1Password raised consumer prices 33% while founders cashed out $75 million, replaced the entire C-suite with enterprise operators, and let the product that built the brand quietly decay. A price increase — or an exit strategy wearing one's clothes?
On February 24, 2026, 1Password emailed subscribers announcing a 33% price increase effective March 27. Individual plans would rise from $35.88 to $47.88 per year. Family plans from $59.88 to $71.88. The company cited continued investment in innovation and security.[1][2]
Taken alone, a price increase is routine. But this one arrives at the end of a 10-month sequence that tells an entirely different story: the founding CEO moved to an advisory chair, the original CTO and CRO both departed, seven new executives — every one drawn from enterprise SaaS backgrounds — were installed, the founders sold $75 million in equity via a secondary sale, and the consumer product that built the brand was left to decay while all engineering investment flowed into enterprise identity security and agentic AI.[3][4][5]
The 33% increase isn't funding innovation for consumer users. It's inflating annual recurring revenue ahead of an anticipated IPO. The founders already voted with their wallets — $75 million worth of votes — and the product people loved is now being run by operators optimizing for an S-1 filing.[6]
Meanwhile, the competitive landscape has shifted fundamentally beneath 1Password's feet. Bitwarden offers comparable functionality for $10/year — open source, auditable, self-hostable. Proton Pass bundles password management with encrypted email and VPN for $24/year. Apple's built-in Passwords app is free, natively integrated, and improving rapidly. The era when 1Password's polish justified a premium is over — especially when that polish has eroded.[7][8]
Greg Henry joins as CFO. Jeannie De Guzman transitions from CFO to COO. Abe Ankumah (ex-VMware, Meraki/Cisco) appointed Chief Product Officer. All enterprise SaaS backgrounds.[9]
Enterprise BenchAfter 13 years as CEO, Jeff Shiner moves to Executive Chair. David Faugno — a former Accel venture partner and Qualtrics CFO — takes sole CEO control. Faugno tells The Globe and Mail 1Password is "on track for an IPO."[3]
Founder TransitionPedro Canahuati (CTO, 4+ years) and Julian Teixeira (CRO, 4+ years) both leave within the same month. Teixeira wrote: "It's the right time to pass the baton."[4]
Old Guard Exits$100M secondary sale completed. Founders sell $75M in equity to Halo Fund (co-founded by Utah Jazz owner Ryan Smith) and Accel partner Ryan Sweeney. CEO Faugno calls it "founder liquidity."[5]
$75M Cash-Out1Password announces it surpassed $400M ARR, 75%+ from enterprise. Michael Hughes (ex-ChargePoint, Barracuda) joins as President. John Torrey (ex-Qualtrics, SAP M&A) becomes CBO. IPO bench complete.[6]
IPO Team AssembledNancy Wang appointed CTO. Previously GM and Director of Engineering for AWS Data Protection — a business with 160,000+ enterprise customers and billions in ARR. Her mandate: AI strategy for identity security.[10]
Enterprise CTOThe cascade originates in D5 (Quality) — the degradation of the consumer product — and D1 (Customer) simultaneously, creating a reinforcing loop. Quality decline drives customer dissatisfaction. Customer deprioritization further reduces quality investment. Revenue (D3) catches the downstream impact as churn meets commoditized alternatives.
| Dimension | What Happened | Cascade Effect |
|---|---|---|
| Quality (D5)Origin · Score 37 | Native Mac app replaced with Electron framework, degrading performance and feel. Safari extension became unreliable. UI complexity increased. The headline consumer innovation for the price increase: "AI-powered item naming." Meanwhile all engineering investment flows into enterprise XAM, agentic AI identity, and developer SDKs.[11][12] Product Quality Erosion | Users report that the product has gotten noticeably worse while prices rise. The one consumer security feature — pasted login phishing defense — launched in January 2026, but Bitwarden had equivalent functionality for years. The quality-price inversion is the trigger for the D1↔D5 reinforcing loop.[13][14] |
| Customer (D1)Co-Origin · Score 37 | Millions of individual and family subscribers who built the 1Password brand over 20 years are being treated as a revenue extraction target. The company now derives 75%+ of revenue from enterprise. No consumer product leader exists in the new C-suite. Community reaction to the price increase was severe and immediate.[1][6] Consumer Abandonment | The switching cost moat is the only remaining defense. Users don't like migrating 400+ passwords. But a 33% price increase is exactly the kind of event that overcomes inertia — especially when Apple Passwords is free, Bitwarden is $10/year, and the product getting worse removes the emotional attachment that prevented switching.[7][8] |
| Revenue (D3)L1 Cascade · Score 26 | Classic VC exit trap: short-term ARR inflation via consumer price increase risks long-term subscriber erosion. At $47.88/year, 1Password is now 4.8× more expensive than Bitwarden and 2× more than Proton Pass. The $6.8B valuation (set in 2022) needs justification for IPO, and consumer churn could undermine the S-1 narrative.[5][15] ARR Inflation | The revenue gamble: if 20% of consumers churn but remaining subscribers pay 33% more, net consumer ARR is roughly flat. But the brand damage is not flat — every churned user becomes a vocal critic, and the organic growth engine that fed enterprise adoption (developers loving 1Password personally, then bringing it to work) stalls permanently. |
| Employee (D2)L2 Cascade · Score 11 | Seven new C-suite executives in 10 months. Original CTO and CRO departed. Founder moved to advisory role. The consumer-first DNA that defined 1Password for 20 years has been replaced by an enterprise SaaS operator playbook.[4][10] Cultural Reset | Identity crisis is real but contained. The employees who joined to build a beloved consumer product now work for a company optimizing enterprise identity security metrics for an IPO. Minimal external cascade — this is internal, but it explains why the consumer product has stalled. |
| Regulatory (D4)L2 Cascade · Score 1 | Minimal direct regulatory exposure from a price change. However, an IPO filing will require disclosure of subscriber metrics, churn rates, and revenue concentration — potentially exposing the consumer-to-enterprise revenue shift to SEC scrutiny.[15] IPO Disclosure Risk | Low probability, but the S-1 filing becomes the forcing function. If consumer churn accelerates post-price-increase, the company must disclose it — and that narrative may not support the $6.8B valuation story investors expect. |
| Operational (D6)L1 Cascade · Score 17 | Support ticket surge anticipated from cancellations, billing disputes, and migration questions. In European markets, 1Password plans will be automatically canceled if customers do not explicitly approve the price increase — creating operational friction at scale.[2] Cancellation Wave | Migration friction is the only remaining moat. Once users overcome switching costs, the exodus is permanent. Password manager switching is a one-way door — users who leave don't come back when prices stabilize. |
The core value proposition of a password manager — generate, store, autofill, and sync encrypted credentials — is now table stakes. After March 27, 1Password becomes the most expensive option in a market that has moved decisively toward free and open-source alternatives.
| Manager | Individual/yr | Family/yr | Open Source | Free Tier |
|---|---|---|---|---|
| 1Password (post-hike) | $47.88 | $71.88 | No | No |
| Bitwarden | $10.00 | $40.00 | Yes | Yes (unlimited) |
| Proton Pass | $23.88 | ~$59.88 | Yes | Yes (generous) |
| NordPass | ~$17.88 | ~$43.68 | No | Yes |
| Apple Passwords | Free | Free | No | Built-in |
Extended Access Management, Secure Agentic Autofill (Browserbase), Perplexity Comet integration, AWS Secrets Manager, developer SDKs, Unified Access governance. $400M ARR, 75% from business customers.[12]
1Password's transformation over 10 months maps precisely to the private-to-public playbook. Install a CFO who's taken companies public. Bring in a President to scale enterprise revenue. Hire a CBO with M&A experience at SAP and Qualtrics. Appoint a CTO from AWS to own the AI narrative. Provide "founder liquidity" so insiders can diversify before lockup. And boost ARR in the final quarters before filing.
We believe this will be a public company some day and that is how we're building the team and scope. We're in the fortunate situation where we get to call the shot on when that happens.
— David Faugno, CEO of 1Password, The Globe and Mail, March 2025[15]
The $920 million in total VC funding — from Accel, Iconiq, Tiger Global, Lightspeed, and celebrity investors including Scarlett Johansson, Robert Downey Jr., and Ryan Reynolds — demands an exit. The $6.8 billion valuation set in 2022 needs justification. Every executive hire, every secondary sale, and now this 33% price increase serves that singular objective.[16]
Faugno told CNBC in November 2025 that 1Password is weighing a 2026 or 2027 IPO. The consumer price increase, timed precisely to inflate ARR in the quarters before a potential filing, is the final piece of the puzzle.[6]
A 33% consumer price hike, timed after a $75M founder cash-out and complete C-suite replacement with IPO operators, is not innovation funding — it's ARR inflation ahead of a public offering.
Quality degradation drives customer dissatisfaction. Customer deprioritization further reduces quality investment. Once this flywheel spins, switching costs are the only brake — and a 33% price hike is exactly what overcomes switching inertia.
At $47.88/year, 1Password is 4.8× Bitwarden and infinitely more expensive than Apple Passwords. The moat they had — polish, UX, cross-platform reliability — they eroded themselves with the Electron migration.
$75 million in secondary sales tells you everything the price increase email doesn't. When the people who built the product take money off the table before the IPO, the consumer roadmap is no longer the priority.
Most organizations see the email. The 6D Foraging Methodology™ reveals the ten months of decisions that preceded it — and the cascade that follows.
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