How Dream Stories Sold Close to 100,000 Personalized Kids Books With Paid Ads

Can I ask how many sales total you have so far?

Yeah. Close to a 100,000.

That's a ton. When did you launch?

At the beginning of this year. We only really started scaling, very recently. Right?

Can I just do that math? I mean, can I do a 100,000 sales times 60 apiece? You guys have done $6,000,000 in total revenue life to date.

So I think this month, yes, we're in the 6 figures. Everything else you see is is custom built.

Hey, folks. My guest today is Ricardo. He's the cofounder of Dream Stories, harnessing generative AI to bring immersive storytelling and image creation to life.

So I started noticing this repeatable pattern that I've... That I figured, you can build services around this. Right? You know, something that grows with you and kinda, you know, matches the phase that that you're in.

Before launching the company in 2023, he was VP of growth at a body scan startup called Neko Health. Prior to that, he founded a snack company and was a founding member of Spotify's US team. Ricardo, are you ready to take us to the top?

Absolutely.

Alright. People hear Spotify in early, and they assume you got rich off options. Is that accurate?

Fairly accurate. Yes. I was early enough that it made it made sense. Yes.

What year was that?

So I joined in 2009, I guess. Yeah.

Okay. Interesting. And is it fair to say, because I wanna understand they build up obviously the dreamstories.ai. Did you basically take a big chunk of the money made there and sort of plow it into the new the new venture, or how did you think about that, those options?

Yeah. No. Part of it, yes. But I I did start a few companies in between as well that I've also had an exit for, so so a mix of both. Right? So the Spotify got the car and the house, and then the other stuff got the company going.

Fair enough. Okay. Let's not bury the lead here. Let's get an overview of Dream Stories first, and then we'll go get your sort of history between Spotify and Dream Stories. So what is dream.ai?

Mhmm. Yeah. So dreamstories.ai is... I usually describe it as either in the content studio or personalized content studio. So this is actually an idea that I had you know, it actually dates back to Spotify, funny enough, from, you know, I initially at Spotify was on the content team, so I dealt with, as you can imagine, with the the large catalog we had there. And I started noticing that there was content in the platform that was personalized.

This could be birthday songs or love songs and so forth. And back then, I had this thought experiment, if you will, about I wonder if one day we'll have, you know, Beyonce sing the song for you or something like that. Right? And I... This was this was really just experiment. Was no... Sorry, a thought experiment. Right? There was no AI to do it. There was certainly not generative AI. But it's interesting that throughout my career, I've

always worked somewhat around personalization and trying to do personalization at scale. As you mentioned, I founded a snack company where I was trying to do personalized nutrition for people with The Body Scanner, which is actually a company by Daniel Ek as well of Spotify. We're almost doing the same thing in the reverse manner. You can think of healthcare as an artisan good. You sit there and there's a doctor across from you performing a service for you

one on one. And with Neko Health, we are trying to scale it, right, at mass, a good service, a personalized service at scale. And so Dream Stories is a connection of these things and trying to do that for content, essentially, because when, as you mentioned, I started the company in 2023, this was around the times you started seeing stuff like Sable Diffusion come out you know, with the with the, you know, in mid journey and so

forth with the with the image stuff. And I... When I saw it, to be honest, I had this moment. Said, oh, shit. This is the moment where these things actually become possible. Because in the meantime, you've seen stuff like SUNO come up, you know, the music gen... Generative music stuff.

S u n o?

Yes. There there's stuff like Suno. There's a few other models out there that let you create personalized music, if you will. I actually think this is is more interesting for our use cases other than music, and and that's kinda... We we built the company around the experimentation around those those contents. Right? And so we decided to start with the family content, particularly children's books as as a first market, but essentially, we're building the The real core

of what we're building is the platform that allows you to take a consumer that is not technical, right? And give them the ability to create and basically create content for self consumption, right? Of their own family.

Interesting. And I'm just trying to think, like, what's the comparable. Right? So are are parents still buying physical children's books for their kids, and are you gonna go take that market share? Or sort of how do you how do you think about that? What's the revenue model?

Yeah. It's actually... So I... It's not a coincidence that, you know, things lined up as I as, you know, as I looked at the behavior at home with my own child. And then started noticing that my, you know, with my family, like we read to our to our son every night. And I started noticing this is kind of a recurrent behavior that happens every single night. There's something interesting about children's contents as well that is quite...

It's repetitive to some degree, but, you know, it changes after a while. So a child will basically will want to read or consume the same content multiple times in the week and then move on to the next thing. So I started noticing this repeatable pattern that I've... That I figured you can build services around this. Right? You know, something that grows with you and kinda, you know, matches the phase that that you're in. It also happens

that I'm Portuguese. My wife is Swedish, so we're, you know, similar culture but different languages, and so I realized, you know, there's a lot of people out there that we could create content that will be hard to find in stores. Right? But to your question about if I'm looking to take that market, it's actually still a growing segment. It's actually one of the ones in books that continues to grow in part because parents wanna get kids away from tablets and digital formats, particularly at bedtime.

But that's kind of how I saw an opportunity to use that as an entry market, right? But also one that is filled with sort of what I'll describe as non tech players. As you can imagine, there's a lot of investment in video and other formats. You saw Sora come out with generative AI video. And I have no interest in playing in a market that has very diluting margins because of this extremely overly well funded players bringing the cost either to zero essentially.

What's the status though right now on the company? Are you pre revenue, post revenue?

No, we're post revenue, so we're selling. We've done it in a very iterative manner, right? So we basically wanted to get to market as soon as possible with a prototype, right? Which catches a segment of it. Way I try to explain to people is that you can imagine that there's people that literally just wanna sit in front of the TV or something and just watch, be something fat to them, and there's people that have a lot of agency that want to create their

own stuff, and they'll go to the trouble of doing it. And we started with a very simple product where all you need to do is really submit the picture, as you can see there, and basically it will create a content for you. And as we are evolving, we collect more data, we're evolving it to be become, give you sort of more agency, like being able to be more tailored to what you want. So we got a

lot of requests around this into essentially it better for the... More personalized in a way.

This is a company I just invested in here in Austin, Texas, their general store. So maybe we'll get a children's book about Ian and Jess, the co founders, on this. But this is interesting.

Yeah. In this case, will be only for one of them, but the first one, right? We actually do allow multiple characters in the book, but you have to currently have to do it one at a time. But it's fine. Let's see. I I don't You

know big deal, but we'll

can keep going, and then essentially after you create the content and decided this is actually what you want to do, you say you picked up the woman. Oh, yeah. But... Yeah. And then later, you know, if you keep going, you know, eventually you will hit the paywall to create the the full book for you.

Mhmm. Interesting. You capture me as a lead. Okay. You get my phone number so you can follow-up if you want. And then what I say to pay all after that?

Mhmm. Yeah. Gonna get to the item.

You So an idea this kind of what's the total price gonna be?

Yeah. With this discount will be 48.

Oh, interesting. Okay. Alright. So are people making their kid the hero?

Generally, yeah. We have sometimes pets, but the vast majority will put their kid. Right?

Wait. So where's the paywall? When do I hit the paywall? Oh, order book. There

we go.

Oh, I see. Is this accurate? So you had six forty eight sales so far?

No, we have more sales. Those are reviews, right?

Oh, sorry. Can I ask how many sales total you have so far?

Yeah, close to a 100,000. Are

the That's first, a ton. When did you launch?

We launched at the beginning of this year. We only really started scaling very recently, right?

That's wild. I mean... And and was your price always like $60 a pop?

Yeah. We've actually played a little bit with it, you know, sort of back and forth. Generally, it's been around $60.60 dollars, but... And that's the place we've been sort of most comfortable with.

Mhmm. Mhmm. Mean, can I? I mean, Ricardo, you know my next question. Can I just do that math? I mean, can I do a 100,000 sales times 60 a piece? You guys have done $6,000,000 in total revenue life to date.

You can do the math. Will say that, of course, we have some discounts like you mentioned, the the 48. Right? So if you wanna get accurate. We also have some volume discounts as well that we do. And so and so you do

What's fine, but still this is impressive. Can... I mean, fair to say even with discounts, can I just say, I'll be really conservative? You've done over $3,000,000 in lifetime sales so far. Mhmm. Is that is that fair to say? That'd be like a 50% discount on the 60 on... $60 on average.

I'll say ballpark.

Okay. I mean, that... That's pretty cool. Mean, I would not have expect... When I was prepping for the thing, I'm going, okay. I don't know if they're live yet looking at the website. It's so, so, so simple. But then the first hint that you were bigger than I thought was when I saw the number of reviews, which is incredible. What would you sort of credit that kinda... I mean, it's a very simple onboarding processes. I mean, is that part of the magic? It's so simple. It feels like magic?

Correct. To be honest with you, I always wanted it to be like that. You know, I... In general, the the companies I I worked at, I've always wanted to kinda feel like end holding a little bit, you know, kinda guide you through in a linear path. Actually, only recently we're able to get it that way. This is kind of where you see this agentic products going to, where it's like, it just again takes you... It doesn't

make you learn a SaaS platform or whatever, just guides you over. So that's kind of all we wanted to do. That's also where you only started scaling it more recently, right, because we started essentially being able to deliver this kind of experience. Right?

Mhmm. I I just wanna make sure... I feel like I'm missing something. Right? Because I'm trying to... Once I hear what your volume is, I'm going, wait. Holy crap. How is it getting all this traffic? So I stick your thing in Ahrefs, but this clearly is not your growth channel because you're you're only getting about 61 hits per per month via Dreamstories. Are you, like, eye framed into some other sites somewhere? How are you getting all the... All these sales?

I mean, we're getting a lot for you via, you know, via Facebook essentially. So we actually not not doing so so much so much organic here.

I see. Okay. So so you're like, you have a community on... Tell me more about the Facebook strategy.

Yeah. No. I mean, so one thing I've done, I've done quite a lot at at Spotify and after was paid acquisition, right? Actually with Spotify we were extremely early on the mobile ad networks and so on and so forth. So it's not a community, Most of it is actually paid acquisition. And that's one thing that... Also one of the things I like about the of the way I built these things or the category, if you will,

is that the competition tends to be very one time oriented. And Mhmm. You know, if you're doing sort of a... If you're doing paid acquisition, you know, it's a bit... Obviously, it's a bidding model, so you... Or an auction model, so you wanna outbid people. So of course, it's kinda just key to take something that is like a a one time purchase and turn it into an episodic thing that happens multiple multiple times over. Right?

Mhmm. Makes a lot of sense.

Can do it. So, of course, if you can do it, you can make the economics work. Yep.

Yeah. What... So, I mean, you... I gotta dive deeper here because there's something to learn here. I mean, you've done paid spend. It sounds like a lot of places, and you're using it to launch your startup, which is which is pretty incredible in terms of a day one strategy. Most people wait to do paid ads until they have, like, a lot of scale. So I guess how do you know what you're willing to pay on it, you know, to get a 60... A new $60 sale?

Mhmm. How do I know? Is that the question?

Yeah. Well, what is your target? Like, you trying to spend under $10 on the ad to get the sale on Facebook ads or under $5? How do you get the ratio?

Yeah. No. I'd like to. Right? But what I usually tell people, and that's a litmus test in every single company I've worked, I said, okay, you haven't done any ads. What do you expect your CAC to be? I usually tell that you should ballpark it to around the the... Ballpark around what their AOV is, which is not a great answer, but it tends to be the case. Like, the agencies, a lot of the times, they kinda stop

Just to be clear, Ricardo, for folks that don't know the acronyms, AOV, you're basically you should ballpark that the the... What you'll spend on Facebook ads is equal to the average order value of the first checkout. So $60 for you or 48 Yeah. Dollars for

Yeah. Exactly. By the way, that's that's like I said, if you're gonna start, right? You you wanna budget the... You know, for... Let's say you're aiming to get fifty fifty sales per per week or something that used to be traditionally the the threshold until Facebook considers that your campaigns are learned... Have learned. So does if you have to budget, you kind of make the maths from that. Right? So if it's 60, let's ballpark it to 60.

Then of course, why do you do that? Well, because there's a bit of arbitrage here. A lot of people use bid caps and whatnot, and so they stop bidding at when it crosses the... Under the sort of the one bar. And so like I said, if you're competing in

Under one way?

Other one ROAS. So essentially this idea of like you spend $60 to get $60. Right? So does you have a ROAS of one. Right? Of course, by the way, you want to have higher than that. Right? You wanna have two, three, four, whatever you can get. Right? But I'm trying to say is that a lot of the times there's a bit of an arbitrage around one because that's where everyone else starts... Stops... Spend up until that

point. Right? And and so essentially, if you... But if you can take, something that is the... Again, if your competition is doing, let's say, 60, right, if you imagine, and and, of course, you can now beat above it because you have either repeat behavior or some so so forth, then of course, cannot beat them and you can make the the the economics work. Right? In this category, not not coincidentally, the reason why I picked this category

is because there was an existing behavior, which was gifting, right, around people gifting to others. And you can search through our personalized books, there's a category with a lot of products, some better than others, and thus the behavior was there. My challenge was essentially just to build something that is that is better or slightly better and be able to just outbid them. Right?

Yep. So what are what are the rest of the economics in there? Like, how do you how do you really grow this thing? Right? Because if you're spending $60 just to get the sort of the customer email, right, to try and resell them the second thing, but your margin also gets cut a little bit too, right? Because you actually have to print and ship these books, right?

Mhmm. Yep. Yeah, we do. But like I said, the upside of this is essentially the repeat purchases, right? They essentially get people to do it. In this case, put an adult. Right? But what happens a lot of the times, and this is actually one of the things we're the only people that I've seen doing it, we have multiple characters per book. Like I said, in this case, to add both of them, you'd need to... In the

book, there's a button to add someone else. So what ends up happening is that a lot of the times people will add different members of the family, cousins, so on and so forth. And as a consequence, they end up they end up, you know, they end up getting what I call reverse books. So essentially, can I get the exact same book, but the other kids is the hero, right? So they just reverse it. And

it's a common behavior we see. Of course, the stories are episodic as you can see there. And we have a number of templates that we created with artists. But eventually I want this to be infinite, right? Essentially, and that's what we're working on. The infinite content machine that essentially can... You like dinosaurs, great. You can keep on going with dinosaurs for the rest of the journey. Right?

How are you die... Did you... Is this hard coded? You're programmatically running the economics on how to offer the discounts or are you using some plugin or API tool to figure out how to drive up conversion and and AOV on this page?

No. That's all in house, actually. We built that ourselves.

Really interesting. I imagine you built some secret sauce into that that no one else has. Is it... Can... Is that true? And if so, can you give us a hint?

You mean the the sort of the general ecommerce stuff?

Yeah. I mean, right, there's a lot these tools that help you, like, drive up AOV on the last page. Right? Like, you know you know, double the order, increase the size, get one for your friend, you know, a discounting. Right? You chose to build it from scratch for a reason.

Yeah. I mean, I've been... So the thing is that there's a lot of things out there that work very well for ecommerce sites or with a a lot of SKUs and and sort of... Wouldn't... I don't wanna call generic products because I don't wanna imply they're less... There's anything bad about them. But in my case, we both came to the snack company in this one. It's generally I'm trying to build a service. So something that essentially

feels more like a service. And so does I end up building a lot of stuff like that is actually custom? So what you see here, this is Shopify, right, and it's very standard. Everything else you see is is custom built, right? It's not... We only use really Shopify for the last last piece in order management and so on so forth.

This is super interesting. Well, I just have to tell you, I mean, when we were prepping this, like, and I saw the website, I'm like, okay, maybe pre ribbon rod because it just looks so simple. But once you get in, holy mackerel, there's a lot of thought inside of this thing.

And I have to tell you, I think you're actually in the AB test, You're seeing a version that I like least. So so I I wish... In a way, I wish that you were seeing... Was like, you're you're showing this, and I'm like, oh, shit. I wish you was showing the the

the How many AB tests are you running at any given point in time?

Oof. It's quite a lot. Right? The problem is that you, you know, right now I can tell running four. The the problem is that depending on what you're testing, you eventually start getting a lot across the results and you just start needing needing a lot more scale to to make sense of the, you know, of the of this sort of the statistical stuff here.

What plugin are you using for this? A lot of people don't like some of these like review sites where they basically own all your reviews if you don't pay them massive amounts of money. What did you use to build out this sort of wall?

Yeah. This I... I'm glad to give them a shout out because I really like them. That's Loox, l o o x x. Yeah. Yeah. I'm super happy with them. They're very good. They're very good at getting videos as you saw. You saw some on the funnel there. They're... Yeah. They're actually a plugin we use that we're very, very happy with. It's also that sometimes you deal with companies that that you can just tell that they, you

know, they really go the extra mile. They they mean business in a way. Right? And it's it's hard to describe, but if you set up something with them, you're kinda gonna understand that, you know, they're competent. Right? I don't know where... I don't know if you're... I'm sure everyone has at some point dealt with just companies that you just, oh, shit. And this guy is just so bad. Looks looks is like I... I'm just very, very happy with them and impressed with overall their their funnels, their setup, their level of polish. It just seems like they care. You know?

I love that. I love that. This is super... Man, I... I'm just... I'm learning so much on this, so I know my audience is gonna love this. Well, I guess, let me get a sense of how... I just asked you how many AB tests are running. You said four. I mean, how aggressive are you being on your on your big channel? Like, the paid spend stuff. Are you comfortable sharing how much you're spending, like, per month? Is it is, like, 6 figures on Facebook ads or or less?

It's... Yeah. It it honestly really depends. I think this month, yes, we're in the 6 figures. We're we're, you know, we're kinda changing it often, you know, oftentimes, like, we we end up changing it back and forth.

Okay. And, immediately, people are gonna go, well, okay. This guy must have raised a bunch of money to do that, he's just... He's really rich, ponging his own money. Which one is it, or did I miss an option?

No. I mean, again, if you make the economics work, you don't need the... You cannot need that. Right? I I don't wanna be... Don't wanna think there's such a thing as, like, free lunch. Right? So I'm not gonna tell you there's, you know, there's a golden pot here. You should come eat it. But it does it does take a lot of it does take a lot of work, right, to to build this to build this. So

so yes, I I did put put some money. I did raise a little bit of money, not not a lot externally. I... But, you know, I'm essentially building an AI content startup. Usually, that's extremely capital intensive. And the difference with me is that I chose to go a route where instead of giving people, know, essentially shit for free that I have to subsidize, let me come up with a, from day one, a model that I can

monetize it. So while in a sense, it's more I'm building in a more conservative manner if you think about it, because it also brings a lot of headaches because I'm constantly having to balance the long term vision of what we're building with the short term sort of economics. It's not always easy, but

it it also feels more grounded. Right? I think sometimes one thing I see in some in some startups is that, let's put it to where they go for bust, and that's sometimes really good, right, because it really works. Right? But then other times, you know, you see that they launch a product and it doesn't stick, and then you spent all this money and time building something that you never had market validation, right? So I kind of

was a bit more, some people would say conservative in a good way, some people would say conservative in a bad way, right, due to being too conservative. But that's nonetheless what I've... What I'm doing.

And what... So are you comfortable sharing how much you raise in your seed round for this company?

To be honest with you, I never shared, but I can tell it was less than than 1,000,000 externally.

Oh, okay. Okay. Got it. Okay. Well, look. We... I told you we would talk about your... Where you're at today, and I think it's your story. I got so intrigued with your story. I mean, your... Where you are today, I didn't ask anything about your story. Let's go just backwards for a second. So Spotify 2,009, then you do Kencko. I believe you did, what, a $3,400,000, I think, raise there. It was a freeze dried smoothie based off my research. What happened to that company?

Yeah. We can... We raised more with Kencko. I think that, to be honest, top of my mind, I remember maybe 20 or 30,000,000 total Oh, wow. For for the company. Yeah. The fur... Maybe you're talking about the first round, was a 3,000,003 million round, a 3,000,000 seed round.

The seed. Yeah.

Yeah. Yeah. No. It's it's still around. I think that the the... With... You know, basically, I've always had an interest in Southern Nutrition and FoodTech in particular. And so I got introduced to a guy that was making some experiments with it, I saw like an opportunity to build a service around it, again, as opposed to a one time thing. And so that's what I did. Now the company moved a little bit away from sort of direct

to consumer into sort of selling on retail channels. In fact, that's also a plug I can make. You should go to Walmart or CVS and buy it. I'm still I'm still a large shareholder in the company, so I would appreciate that. But... Yeah. But it but it moved away a little bit for... Or for that... For for for essentially those channels. Right? And so

So your co founder, Thomas, he's he's still running it then?

Absolutely. Yeah. And he's doing a great job. He's a... I think I'm more of a digital slash technology guy. He's more of a traditional CPG guy. So we're we're actually a great team in that regard. But when the company... You know, we made this decision together to move more into retail, and and I felt he's the right guy to lead it, right? And so does, I stepped down from the role. But nothing bad happened there, right? Just basically different direction for the company that made more sense for Tomas to lead for the long run.

Mhmm. Yep. Yep. Super cool. Wait, this really valuable.

Buy it at Walmart. I feel like it was a good decision.

That's smart. Okay. Cool. Last question, then I'll throw it over to you. How many folks are full time right out the business?

Yeah. We're a very small team. We're currently seven on the team. So very, very, very small team. Most of them engineers, know, as as... Like I said, as we build out the platform.

Mhmm. Mhmm. Yep. Makes a lot of sense. Are you using any technology to drive all the... When someone clicks on one your Facebook ads, do they just go to your homepage or are you doing like a bunch of funnel testing there too?

We do, but it's mostly in house. Right? It's similar to the platform we use for for a b a b test. I mean, we use... It's not a secret. We use we use PostHog for for data analytics and so forth. Also shout out to them. Probably the best in... I feel like every two years or something, there's a new shiny platform. So maybe in two years we talk and I'll tell a new one. But PostHog is really good. I would really recommend it. Shout out to them. And so that's kinda what we use.

Just to be clear, PostHog, you're talking PO, this one, right? PostHog, this is their website, right?

Correct, yeah. They're very funny The website is not very serious, you know? It's kinda unusual. Yeah. Unusual for, you know, B2B SaaS, but nonetheless, it's very cool.

It works, yeah. So that's part of your tech stack. Look is part of your tech stack. Any other tech thing that you use that have just blown you away that you wanna give a shout out to?

I mean, not new. Right? But I think Shopify is still very good. Right? I'm quite impressed with the product and we used it, you know, at Kencko and and now for a very long time, but that's not like the... I I guess that's not what your what your audience wants to hear. Right? Because everyone already knows that. But still, shout out to them. I think they they do a good job, and, you know, they do what they do very well.

Yeah. No. Look. We we love the space. I mean, you you know me as podcast host because that's how your rep reached out. But my full time thing is, you know, we've deployed a $250,000,000 into companies as non dilutive capital. It's my own fund, and we've just started deploying money into Shopify applications, like funding basically ad spend. Exactly... Almost exactly what you're doing. Right? And just undercutting Shopify money. It's a huge and powerful ecosystem. So Mhmm.

Makes tons of sense. Anything else that you... That I should have asked you, Ricardo, that I didn't over the past fifteen, twenty minutes?

You should ask me if I'm hiring because I am.

Are you hiring?

Yes. I'm hiring. So please, you know, know, you can email like jobs@atdreamstars.ai. What are you looking I mean, mostly engineering. Right? You know, engineering particularly around AI, right? Machine learning engineers or whatever we're calling it these days is it keeps evolving. But essentially, that's what we're looking for. Right? Like I said, we're the part of the business that we discuss is very much what the what the business is today. Right? I I have,

like I said, this longer vision of, like, where I believe content generally will go in... That spans beyond books and and and so forth. So, you know, we need people to actually execute it.

Yep. I love that. Cool, Ricardo. Well, look. Appreciate you coming on and sharing your story with us. Guys, I thought it was a simple website that was pre revenue. Turns out they did over $3,000,000 of revenue driven mainly using Ricardo's brain when it comes to using paid ads and their Facebook page to drive a lot of traffic and a really impressive... Almost a almost a stupid simple onboarding process that just feels like magic when you do

it to the point where you get a great customized sort of book. Main use case right now is kids, but who knows where he'll take it in the future. He's got his own kid he's building this for. Seven people full time on the team under 1,000,000 raised. We'll see what happens next, Ricardo. Thanks for taking us to the top. Dreamstories.ai.

Thank you. Thank you, Nathan. Speak soon.