Lovable’s Anton Osika on churn, calculating ARR and his newfound celebrity status

0:00Hello and welcome to the Sifted podcast, the show where we help you get to know the brightest and boldest people and companies in Europe's startup ecosystem. I'm Amy, Sifted's editor and your host. And today I'm joined by a gentleman who you've all heard a lot about in the last eight months. He is Anton Ossica, co-founder and CEO of Lovable, Europe's fastest growing startup and one of the forerunners of the vibe coding movement. Lovable has had an absolutely whirlwind year, launching its website in November 2024 and by July this year announcing that it had hit a record-breaking 100 million in annual recurring revenue, or ARR, which made it the world's fastest growing company.

0:38And it can't have been any less hectic for Anton himself, who's headlined many of this year's tech conferences, including Tech Barbecue, where we're recording this episode of the Zifted podcast, spent a fair bit of time posting on social media, and hired dozens of people. So you're jet-lagged, you're on the road a lot at the moment. What is it like living the life of Anton? Fun. Yeah? Yes, we're building what we think is the best place to build software products. And every week there's someone who reaches out to me. Someone just came up right now and said, Anton, you saved my company with Love Bowl.

1:11It's amazing. So that's very fun. And I'm putting together a team where we're determined to prove that you can create a trillion dollar company from Europe. So that means that we have to work really hard and be very super focused on what we're spending our time on. But what's the most challenging part of being like in the limelight? I just can't imagine what it's like to be, you are like the founder everyone wants to meet and get to know. And at the moment, what's that like on a kind of personal level? So we're recording this at the conference here and it's fun and a bit frustrating how many people come up to it.

1:48But it's possible, I just don't spend so much time walking around on the event floor. Yeah, okay. And what about when it comes to actually building a company in such a public way? What are the kind of, I guess, like pros and cons of that? so far I haven't felt much cons I think it is useful that a lot of people that I want to have a partnership with or similar know a lot about the lovable story so yeah that's fun and people what I want to do is to inspire European founders to try to become a global world leader in an interesting category and that's probably very helpful how we're doing it being public.

2:33Why does the kind of Europe thing matter to you? I think in terms of people realizing their full potential and being able to do that is a lot about believing what is possible. And Europe has had this belief that all the large tech companies are built in the US. I don't think that has to be the case. It's all about if you're very thoughtful about what team you put together and how you work together and just being ambitious enough to operate at the global stage. And I think that's something that people kind of love about Lovable, right? That you're so publicly ambitious about Europe and about what you can build.

3:16And I feel like Europeans don't normally have that kind of storytelling ability. Was that quite deliberate from the start? No, it's just something I started talking about because I care about the topic and a lot of people were commenting on that. There has been these companies around for decades who were already building the same thing as Lovable in the US. And we just came in and ate their lunch and created a better product. So that's what sparked me to start talking about like, hey, more people can build from Europe. This is what it's like to build from Europe. and started sharing about that.

3:55Another kind of pressure I imagine you're feeling is, I find it funny how after you announced the 100 million ARR, it felt like every VC on my LinkedIn feed posted a picture of themselves with you being like, when I remember first meeting Anton, what's that investor attention like? Yeah, that part is a bit crazy. feels it's annoying to have to not answer all these nice people who want to talk with me but what can I say there's been a lot of fear of missing out in investing in lovable and we try to just focus on building the business and as little time as possible on raising capital which is just a one tiny part of making the business successful.

4:42So if anyone listening to this is in the enviable position that you were in where every investor wants to invest in your company how did you go about selecting which ones to to take the money from yeah from the get-go it was a lot about these people that i like and want to work with and there i selected individuals and firms that understand that they could ai side and are a bit like me contrarian about the world since then it's been yeah it's been the same thing all the way like who are these individuals in the companies and how do I think they're actually going to help the company forward Have you already been preempted some further rounds?

5:29There's been many times but not yet What would be the trigger for you to say oh go on then I'll take some more money For us it's about more research on business milestones and having a lot of clarity on why does it make sense to dilute or stop for what can we do with further capital. And so you hit 100 million ARR, fastest company ever to do that in July. What's the next big milestone and when are you hoping to hit it? The next milestone, I think in terms of product capabilities, where in the future entire companies are going to run their engineering product design department on top of lovable and anyone where anyone in the company can go in and find something that they know can be improved in the product like a friction point something that can be polished propose a change to their entire software and then circle circle let the proposed change before it can go straight into production, which is currently difficult to do for many reasons.

6:38And being able to have really complex businesses relying solely on Lavable for evolving most of their product features is a milestone that we have in mind. How far off is that? You'll be able to do this in a few months for a certain scope of companies and products who it will probably always be this like oh but there's if you want to do something very very unique or you believe something very very complex it's going to be maybe years up to fill that entire scope and is that the kind of vision you're selling to enterprise because i know that's a big push for you isn't it is that what they need that you know someone doesn't just pilot a feature or a product in lovable but they can actually put it into production and make it a fully fledged fully functioning thing so if i talk to large companies using lovable there is so much excitement and love for many different use cases inside of lovable and there's everything from finance operations um as i mentioned marketing being able to move very fast and in product engineering design it's actually even though you're not using lovable to go all the way production in most cases i mentioned some example where people build real products but you're saving more than half of all the time spent because you only loop in engineering resources that were the engineers that have context on an existing system or existing system when you're fully certain of what you want to build and that you're validated and that this is actually the right thing.

8:27And in this way, you avoid a lot of the thrash in the engineering organization. So all of these use cases today are super powerful and large companies save weeks of work every week because so many people can move faster. But as you see, the question is Yes, the vision is, of course, that you are doing your production changes with Lovable and you can do them with much more confidence than if you didn't have Lovable and had to rely on humans verifying that all the changes are secure, all the changes are not going to result in the system going down. So that's, of course, the vision that we're building towards as quickly as possible.

9:17What percentage of your customers are big companies at the moment? so in terms of the number of users um i think it's maybe closing up on 10 okay and what's the what's the goal the balance between big and you know the individual customer that you want so in terms of users i think it's going to be more users who are not large companies because there's just more humans that are not working in these large companies they want to create things for themselves and for their small projects and for starting new new businesses playing around i created for the house i live i could my wife created it for a wedding website um but but in terms of maybe the amount of usage and the dollar amount our default is to think in terms of what's the global spend on it in the world and and that's like ratio is 78 80 it's actually large companies I don't think we're going to get that far, but that's the direction we're thinking about it.

10:22So when I speak to lovable skeptics, they're always talking about the churn and how do you get people to stick and use lovable for the long term? What's your answer to that? We're seeing users loving the products and we're seeing healthy churn numbers. there is a certain impact coming from that people want to try out AI tools a lot and aren't ready to pay a monthly fee for the long term but the very healthy numbers if you compare to other products. Are you allowed to tell me any of those numbers? I won't share those numbers publicly today but and and when you you talk a lot obviously about the the arr how do you calculate that figure we just take the monthly recurring revenue multiplied by 12 okay is it is it slightly disguising the fact that you know a whole bunch of those people could just cancel next month and then it's not going to be that money over the year i mean they could cancel but today it's just been that more people subscribe.

11:31So I think you have to count on a monthly basis. This episode is brought to you by HSBC Innovation Banking, the bank built for innovation. Unlike traditional business banks, HSBC Innovation Banking focuses exclusively on the innovation economy. That's why they're the first choice for tech and life sciences founders who are serious about building something extraordinary. They see your potential early, understand the challenges you're up against and bring the right tools, expertise and networks to help you scale to Series A and beyond. So if you're a VC-backed founder looking to take your business from kitchen table to cap table, it's time to talk.

12:10Head to hsbcinnovationbanking.com to get started. And another thing, I've been surveying people at the conference questions I should ask you. Another one people said was, when will you need to raise your prices? I hope you don't have to raise your prices. I think the cost of the AI is going down and if we can reduce our prices, we can serve more people. But this is not something down to analysis on what's the optimal pricing. We think it would be great if we could monetize later in the building's journey and make it much cheaper to create. So the focus right now is on landing more of the big companies, just getting more of the world using Lovable and loving Lovable.

13:01And then further down the line, you might optimize a bit more on prices to improve margins and that kind of thing. Yes, to make sure people pay when they're getting as much value as possible to make those tightly connected as possible is how we think about it. And how much of a concern is it that a company like Figma or another big tech company kind of just copies what you're doing and serves that to the significant bunch of customers that they already have that already love their products? This is not something I think so much about. I just think about creating the best product and continuing to innovate.

13:37Okay. Can we talk a bit more about how you get to the point where you're used by seriously big businesses a lot? What needs to be built to get you there? What are some of the Lego blocks that need to get put in place? We spent the last few months making sure that Lovable meets all of these certifications requirements associated to a similar. And we also spent a lot of time to make sure that applications that are built with Lavable are not shared in public by default. They're secure. There are a lot of checks that run before you publish your application to find the most common vulnerabilities. It's not guaranteed to be secure yet, but that's what we spent a lot of time on.

14:31So currently, there's nothing blocking a large enterprise that wants to move faster and to specifically take many, many useful steps in letting their workforce be more AI literate and just have a better intuition and grasp of what is possible with AI. How can we create software that automates the things we do day to day? How can we use Lovable to create AI tools for making our work and our customers work more efficient? And learning what that looks like that's possible today. And how high touch are those customers? Are you needing to build out a kind of big sales team to kind of manage them and onboard them and help them understand it?

15:19Or can you still be quite kind of small and agile and, you know, use Lovable for them to learn Lovable? It's a good question. I think it's always better to have the product that's simple and intuitive that you do not need to do any type of onboarding. I do think that in the interim, we're spending time face to face with customers because it's a feedback cycle where we learn a lot. and we can just in the moment explain any questions that they have. So it remains to be seen. It's fun that we have this team and business plan, which has been growing very, very rapidly, where large businesses, medium businesses, they use Lovable without having to talk to us.

16:06Okay. And what about your team? How many employees do you have now? 60. How many have you hired this year? Oh, that's a lot. that's like at least 40 I think. And what have been some of maybe the mistakes you've made on the kind of hiring front so far? I think we've been quite thoughtful. I think every, most startup are built such that it's like you hire those people you know from before and your friends and that puts, they construct the team such that people are maybe too similar than what's optimal. now this year hired people with a lot of different types of backgrounds which hasn't been like a focus but it's just I'm happy that that's naturally happened I wish we'd been even more well networked across a lot of different places and hired people from more different places I guess you don't have a playbook to follow as such you in the sense that because so few companies have grown their revenues as fast as you have yes i imagine the kind of you know this stage hire these kind of people at this stage hire these kind of people maybe doesn't apply to you as much no i think it's always about figuring out what does the business need and um i think we should have hired faster i'm almost I'm cautious about scaling the number of people quickly.

17:39I think we should have hired faster. And yeah, it's something we always just had to reason myself to what's the right amount of people. What are some of the key roles you'll need over the next year? So we obviously need to make sure we have people on legal and finance and have the company run at this larger scale that we're operating at right now. apart from that we're looking to hire a very creative and ambitious commercial team that works closely with our customers where the first focus is to ensure they get the full potential of value they can get from lovable and then we're hiring very business-minded engineers that are thinking about the product they're thinking about the users as they do their work so it's very experienced engineers and final question because i know you've got to go be on stage what's the thing you still most love about what you're doing and what's the thing that you wish you could not have to deal with i i love uh like the day-to-day in-office collaborations with my team and what to do in the product and talking about the future.

19:04And I guess I would prefer to spend time with a small group of people and not have to meet a million new people every day. Thank you so much for meeting another new person today, Anton. What a great way to tell. You are different. You are not just one more person to interview for any role. And that is all we have time for. Keep listening weekly for more interviews with the CEOs and founders of Europe's most fascinating tech businesses. And please rate, review and share this podcast. It was produced by the wonderful Maya Durampal-Hornby. And if you enjoyed this episode, please take the very, very quick podcast survey, which is linked in the episode description.

19:46And one lucky listener will get to win a rather nice pair of headphones as a thank you. See you next week.