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

Stockholm-based crypto platform Lovable is growing its revenue at an astronomical rate — and doing something that few American companies, startups or otherwise, have ever thought of: voluntarily promising a 10% annual salary increase to all employees on their employment anniversary.

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

While most companies have stock and profit-sharing plans, what’s different here is that Lovable shares the wealth as a direct raise, not contingent on vesting schedules or the employee paying 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 who meet performance expectations on their anniversary. The longer someone stays at Lovable, the more they understand the company, contribute to its momentum, and shape its culture,” Marianne Caughey, head of the people team at Lovable, told TechCrunch.

Now, it’s true that such a decent raise across the board is 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, with hiring for roles across the board, Caughey said.

However, the startup is adding revenue so quickly that Lovable can share the money with those who create it. In some months, it said, it increased its annual recurring revenue by $100 million. Lovable claimed in March that it had already surpassed $400 million in ARR, and at one point, it predicted it would reach $1 billion in ARR by around the end of the year. Lovable launched its biometric coding product in late 2024 and has been on a tear ever since.

For many businesses, cash may be too valuable to commit to larger, permanent overhead expenses. Stock compensation doesn’t cost them cash right away. This is the main reason why most startups default to loading employees with options instead of raising the base pay.

The larger point is that this represents a reversal of how American companies tend to treat employees by default. The typical process is: obtain a job (often through a tedious, multi-step, multi-month process) and then undergo annual reviews. The message is: Prove your worth to get the offer, then keep proving it over and over again to keep your job. If you dream of raises and promotions, go the extra mile first, present your case, and then… we’ll see.

The startup grind culture is arguably even cuter. The metaphor is that employees are expected to sleep at work to increase the value of their stock, and then wait until the company goes public or is presented with some sort of tender offer (an opportunity to sell their shares before the company goes public).

So, can the Luvable approach eliminate the toxic corporate policies that feed on job insecurity and creep into many companies over time? It’s possible, says Elena Verna, head of growth at Lovable.

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

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

It is also true that this is a smart retention game. Lovable will almost certainly fend off aggressive poaching attempts from competitors.

“We hire enterprise-minded people who can work independently, deliver meaningful work early, and increase their impact over time. We want to reward that,” Caughey said.

The reality is that if Lovable’s valuation continues to rise, more shares could end up being worth much more than a 10% cash raise. However, cash is a certainty, while stocks are a bet. In a world where employees are facing mass layoffs due to artificial intelligence — even as their companies achieve record revenues and profits — this kind of approach is refreshing.

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