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

Stockholm-based vibe-coding platform Lovable is growing revenue at an astronomical rate — and doing something that few U.S. companies, startup or otherwise, would even contemplate: voluntarily promising annual 10% salary raises for all employees on their work anniversaries.

In the U.S. corporate world, employees don’t generally get built-in raises unless they’ve unionized, and even then, a 10% raise across the board is typically spread over multiple years of a contract, not delivered annually.

While most companies do have stock and profit-sharing plans, what’s different here is that Lovable is sharing the wealth as a direct raise, not contingent on vesting schedules or the employee kicking in cash to convert stock options into actual shares.

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

Now, it’s true that such a decent raise across the board is made easier — perhaps is only possible — at a smallish company. Lovable is currently at 200 employees but plans to grow to 400 by year-end, with hiring in roles across the board, Caughey said.

Still, the startup is adding revenue so rapidly that Lovable can share the cash with those who are creating it. In some months, it has said, it grew annual recurring revenue by $100 million. Lovable claimed in March that it had already crossed $400 million in ARR and, at one point, projected hitting $1 billion in ARR by around the end of the year. Lovable launched its vibe-coding product in late 2024 and has been on a tear ever since.

For many companies, cash may be too precious to commit it to the permanent overhead of larger salaries. Equity compensation doesn’t cost them cash out of pocket immediately. That’s a big reason most startups default to loading up employees with options rather than raising base pay.

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

Startup grind culture is arguably even more grueling. The trope is that employees are expected to sleep at work to potentially grow the value of their stock, then wait for the company to go public or offer them some kind of tender offer (an opportunity to sell their shares before the company’s IPO).

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

“Because we don’t take retention for granted. It’s treated as compounding value that is 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 life, not managing optics,” she writes in a LinkedIn.

Founder CEO Anton Osika added on Twitter: “Because people get more valuable the longer they stay, and they shouldn’t have to worry about getting a raise or not.”

It’s also true that this is a savvy retention play. Lovable is almost certainly fending off aggressive poaching attempts from competitors.

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

The truth is, if Lovable’s valuation keeps climbing, more equity might ultimately be worth far more than a 10% cash raise. Still, cash is certain, while equity is a bet. And in a world where employees have been subjected to mass layoffs attributed to AI — even as their companies post record revenues and profits — this kind of approach is refreshing.

Note: This story was updated to include a comment from Lovable and its most recent employee headcount.