What is technical debt?

Technical debt is a metaphor created by Ward Cunningham, an American computer programmer:

For example, if you want to start your own business, but do not have enough personal savings, you may opt to take out a loan with a bank. In this case, you incur a small debt now in order to acquire a potentially larger reward later, when your business generates a profit.

Likewise, you may decide to incur some technical debt in order to capture the First-Mover Advantage (FMA) to ship a feature before your competitors go to market. The debt comes in the form of poorly-written code; for instance, you may write everything into a single file (colloquially called a kitchen sink) with no modularization or tests.

In both cases, the debt is incurred with the expectation that it will be repaid, with interest, at a later date.

For development, repayment comes in the form of refactoring. This is where time is re-invested to revise the poorly-written code back to an acceptable standard. As this requires time and manpower, by incurring the technical debt, you are, in essence, trading a moderate increase in development speed now for a significant decrease later.

The problem arises when the debt is not repaid sufficiently quickly. At some point, the amount of maintenance done on the project is so great that no more features can be added, and the business may opt for a complete rewrite instead.