Scalability

The ability of a system or business to handle much greater volume without a proportional rise in cost or a loss of reliability.

Example

Software that serves ten times more customers with only modestly higher infrastructure cost.

Important

A product that works today may need significant rebuilding to scale.

Related terms

  • Technical debt — The accumulated future cost of shortcuts and outdated decisions in a product's code and systems, paid as extra time and risk when making changes.
  • Gross margin — Gross profit - revenue less the cost of goods sold - expressed as a percentage of revenue. It asks whether the thing being sold makes money.

Lessons that explain it

  • Ask what breaks, and what it costs, at ten times the customers — Technical diligence tests whether a product can serve far more customers without collapsing or destroying margins, by looking at architecture, infrastructure costs and past incidents. (11 min)
  • Technical debt shows up as time engineers cannot spend on new work — Technical debt is the accumulated cost of shortcuts in a product's code and systems. Diligence measures it through how much engineering time goes to maintenance, how fast changes ship and how often they break things. (10 min)

All 578 terms in the Investing glossary