#StartupsEverywhere Profile: Patrick Utz, CEO & Co-Founder, and Matthew Chang, CPO & Co-Founder, Abstract
This profile is part of #StartupsEverywhere, an ongoing series highlighting startup leaders in ecosystems across the country. This interview has been edited for length, content, and clarity.
Facilitating Easy Access to State Government Data
Based in Los Angeles, Calif., Abstract is working to enable access to and understanding of California legislative and government data. Co-Founders Patrick Utz and Matthew Chang spoke to us about their vision for the Abstract platform, the need for policies that enable growing startups' ability to access new talent, and why lawmakers should support tax incentives that encourage innovation.
What led you to build Abstract?
Patrick: My co-founders and I started Abstract out of a frustration of not really being able to understand bills and the legislative process through publicly accessible tools. The legislative processes in this country are pretty opaque, which is unfortunate because these bills can ultimately get turned into laws that dictate a lot of things for individuals, startups, businesses, nonprofits, etc. We were all passionate about this policy space, so we began to explore lobbying and trade association space here in California. We found that most lobbyists and trade associations are using email chains, Excel files, old government websites—just a really outdated workflow—to track bills that are going through the legislative process in California, take notes on them, and share that information with their clients or members.
This led us to the belief that we can make a better solution for tracking these bills, collaborating and taking notes on bills, and sharing that legislative information. And that's what Abstract is now. Currently, we’re just focused on data from the state of California. We're also looking to streamline the coalition process. If a lobbyist or a trade association wants to work with other lobbyists or other organizations instead of building a coalition using email chains, we want to streamline that through one platform. The ultimate vision is to make lobbying, government, and the legislative process more accessible for everyday business owners and individuals.
How does the Abstract platform work?
Patrick: On the technical side, we are using AI—we have a natural language processing system to detect differences between bill versions. This enables the Abstract system to tell our users if a bill’s subject matter has changed. For example, if a piece of legislation was focused on abortion, then suddenly it was amended, and now it’s dealing with gun rights, instead of having to manually find those changes, we built an algorithm that is able to pick up on those differences. A big part of our work is how we scrape all this data, sanitize it, and make it easier for people to visualize and use.
Matthew: A big focus of ours is collaboration. We're really trying to foster a network of people that are able to work together on issues that they care about through the Abstract platform, including making it easier to discover bills that they care about on certain issues. Our users can give us specific topics that they care about, and we're able to pull bills in California that match that as they are introduced and move through the legislative process. Beyond that, we’re focused on being an organizational tool for those bills, and being able to collaborate on them through things such as notes, tags, and then share that with people.
What specific tech tools has Abstract used that have enabled you to build your platform so quickly?
Patrick: We’re using a cloud computing service. It would be great if there were a federal incentive to make that even lower-cost for startups that are in the research & development (R&D) phase, as a way to help promote business growth. But there’s no way we would be where we are without the ability to use that type of service. We would have had to spend years just to build the hardware infrastructure to host our product. AWS, Google Cloud, and Azure-type services are what allow so many tech startups to flourish and build cool things without having to worry about the hardware and infrastructure.
Matthew: My background is in marketing for a company that sold the hardware of cloud computing services. I can tell you for a fact that in our first year, we would not have been able to afford the infrastructure necessary to build out something like our product.
How has the current U.S. intermediary liability or privacy frameworks impacted your business and your ability to scale?
Patrick: Although it may not be immediately obvious to some, Section 230 is really relevant to our platform’s ability to exist in its current form. Even though, whenever someone creates a note or tag on a bill, it is by default private to them, they have the ability to share that content to other users or make it public within the Abstract network. That means Section 230 related policy—whether or not we are liable for what our users want to say about legislation—definitely has implications for our ability to grow. If there is all of a sudden a possibility that we are liable whenever a user says something about a bill, moderating that content can get really complex.
We were founded after the California Consumer Privacy Act (CCPA) was passed, so our Terms of Service and Privacy Policy were made with CCPA in mind. Right now, we’re still early-stage, and we’re able to adapt data policies. But I think the question of how these types of laws will impact us will be more relevant as we scale.
As a young company that has been steadily employing staff, what has the hiring experience been like? How can policy better support your ability to hire?
Patrick: It is really hard to hire as a startup right now. We have raised $2.5 million dollars in investment capital—which is great for our stage—but a growing business is going to burn through that relatively quickly, especially when you have to try to compete with the salary offerings of larger companies. We are big supporters of the idea of startup visas. The expansion of the pool of talent to include all the smart, international folks that want to work with innovative startups would have a huge impact.
Matthew: Agreed. I think that idea of a startup visa is awesome. I remember reading the other day how a large percentage of the PhDs educated in the United States are leaving to reside in other countries. And it doesn't make sense that we're not just stapling visas to those degrees and trying to keep the talent pool here in the U.S.
Patrick: We have also faced some challenges hiring because we have employees that work remotely. Our headquarters is based in Los Angeles, and whenever we hire somebody from another state—whether it’s Colorado, Pennsylvania, or New Jersey—we have to register in that state, pay different taxes for that state, etc. This is a pretty significant burden on a startup of our size. Ideally, we'd have everyone here in Los Angeles, but it's also really expensive to pay people here. And everybody seems to want to work remotely. Overall, hiring presents a number of challenges that I think policymakers could help address and provide assistance to emerging companies with limited resources.
You recently joined a number of organizations in the startup ecosystem asking Congress to preserve the tax treatment of Qualified Small Business Stock (QSBS). Why was participating in this initiative important to Abstract? Are there other tax incentives you think policymakers should be supporting to encourage startup growth?
Patrick: Of course there need to be ways for the government to fund all of its initiatives. I also feel like, for most founders, there is a substantial benefit to having incentives to build. It's not always just monetary incentives—we're building Abstract for the mission. But we’re building this company on thin margins with our blood, sweat, and tears. And I think that the financial incentive that QSBS provides to individuals who spend their entire life building something up is valuable. A lot of people don’t realize that a lot of founders don't get a huge multi-million dollar payout when they exit, so QSBS is most valuable to them.
As for other tax incentives, California has a special R&D tax credit that’s a function of your engineering wages. Currently, we're looking at leveraging that credit with the hope of saving in the neighborhood of $20,000. Every dollar counts when you’re a startup, but about 25 percent of what we’ll get is paid back to the firm that does the tax work for us. It would be great if that was a more substantial incentive. Additionally, if there was more federal knowledge infrastructure around how startups can benefit from these types of R&D tax credits, I think that'd be great. The last thing that a startup needs is to spend more money on corporate taxes when they're not even generating revenue.
Are there any other local, state, or federal startup issues that you think should receive more attention from policymakers?
Patrick: There are a lot of National Science Foundation (NSF) and other federal agency grants for startups that are in what is traditionally thought of as the hard sciences, like nanotechnology or technology manufacturing. It would be great if there were more grants for software-based companies that are doing social good or creating a public benefit. We want to fundamentally reshape how businesses, nonprofits, and individuals interact with the government, which will lead to a more efficient society. So if we could receive that type of public support, we could really focus on our work’s benefit to U.S. communities moving forward.
What are Abstract’s goals moving forward?
Patrick: The goal moving forward is to be the trusted source for information on legislation and regulations here in California. Currently, we have information at the state level, but we’re looking to expand into cities and counties as well. Beyond that, the goal is to make lobbying accessible for everyone. We don’t want to just make a service for lobbyists and trade associations but make something that an everyday business owner or individual can use. Those are the long-term goals that we want to achieve to help make government more transparent.
All of the information in this profile was accurate at the date and time of publication.
Engine works to ensure that policymakers look for insight from the startup ecosystem when they are considering programs and legislation that affect entrepreneurs. Together, our voice is louder and more effective. Many of our lawmakers do not have first-hand experience with the country's thriving startup ecosystem, so it’s our job to amplify that perspective. To nominate a person, company, or organization to be featured in our #StartupsEverywhere series, email advocacy@engine.is.
