Could Lovable’s automatic 10% pay rise be the cure for toxic cultures?

Stockholm-based vibe coding platform Lovable is growing revenue at an astronomical rate — and it’s doing something few American companies, startups or otherwise, would even consider: voluntarily promising 10% annual salary increases to all employees on their job anniversaries.

In the US corporate world, workers generally don’t get built-in raises unless they’re unionized, and even then, a 10% raise across the board is usually spread over several contract years and not delivered annually.

While most companies have stock and profit-sharing plans, what’s different here is that Lovable shares the wealth as an immediate increase, without depending on vesting schedules or the employee cashing in to convert stock options into actual shares.

“This program reflects the lasting company we want to build. It applies to all full-time employees who meet performance expectations on their anniversary. The longer someone stays at Lovable, the deeper they understand the company, contribute to its momentum and shape its culture,” Maryanne Caughey, head of Lovable’s people team, told TechCrunch.

Now, it’s true that such a decent raise is generally easier – perhaps only possible – in a small company. Lovable currently has 200 employees, but plans to grow to 400 by the end of the year, hiring in roles across the board, Caughey said.

However, the startup is adding revenue so quickly that Lovable can share the cash with its creators. In a few months, he said, he grew annual recurring revenue by $100 million. Lovable claimed in March that it had already surpassed $400 million in ARR, and at one point predicted it would reach $1 billion in ARR around the end of the year. Lovable released their vibe-coded product in late 2024 and have been crying ever since.

For many companies, cash may be too valuable to commit to the permanent overhead of higher wages. Equity compensation doesn’t cost them cash out of pocket right away. This is a big reason why most startups opt to load employees with options instead of increasing base pay.

The bigger point is that this represents a reversal of how Corporate America tends to treat employees by default. The standard process is: get hired (often through a grueling, multi-stage, months-long process) and then go through annual reviews. The message is: prove your worth to win the offer, then keep proving it over and over again to keep the job. If you dream of raises and promotions, go first and beyond, make your case, then…we’ll see.

The startup grind culture is arguably even more exhausting. The trope is that employees are expected to sleep on the job to potentially increase the value of their stock and then wait for the company to go public or offer them some kind of offer (an opportunity to sell their stock before the company’s IPO).

So, would Lovable’s approach banish the toxic corporate politics that fuel job insecurity and seep into so many companies over time? Lovable’s Head of Growth, Elena Verna, argues that it could.

“Because we don’t take retention for granted. It’s treated as a composite value that’s actively recognized and rewarded. You don’t have to re-prove your worth every cycle. So everyone can focus on doing the best work of their lives, not managing optics.” writes on a LinkedIn.

Founding CEO Anton Osika added on Twitter: “Because people get more value the longer they stay and don’t have to worry about whether or not they’re going to get a raise.”

It’s also true that this is a smart conservation play. Lovable almost certainly fends off aggressive poaching attempts from competitors.

“We hire people with a founder mindset who can operate autonomously, ship meaningful work early, and grow their impact over time. We want to reward that,” said Caughey.

The truth is, if Lovable’s valuation continues to climb, more equity could end up being worth a lot more than a 10% cash boost. However, cash is certain, while equity is a gamble. And in a world where workers have been subjected to mass layoffs attributed to artificial intelligence — even as their companies post record revenues and profits — this kind of approach is refreshing.

Note: This story has been updated to include a comment from Lovable and the latest headcount.