What Is a Password Manager, and Why Does Your Startup Need One


What Is a Password Manager, and Why Does Your Startup Need One

Omar Al Fil

MAY 9, 2019

When you’re running a startup, it goes without saying that you’ve got a lot on your plate: managing your team, updating all your social media channels, responding to user feedback. The list goes on.



Luckily, each of these tasks has its specialized app, service, or tool, many of which have become essentials for startups of all types and sizes. But there is one often overlooked tool that is just as essential as any other; it might even be the most critical. That tool is a password manager.

What is a password manager?

In its most basic form, a password manager is a software application designed to store passwords in an encrypted format, and provide secure access to them.

Password managers can also be used to generate strong and complex passwords, which usually look like a nonsensical jumble of characters (ex: lFpf^#HfVov-G,NJg), and even autofill those passwords for you whenever you log into a stored account. Aside from passwords, many password managers also allow you to store other kinds of sensitive data, such as payment card details, passport information, and private notes.

Generally speaking, most password managers are designed for individual use. However, there are some that also offer an enterprise solution, built with teams and companies in mind.

Password manager

Key differences

It’s important to note that there are different types of password managers out there, with two major points of differentiation:


Some password managers store your encrypted data remotely, on a cloud server, while others keep them stored locally, within your device.

Although storing passwords remotely would allow you to retrieve them more easily, it does put your data at a higher risk of being accessed by hackers. Storing passwords locally, on the other hand, is much safer, but limits your access to that data.


Some password managers allow you to access your data by entering a master password, while others authenticate your identity through alternative methods, like your biometrics (fingerprint, retina, FaceID for iOS users, etc.) or a token-based hardware device, like a USB key.

Memorizing a single master password is a lot easier than memorizing a hundred different ones, but it also makes it easier for a hacker to gain access to all your passwords since they’d only need to figure out one password to get to everything behind it.

An alternative method of authentication can provide better protection and be harder to fool, but unfortunately, it does require the device you are running the password manager on to support it (phone with a fingerprint scanner, desktop computer with a USB port, etc.)

Hackers and Startups

Countless benefits

By now, you probably have a better idea of how password managers work, but you may still be wondering what the real-world benefits of using one are.

01. For you

A password manager can make your life a lot easier, and a lot more secure.

If you’re the type of person who keeps forgetting their passwords, you’ll enjoy having easy access to every single one of them. Plus, not having to manually type in a password every time you need to log into an account will make it much more feasible to use impossibly complex randomized passwords for your accounts, which hackers are much less likely to guess.

02.For your startup

A password manager can give you better visibility and control over the flow of data within your company.

No matter how much you trust your team, some people don’t have the best password habits and could jeopardize the security of your entire organization with one weak password. By equipping your team with a password manager, you’ll be able to ensure that all accounts associated with your company meet a certain standard of security.

Besides the protection it provides, a password manager can also be a significant time-saver. Most password managers allow you to share access to accounts among team members, which means that instead of having to share social media account credentials with each member of your marketing department, for example, you can instead grant them all access instantly via the password manager.

The security and convenience that a password manager can provide your startup should be enough of a reason to make it one of your most essential tools, and if you’re unsure about whether you should go with something conveniently cloud-based or securely offline, we’d recommend something right in the middle.

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