Could Lovable’s 10% automatic raise be the cure for a toxic culture?

Stockholm-based vibecoding platform Lovable is growing its revenue at an astronomical rate. And we’re doing things that most American companies, startup or otherwise, don’t even think about. The idea is to voluntarily commit to a 10% annual raise on every employee’s anniversary.

In the American corporate world, employees typically cannot receive built-in raises unless they are part of a union. And even then, a flat 10% raise is typically spread out over multiple years of the contract term, rather than annually.

Most companies have stock and profit distribution plans, but what’s different here is that Lovable distributes wealth as a direct source, rather than relying on vesting schedules or employees putting in cash to convert stock options into actual stock.

Now, it’s true that such an overall decent salary increase is probably only possible in smaller companies. LaBable announced in March that it had 146 employees. There are currently 78 job openings listed on the website, and the company expects to have over 225 positions available by the end of the year.

But because the revenue is growing so fast, you can share the cash with the people who are generating the revenue. The company said it increased annual recurring revenue by $100 million in just a few months. LaBable claimed in March that ARR had already exceeded $400 million and at one point predicted ARR to reach $1 billion by the end of the year. Lovable launched its Vibecoding product in late 2024, but it’s been in the doldrums ever since.

It’s also true that for many companies, cash may be too valuable to cover the permanent overhead of high salaries. Stock-based compensation does not provide immediate cash payments. This is a big reason why most startups default to giving employees options rather than increasing base pay.

More importantly, it represents a reversal in the way American companies treat their employees by default. A typical process is: They are hired (often through a grueling multi-step, months-long process) and then undergo an annual evaluation. The message is: prove your worth and get the job offer, then prove it again and again to keep the job. If you’re dreaming of a raise or promotion, first go above and beyond and make your case. Then…you get it.

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

So will Lovable’s approach eradicate 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 that it can.

“Because we don’t take retention for granted. We treat it as a compounding value that is actively recognized and rewarded. There’s no need to re-prove your worth every cycle, so everyone can focus on doing the best work of their lives, not managing optics,” she wrote on LinkedIn.

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

It is also true that this is a skillful holding play. Rabble is almost certainly fending off aggressive poaching attempts from its competitors. The truth is, if Lavable’s valuation continues to rise, more shares could end up being worth much more than a 10% cash raise. Still, while cash is a certainty, stocks are a gamble. And in a world where workers are facing mass layoffs due to AI, even as companies post record revenues and profits, this kind of approach is refreshing.

Loveable has not yet responded to a request for comment.