Podcast Summary

Episode Overview

Podcast: SaaS Interviews with CEOs, Startups, Founders
Host: Nathan Latka
Guest: Ricardo (Co-founder, Dreamstories AI)
Date: November 21, 2025
Episode Title: He Used AI to Generate $6M Revenue at Dreamstories by Selling Children's Books

In this episode, Nathan Latka interviews Ricardo, the co-founder of Dreamstories AI. Ricardo reveals how he harnessed generative AI and his growth background to build a platform that personalizes children's books—achieving impressive revenue and scaling rapidly, all with a minimal team and lean funding approach. The episode explores Dreamstories’ AI-driven product, growth strategy via paid channels, business economics, and Ricardo’s unique founder journey.

Key Discussion Points and Insights

1. Dreamstories AI: The Product and Opportunity (03:33–06:08)

• What is Dreamstories?
  Dreamstories AI is described as a “personalized content studio” leveraging generative AI to allow non-technical users to create custom children's books, often featuring their own children or family members as protagonists.
• Origin of the Idea:
  Ricardo draws from his experience at Spotify, where he was fascinated by personalization at scale. Observing his own family’s bedtime reading habits, he saw a repeatable pattern in kids’ content consumption—a behavior he realized could be productized.
• Market Dynamics:
  The children’s book segment is still growing, particularly as parents look to keep kids off screens at bedtime. Dreamstories targets this segment, competing with traditional players rather than VC-backed, margin-thin content companies.

2. Business Model and Customer Journey (06:08–09:19)

• Revenue Model:
  Customers go through a streamlined, ‘magical feeling’ onboarding, upload a photo, create the book, and only pay at the paywall after seeing a preview.
• Pricing:
  Usually $60 per book, sometimes discounted to $48 or less with volume deals; average order value fluctuates due to discounts.
• Customer Behavior:
  Most customers make their child the hero, though sometimes pets or multiple children/family members are included. Repeat and “reverse” purchases (swapping protagonists) are common due to episodic stories.

3. Revenue, Growth, and Scaling Tactics (09:19–14:43)

• Sales Traction:
  “We’ve done close to 100,000 sales since launching at the beginning of this year.” (Ricardo, 08:41)
  • Even accounting for discounts, lifetime revenue is conservatively over $3 million, possibly up to $6 million.
• Growth Channels:
  The lion’s share of traffic comes from paid acquisition—especially Facebook Ads—not SEO or organic social.
• Paid Acquisition Strategy:
  Ricardo’s playbook is honed from his Spotify days:
  “One thing I’ve done a lot at Spotify and after was paid acquisition… not a community, most of it is paid.” (11:12)
  He’s comfortable spending up to the book’s AOV ($60) per acquisition, explaining that most new entrants bid up to a 1:1 spend-to-return, and that Dreamstories’ repeat purchases and higher AOV allow him to outcompete.
• Margin Management:
  Despite CAC, margins exist due to repeat purchases and secondary orders (reverse/episodic books).

4. Product & Tech Stack (16:13–17:23; 18:16–24:35)

• Custom-Built Core:
  Most functionality is proprietary, with Shopify used for checkout/order management.
  “Everything else you see is custom built… We only use Shopify for the last piece and order management.” (Ricardo, 16:41)
• AB Testing:
  Actively running 4+ AB tests in product flow at a given time, always iterating on the funnel and onboarding experience.
• Reviews Plugin:
  Notable shout out to “Loox,” the reviews tool Dreamstories uses, praised for its capability and service.
• Analytics:
  Uses Posthog for in-depth analytics and funnel testing, lauding their efficacy and unconventional, fun B2B SaaS approach.

5. Founder Journey & Funding Philosophy (00:58–01:25; 14:16–21:11)

• Background:
  Spotify early employee and option-holder, exited a snack startup (Kenko), also VP at a body scan health startup (Necco Health).
• Funding:
  Ricardo invested his own proceeds from previous ventures, raised less than $1 million externally for Dreamstories.
• Lean and Profitable Growth:
  “If you make the economics work, you don’t need [to raise much or self-fund extensively]… I chose to come up with a model I can monetize from day one.” (Ricardo, 19:41)
• Team:
  Extremely lean—only 7 full-time employees, mostly engineers.

6. Broader Vision and Hiring (25:21–26:04)

• Looking Ahead:
  Ricardo envisions Dreamstories evolving far beyond children’s books, into broader content and personalized media.
• Hiring:
  Actively seeking engineers, especially in AI/machine learning.
  “Are you hiring? — Yes, I’m hiring!” (25:23–25:24)

Notable Quotes & Memorable Moments

• On the AI Moment:
  “When I saw [generative AI breakthroughs]… I had this moment: oh shit, this is the moment where these things actually become possible.” (Ricardo, 02:56)
• On Paid Acquisition Economics:
  “What I usually tell people… you should ballpark [CAC] around what their AOV is… people stop bidding when it crosses under the one bar, so if you can make it episodic and beat them, you make the economics work.” (Ricardo, 13:04)
• On Building Custom:
  “I’m trying to build a service that feels… more like a service, so I end up building a lot of stuff that is custom.” (Ricardo, 16:41)
• On Lean Company-Building:
  “Instead of giving people shit for free that I have to subsidize, let me come up with from day one a model I can monetize… building in a more conservative manner… but also feels more grounded.” (Ricardo, 19:41)
• On Product Simplicity:
  Nathan: “Once you get in, holy mackerel, there’s a lot of thought inside of this thing…” (17:34)
• On Repeat Purchases and AOV:
  “A lot of the times people add different members of their family, cousins, so on and so forth, and… end up getting what I call reverse books.” (Ricardo, 14:58–15:18)

Timestamps for Major Segments

• Dreamstories origin story: 03:33–06:08
• Product onboarding and pricing: 06:08–09:19
• Revenue milestones & economics: 09:19–14:43
• Paid acquisition & scaling: 10:57–14:43
• Custom tech stack & AB testing: 16:13–18:06
• Team size & hiring: 23:23–26:04
• Analytics and reviews stack: 18:16–24:35
• Ricardo’s founder path & philosophy: 00:58–01:25; 14:16–21:11

Takeaways for Founders and Operators

• Monetizable, episodic personalized content serves as an excellent product for paid acquisition-led growth.
• A lean, mostly engineer team with a custom tech stack can scale a consumer AI product rapidly—with as little as $1M external funding.
• Carefully tracking funnel performance, running constant AB tests, and obsessing over onboarding fosters high conversion and repeat usage.
• Success in new AI-powered consumer products can come from thoughtful application of established SaaS and DTC growth tactics—not just technology.

Resources & Further Information

• Learn more or apply: jobs@dreamstars.ai
• Main tools discussed: Shopify, Posthog, Loox
• Dreamstories AI (website not specified in transcript; inferred name: dreamstars.ai or dreamstories.ai)

End of summary.