Managing Technical Debt: A Practical Guide for Startups

Technical debt is one of those concepts that everyone in tech talks about but few manage well. Like financial debt, technical debt isn't inherently bad—we see it as a tool that enables faster movement. But also like financial debt, it can become crippling if not managed carefully.

This article shares our approach to technical debt across the companies in our portfolio.

Understanding Technical Debt

Technical debt is the implied cost of future rework caused by choosing an expedient solution now instead of a better approach that would take longer. It includes:

Code debt: Quick implementations that need refactoring
Architecture debt: Design decisions that don't scale
Testing debt: Missing tests that make changes risky
Documentation debt: Undocumented systems that only original authors understand
Dependency debt: Outdated libraries and frameworks

When Technical Debt Makes Sense

Contrary to engineering idealism, technical debt is often the right choice:

Validating Hypotheses

When you're testing whether an idea works at all, building it "properly" is premature. Build fast, learn fast, then decide whether to invest in quality.

Speed to Market

If there's a genuine first-mover advantage or a window of opportunity, getting something working quickly may be more valuable than getting it perfect.

Learning the Domain

When you don't yet understand the problem space well, building a perfect system is impossible anyway. Better to build something quick, learn, and rebuild with better knowledge.

Temporary Solutions

Solutions you know you'll replace—migration tools, one-time scripts, proof of concepts—don't need production quality.

When Technical Debt Is Dangerous

Core Systems

Debt in core systems that everything depends on multiplies across the entire codebase. Be more careful here.

Security-Critical Code

Shortcuts in security are particularly dangerous. The cost of a security breach usually exceeds any time savings.

Customer-Facing Quality

Technical debt that manifests as bugs, slow performance, or poor UX directly hurts the business.

Compounding Debt

When existing debt makes all future work harder, you're in a debt spiral that needs to be addressed.

Managing Technical Debt Strategically

Track It

You can't manage what you don't track. Maintain a technical debt inventory—major items, their impact, and rough cost to address. This doesn't need to be elaborate; even a simple list helps.

Budget for Paydown

Allocate a percentage of engineering time specifically for debt reduction. We typically target 15-20%. This ensures debt gets attention without dominating the roadmap.

Pay Down High-Interest Debt First

Prioritize debt that:

Slows down everyday development
Creates risk (security, reliability)
Blocks important features
Will be more expensive to fix later

Combine with Feature Work

When building in areas with existing debt, factor cleanup into the estimate. "While we're in there" is often the most efficient time to address debt.

Make it Visible

Technical debt becomes dangerous when it's invisible to non-technical stakeholders. Keep product and business teams aware of debt levels and their implications.

Preventing Unnecessary Debt

Code Review

Rigorous code review catches shortcuts before they ship. Invest in review culture and make it non-optional.

Automated Testing

Tests don't prevent debt, but they make it safer to address. With good test coverage, refactoring is less scary.

Clear Standards

When teams have clear coding standards and patterns, they're more likely to build things consistently and correctly.

Realistic Timelines

Much debt accumulates because of unrealistic deadlines. Push back on timelines that make corners inevitable.

Warning Signs of Critical Debt

Know when debt has crossed from manageable to dangerous:

Simple changes take disproportionately long
Bugs frequently appear in "unrelated" areas
Only specific people can work on certain systems
Deployments are scary and often fail
Engineers are frustrated and demoralized
Technical problems are blamed for missed business goals

If you're seeing multiple warning signs, it's time for a dedicated debt reduction effort.

The Rewrite Question

When debt gets bad enough, teams often propose rewriting systems from scratch. This is almost always more expensive and risky than expected. Before agreeing to a rewrite:

Exhaust incremental improvement options
Understand specifically why incremental won't work
Plan the rewrite in phases, not as one big bang
Maintain the old system until the new one is proven

Conclusion

Technical debt is a normal part of building software. We believe the goal isn't zero debt—it's appropriate debt, taken on deliberately and managed actively. We recommend treating technical debt like financial debt: useful for enabling investment, dangerous when it spirals out of control.

The best engineering teams take shortcuts when they make sense, document the debt they're taking on, and systematically pay it down before it constrains the business.