What Every Entrepreneur Needs To Know About Technical Debt

by Josh Cramer


Debt can be tricky for startups. It’s inevitable and sometimes invisible, but ignoring it can run your business into the ground. Debt isn’t limited to money. Technical debt is a slippery concept that has many entrepreneurs running in circles.


Simply put, technical debt is the cost, in dollar figures or human resources needed, for maintaining, changing, and iterating your product. The very act of building a product means you’re already incurring technical debt. It’s a natural byproduct of software development. Like credit card debt, it can consume all your resources if left unchecked.




Thankfully, by being proactive and aware, you can protect your business and manage technical debt before it gets out of control.


Why Startups Incur Technical Debt

When you launch a startup, you’re at a disadvantage: Your business model is unproven, and you’ve yet to build a shippable product.


But without customers, you can’t prove your concept. And every day you don’t have a product on the market is a day lost to competitors. The urgency can be maddening. You’re up against three constraints — time, quality, and scope — and you’re only able to focus on one or two effectively.


Most startups choose time and scope, which translates to cramming their product with complex features and rushing it out the door as quickly as possible. Inevitably, this leads to cutting corners on design and engineering.


By taking this route, you’re likely to incur massive technical debt — regardless of your intentions to fix problems later. Developing a product is like building a house: You can speed through construction, but it’s exponentially harder to repair the foundation once you’ve moved in. If you never make those repairs, your house will collapse.


How to Assess Levels of Debt

Technical debt has a direct impact on every facet of your business. There are some symptoms that signal it’s time to start addressing your debt:


Increased Costs of Maintaining and Iterating Upon Your Product

High technical debt eats up resources and makes everything grind to a halt. Team velocity slows because your team is constantly fixing bugs and troubleshooting. Your schedule is consumed by putting out fires instead of focusing on how to create value for your customers.




Declining Customer Satisfaction

If you sacrificed principles of good design during development, your customers experience defects, lags, and frustration when using your product. You’ll receive negative feedback and ultimately lose market share to competitors.


Low Development Team Morale

When designers and engineers are forced to compromise the quality of their work, morale sinks. They’ll have to deal with the fallout by fixing recurring bugs and deploying “hot fixes” on a regular basis. This low morale leads to high turnover.


How to Take Control

If any of these symptoms rings true, don’t despair. You can pay down your debt. The first step is understanding the root cause. The next is to create a culture that pays down technical debt without taking on more than necessary. Here’s how to get started:


1. Start a conversation with your team.

Awareness can go a long way toward preventing debt. Establish an ongoing dialogue, and empower your team to create ways to reduce it. Let your team know you understand the challenge in building a solid, resilient product. They’ll feel supported and appreciated.


2. Focus on quality, not time and scope.

According to business commentators Tajima and Matsubara, “the tradeoff between price [cost] and quality does not exist…rather, the idea that high quality brings on cost reduction is widely accepted.” This philosophy is a strong hedge against technical debt.


As James Shore pointed out in his “design debt” article, when you reduce schedule-induced pressure on your team, they get the space they need to work to their full potential. This leads to better design decisions and a higher-quality product.


In some cases, it may be necessary to improve the quality of your team in order to effectively address technical debt. Having members who understand and practice test-driven development is an essential component in keeping things under control. If no one on your team champions this methodology or the team doesn’t feel as though they have permission to implement this strategy, it may be time to make some changes.


3. Reduce feature complexity.

Your product doesn’t need tons of bells and whistles. Not only do they detract from core functionality, but there are also serious long-term costs associated with feature complexity — all of which contribute to technical debt.


Again, focus on quality over scope, and remove or refactor unused features as your product evolves. The simpler your product is, the less technical debt it will accrue.


4. Measure everything.

Data-driven insights empower you to make good decisions. Measure everything from team velocity and volatility and defect rates to key customer interactions. This information will provide a foundation for strategic, informed leadership, enabling your company to operate more effectively and manage technical debt without derailing your operations.


Technical Debt as a Competitive Advantage

Reducing technical debt won’t just lower costs and make your stakeholders happier. It can actually be a competitive advantage.


Take last year’s Amazon outage as an example. It knocked out a number of major Internet-based products, most of which were carrying significant technical debt. They cut corners during the engineering process, and they paid for it when Amazon went down. The disruption to the market was huge.


For the companies with failed products, the outage was a catastrophe. For you, though, the next Amazon-style crisis could be an opportunity. Think about it: A resilient product could have survived the Amazon outage. If another outage hits and you’re not carrying unnecessary technical debt, your product won’t fail. While others are scrambling to pick up the pieces, you’ll reap the rewards of high-quality design and engineering.


Protecting yourself from technical debt isn’t simply about keeping your head above water. By building a culture that prioritizes design quality, you allow your team to focus on creating a product your customers will love, and that’s an investment in your company’s future.


Josh CramerJosh Cramer is the founder and CEO of Cramer Development, a word-class Web and mobile application development company that helps clients create new businesses and products through ideation and technical services. Connect with Josh on Google+.


Photo Credits

1shots | Vichaya Kiatying-Angsulee | freedigitalphotos.net | Courtesy of Author