A company can use time horizons as a competitive advantage by being willing to wait longer for returns on investment than competitors. The set of ideas possible with a longer time horizon is inclusive of the set of ideas in shorter time horizon, but also includes more ideas that are not available in the shorter. Assuming some of those ideas are fruitful, there is a fundamental advantage to having a longer time horizon than the competition.
This is an argument for keeping companies private for longer so they don’t need to operate in lockstep with the market’s quarterly earnings reports.
See also:
- Heirlooms foster long term thinking. While written about shared resources, this also applies to hypothetical companies aiming to operate for a long time.
Links to this note
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Stone fish traps in use over the last 40,000 years located in the Barwon River that some believe are the earliest human construction in the world. It’s an example of a man made system that has endured for thousands of years and is still in use today—a model for how one might approach building new systems.
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People Are Bad at Long-Term Thinking
People are generally bad at thinking and making decisions about long-term consequences. Gate’s Law observes that people overestimate the short term and underestimate the long term. People are motivated by loss aversion which leads to status quo preserving behavior and biases people towards keeping things the same.
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Governments Are Comfortable Thinking Long Term When it Comes to Infrastructure
While government tends to be short-term oriented (the election cycle drives decisions so officials can be re-elected), an area the do feel comfortable thinking long term is infrastructure. With regularity, they will initiate projects to build roads, telecommunications, buildings, and other infrastructure that takes many years to build (the second avenue subway line in Manhattan started in 1972).
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Being Obsessed With What You Are Building Is a Competitive Advantage
When building a company and product, having a singular obsession with working on it and solving the problem is an advantage over competitors that do not. The obsession leads to exploring the area in depth, more than any rational person would do. This leads to all sorts of discoveries overlooked by others.
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Stripe Atlas Is Used for One in Ten New C Corporations in Delaware
From the 2021 business update letter from Stripe, Atlas is now used by 1 in 10 new incorporations in Delaware.
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Founders that are willing to take on problem areas that are unappealing because it seems like a lot of work is a moat. Schlep blindness, as Paul Graham calls it, is mostly subconscious and causes hackers to choose easier, but more competitive areas. This explains why you see thousands of todo list apps, but not a thousand employment compliance companies.