The perverse incentive behind Lovable's growth

Lovable is reportedly the fastest growing startup in the world, so I figured I'd give it a shot.

I've been helping a friend get a film-related mobile app off the ground, so I decided to use Lovable to make a high-fidelity, interactive prototype. I described the app in some detail to ChatGPT and asked it for a concise prompt for Lovable, which it gave me. I plugged it into Lovable, along with a screenshot of a mockup to illustrate the aesthetic.

The result was pretty good. The aesthetic was matched very closely, the basic navigation was there, and the sample data was rich. There were a couple issues about content not being inside the right container, and the bottom tab bar was inconsistent from screen to screen. These were improved but not totally fixed after a couple followup instructions.

What I was surprised by was Lovable's extremely aggressive paywall. On the free tier you get five prompts a day. You quickly run into this because Lovable makes basic mistakes when implementing code (see examples above).

There's actually a perverse incentive at play: if Lovable became excellent at one-shotting users' app concepts, fewer people would hit the usage limits, reducing the growth of their paid tier. I wonder how this is playing out internally...

The need to reprompt Lovable plus its stingy paywall helped me understand why it's growing so fast. Text-to-product experiences are magical, to be sure, and I imagine Lovable's word of mouth is reasonably strong. But now I better understand why they've been so effective at creating an exponential revenue growth chart.

I imagine Lovable users churn often. It's fun to describe an app and then see it exist, but how many of these apps are production-ready, or even apps people intend to deploy? Vercel tracks # of deployments. I wonder how many of Lovable's projects are deployed.

On 20VC, angel investor Fabrice Grinda was asked about whether he worries about missing out on certain hyperscaling AI startups such as Lovable. He responded:

What worries me about the gold rush is there are too many companies doing the exact same thing going after the exact same category, and it's unclear who's going to win.... What worries me about the Lovable-type examples is, yeah, they can go from $0 to $18M in ARR in like three months, but you can go back in the other direction.

I don't know if people remember that AI company where everyone for a month basically changed their profile photo using AI – the name might come back to me. And their MRR went from $250k a month to $30M, and 99% churn a month later they're back to $500k. And they raised at that moment in time. So these things are riskier than people think they are.

Do I think that Github... can launch coding tools to compete with the likes of Lovable and Cursor? Yes, absolutely. I don't mind missing the bubbly elements of the bubble. I worry that people are underestimating the orthogonal risk from either OpenAI extending their stack... I feel people are underestimating the risk of zeroes even though something can go from $0 to $100M in ARR very quickly.

The way that I could see Lovable succeeding is by becoming the prototyping platform of choice for product people (PMs, designers) and agencies.

The latter is particularly interesting, because there's about to be tremendous downward pricing pressure on agencies as everyone catches on to the utility of tools like Cursor and Lovable.

Lovable 2.0 recently launched and it was all about collaboration. I can see Lovable being the platform on which people collaborate on prototypes. Think about this in the agency context: instead of presenting a bunch of slides to a client, hearing feedback, iterating, and then presenting again, you can just pull up a prototype and live update it together in a single session.

I did, however, hear from a designer friend that v0 is better than Lovable. I haven't tried it yet, but I already pay for Vercel, so v0 might become my prototyping tool of choice.

But yeah, I'm somewhat bearish on Lovable after my experience with them, even though they may be the fastest growing startup in the world.