another one that I really like is the reorganization and turnaround industry, where with the passage of the bankruptcy laws, suddenly you're able to build all sorts of industry, whether it was high yield debt or junk bonds, whatever it might be. But it was built on top of this platform of certainty where everybody knew how things were going to function in different scenarios. The same thing could be said more closer to my industry, supplements, which for better or for worse, exploded after the passage of the Dietary Supplement Health Education Act, Deshae, back in 93 Basically every massive market that you look at, you can trace to some sort of regulatory unlocking event. Unless we ignore what's going on today, I think we just saw in the last couple of months lots of people saying you wouldn't have the modern internet without Section 230 of the Communications Decency Act.