Time Preference and Software
long term game
Time Preference is how much do you value present over the future.
A High Time Preference is when you value the present more than the future.
A Low Time Preference is when you value the future more than the present.
Time Preference in a Software House Company
A Software House (SH) is a company that builds customizable software for other companies.
Usually, an SH has a high time preference because they work per project, and after the project is finished they don't need to maintain it anymore.
So they have few incentives to deliver a good code, which takes more time, so they can profit faster.
Time Preference in a SaaS Company
A SaaS company is a company that provides a service charging a subscription on a monthly basis for its customers.
The best time preferences for a SaaS company is a low one.
A SaaS company should invest in automation (CI/CD, tests, deploy) and in quality of code as it needs to keep improving the software to keep the customers happy and paying for the subscription.
Quality over Time
The two charts above show how quality changes over time based on the company time preference.
A company with low time preference will invest in testings, QA, and refactors that will payoffs in the long run.
A high time preference will make the quality reduces over time as there is no investment in improvements.
Cost over Time
The cost increases a lot in a high time preference company. The cost of adding more features or maintain a legacy codebase or a codebase without tests grows exponentially. The number of bugs also tend to grow.
The cost still increases for a low time preference company as it needs to support more customers over time, but the cost grows much slower than the revenue.
Revenue over Time
The revenue of a low time preference company tends to grow over time, as you keep selling the same software over and over.
A high time preference will prefer projects that yield great financial returns in the short term, but it will have times without any project or fewer projects that it wants.
My advice is to have a low time preference in most aspects of your life and business and focus in your future, avoid using a greedy search.
You can read more about time preference on The Bitcoin Standard book