Careers Start by Peeling Potatoes

Listening to my the family talk about dividing up the cooking chores for this Thanksgiving dinner, including who would peel the potatoes, reminded me that most careers start by peeling potatoes.

KP – Kitchen Patrol
One of the iconic punishments in basic training in the military was being threatened by our drill instructors of being assigned to KP – Kitchen Patrol – as a penalty for breaking some rule. If you got assigned to KP you were sent to the base kitchen and had to peel potatoes all day for all the soldiers on the base.  It was tedious work but to my surprise I found that it wasn’t the dreadful experience our drill instructors made it out to be. But working in the mess hall, the real eye-opener was the inside look at the workings of something I took for granted – how do you cook three meals a day for 10,000 people at a time. Peeling potatoes was a small bit in the thousands of things that had to go right every day to keep 10,000 of us fed.

One my first career lessons: stop taking for granted finished goods and appreciate the complexity of the system that delivered them.

Solutions From Hands On
When I got to my first airbase my job was lugging electronics boxes on and off fighter planes under the broiling hot Thailand sun, to bring them into the technicians inside the air-conditioned shop, to troubleshoot and fix. The thing we dreaded hearing from the techs was, “this box checks out fine, it must be a wiring problem.” Which meant going back to the aircraft trying to find a bent pin in a connector or short in a cable or a bad antenna. It meant crawling over, under and inside an airplane fuselage the temperature of an oven. Depending on the type of aircraft (F-4’s, F-105’s or A-7’s – the worst) it could take hours or days to figure out where the problem was.

A few months later, I was now the guy in the air-conditioned shop telling my friends on the flight-line, “the box was fine, must be a cable.” Having just been on the other side I understood the amount of work that phrase meant. It took a few weeks of these interactions, but it dawned on me there was a gap between the repair manuals describing how to fix the electronics and the aircraft manuals telling you the pin-outs of the cables – there were no tools to simplify finding broken cables on the flightline. Now with a bit more understanding of the system problem, it didn’t take much thinking to look at the aircraft wiring diagrams and make up a series of dummy connectors with test points to simplify the troubleshooting process. I gave them to my friends, and while the job of finding busted aircraft cabling was still unpleasant it was measurably shorter.

My next career lesson: unless I had been doing the miserable, hot and frustrating job on the flightline, I would never have known this was a valuable problem to solve.

Up From the Bottom
My startup career started on the bottom, installing process control equipment inside auto assembly plants and steel mills (in awe of the complexity of the systems that delivered finished products.) Wrote technical manuals and taught microprocessor design (to customers who knew more than I did.) Worked weeks non-stop responding to customer Requests For Proposals (RFP’s.) Designed tradeshow booths, spent long nights at shows setting them up, and long days inside them during the shows.

Over ten long years I wrote corporate brochures (making legal, finance and sales happy), and sales presentations (treading the line between sales, marketing, truth, and competition), and data sheets, web sites and competitive analyses, press releases (getting a degree in creative writing without being an English major,) and flew to hundreds of customer meetings on red-eyes at a drop of a hat (making sales guys rich and gaining a huge appreciation for their skills.)

Partnered with engineering trying to understand what customers really wanted, needed and would pay for, versus what we could actually build and deliver (and learning the difference between a simply good engineer and working in the presence of sheer genius.) In the sprint to first customer ship, slept under the desk in my office the same nights my engineering team was doing the same.

Each of those crummy, tedious, exhausting jobs made me understand how hard they were. Each made me appreciate the complexity of the systems (with people being the most valuable) that make up successful companies. It made me understand that they were doable, solvable and winnable.

It took me a decade to work my way up to VP of Marketing and then CEO. By that time I knew what each job in my department meant because I had done every one of them. I knew what it took to get these jobs done (and screw them up) and I now pushed the people who worked for me as hard as I had worked.

Career Lessons Learned:

  • Winning at entrepreneurship is for practitioners not theorists.
  • Building a company in all its complexity is computationally unsolvable.
  • There’s no shortcut for getting your hands dirty. Reading stories about the success of Facebook or blogs about the secrets of SEO might make you feel smarter, but it’s not going to make you more skilled.
  • Unless you’ve had a ton of experience (which includes failing) in a broad range of areas you’re only guessing.
  • Great careers start by peeling potatoes.

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Customer Development in Japan: a History Lesson

The Japanese edition of The Startup Owner’s Manual hit the bookstores in Japan this week. The book has been shepherded and edited by a great Japanese VC at Mitsui Sumitomo Insurance Venture Capital, Takashi Tsutsumi, with help from Masato Iino. I asked Tsutsumi-san to write a guest post for my blog to describe his experience with Customer Development in Japan.

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To celebrate the debut of the Japan edition of “The Startup Owner’s Manual” and to express great thanks to Steve and his co-author Bob Dorf, I would like to reflect back what first drew me to this book and offer Steve’s worldwide readers a look at the progress of Customer Development and the Lean LaunchPad class in Japan.

The Crater in my rookie days
Back in 1990’s, I was working for one of the leading sogo shohsa (trading company) in Japan, building data communications startups. After helping build the first Ethernet switch startup, I was attracted by Asynchronous Transfer Mode 25Mbit/sec technology, (ATM25) which was 2.5x faster than Ethernet and ran data but plus voice and video. Leveraging my marketing skills, I successfully made what Steve calls an “onslaught launch”, generating a lot of press coverage and apparent early success. But customers didn’t agree. After many sales calls, early prospects showed little rush to buy it! I got comments like, “Well, ATM25 is interesting technology, but I have no need to rush to buy it” or “I like ATM25 very much, but we need to replace my existing infrastructure to appreciate multimedia features, which I do not think that important.” I discovered my product was a “nice to have,” not a “must have,” and we shut the company down a year a later.

This made me believe deeply in the extreme importance of talking to customers before investing time and money, something I took to my next startup. The result: great success of my third startup, a load balancing technology for web servers back in the late 1990’s.

Finding a repeatable process for startups
Despite my success based on talking to customers upfront, however, I wasn’t confident I could replicate startup success consistently without a clear, and repeatable process to talk to customers. By then, I had become a venture capitalist at Mitsui Sumitomo Insurance and found myself talking to a lot of entrepreneurs who were proclaiming their great technology yet were struggling with little revenue, and claiming they were “crossing the chasm”. However, when I looked into the detail, most of them did not have even early adaptors and the problem wasn’t “chasm crossing,” it was that almost nobody wanted their products.

In 2004, Googling terms like “high tech marketing” and “startup” I discovered “The Four Steps to The Epiphany” at Cafépress.com. Amazon did not carry it yet, and I was nervous spending money at a website known mostly for cups and t-shirts, completely irrelevant to business books. After waiting for a week or so for the book to make it to Japan, I was very much shocked how impressed I was by the Customer Development Model detailed in the book. A few of the many quotations that struck me:

  • “Most startups fail due not to the failure of product development but due to the lack of customers”
  • “Learning and discovering who a company’s initial customers will be and what market they are in, requires a process separate and distinct from product development”
  • “All a startup has are mere hypotheses,” and
  • “in a startup no facts exist inside the building, get out of the building to talk to customers”

This was exactly what I was searching for.

The first meeting with Steve
After my reading The Four Steps to The Epiphany several times, my Customer Development conviction got stronger. I wanted this book not only as my “secret weapon,” but also for all entrepreneurs in Japan.

I sent Steve a cold email to allow me to translate the book into Japanese and evangelize Customer Development in Japan. Steve responded to my email in ten minutes, saying “come meet with me!” Soon we had our first meeting Steve’s favorite spot, Café Borrone on El Camino Real.

After listening to me for fifteen minutes, Steve said “Go ahead. I will support you”.  It was very, very happy moment for me.

I was extremely surprised that he gave a huge trust on completely unknown and strange Japanese VC who suddenly contacted him by email. We kept talking, with Steve asking “How long are you staying in Silicon Valley?” When I told him, “two more days,” he asked, “Are you interested in meeting with venture firms in the Valley?”  When I said of course, but who would meet with me with two days notice, he picked up his mobile phone and, surprisingly for me, started dialing … and I actually had a great meeting with one of them the very next day. More “pay it forward” culture in action.

Evangelizing Customer Development in Japan
After that meeting, I started working on the translation word by word over a number of weekends and published the Japanese edition of “The Four Steps Epiphany” in May 2009 (now in its third printing.)  Since then, I have been teaching Customer Development and running Lean LaunchPad style classes at variety of universities, national research laboratories, incubators, and startup communities throughout Japan.

After three years of evangelizing, I am very pleased to see success cases emerging in Japan by following Customer Development Model. For example, Maysee, a business card cloud services startup, got out of the building and then developed an MVP, avoiding costly UI development that customers in fact found no need for. They pivoted the product by implementing Google like wide-open search windows requested time and again in customer interviews. Maysee now enjoys hockey stick revenue growth.

Goryo Chemical, new fluorescent probe for Chemical biology startups (leveraging a technology from a university), found early in Customer Discovery that the original value proposition hypothesis was wrong, but one other feature was in fact very valuable. Their pivot resulted in great deal of customer tractions.

These kinds of success cases continue to happen in Japan’s startup community and in corporations that have to innovate to remain competitive in the global market.

Customer Development Education
Customer Development is growing fast here in Japan, with Lean LaunchPad programs in great demand among entrepreneurs and “wanabees” learning to build hypothesis and test them by getting out of the building. Some have actually established new startups with tested business model hypotheses under their belt. Lean LaunchPad teaches entrepreneurs, to test their business model until they find customers who are eager to buy, and a business model that scales profitably and repeatedly. I am confident we will see real startups and business emerge soon.

Lean LaunchPad class at Hosei University business school

Much more is happening with collaborative learning and tools, and I am looking forward to more Customer Development success ahead as more entrepreneurs, investors, and educators read the new book, The Startup Owner’s Manual.

In fact, I recently started my Customer Development blog with my partner, Masato Iino, to accumulate the learning and discovery of Customer Development and Lean LaunchPad in Japan, and to update readers with more concepts and tools to do Customer Development in their startups.

Lessons Learned – Japanese Style

  • Failure comes often, but failure is mother of success.  To appreciate a “mother,” it is important to improve from the failure and to look for a solution continuously to do a better job with a solution, hopefully resulting in a great success.
  • Pushing the boundaries collaboratively is really powerful.  Try collaborative learning by leveraging global intelligence and passion of entrepreneurs.
  • Pay-it-forward culture actually exists.  But, the key is for me to transfer the same culture to my next generation by giving them an opportunity like the one I appreciated.

Takashi Tsutsumi
ttutumi@gmail.com

本ブログ記事の内容は、堤孝志個人の見解に基づいており、所属する組織の見解を示すものではありません。
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Entrepreneurs as Dissidents

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. While some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.


If you can’t see the video above click here.

Countries that put their artists and protesters in jail will never succeed in building a successful culture of entrepreneurship.  They will be relegated to creating better mousetraps or cloning other countries’ business models.

Entrepreneurs as Dissidents
When Steve Jobs returned to Apple, he ran the Think Different ads, a brilliant marketing campaign to make Apple’s core customers believe that Apple was still fighting for the brand.

But in hindsight, the ad captured something much more profound.

The crazy ones? The misfits? The rebels? The troublemakers? To celebrate those people as heroes requires a country and culture that tolerates and encourages dissent.

Because without dissent there is no creativity.

Countries that stifle dissent while attempting to encourage entrepreneurship will end up at a competitive disadvantage.

Pushing the boundaries
Most startups solve problems in existing markets – making something better than what existed before. Some startups choose to resegment a market – finding an underserved niche in an existing market or providing a good-enough low cost solution.  These are all good businesses, and there’s nothing wrong with founding one of these.

But some small segment of founders are truly artiststhey see something no one else does. These entrepreneurs are the ones who want to change “what is” and turn it into “what can be.“ These founders create new ideas and new markets by pushing the boundaries. This concept of creating something that few others see – and the reality distortion field necessary to recruit the team to build it – is at the heart of what these founders do.

The founders that make a dent in the universe are dissidents. They are not afraid to tell their bosses they are idiots or tell their schools they been teaching the wrong thing or to tell an entire industry to think different. And more importantly they are not afraid to tell their country it’s mistaken.

Freedom of Speech, Expression and Thought
Entrepreneurs in the United States take for granted our freedom of speech, freedom of expression and freedom of thought. It’s enshrined in our constitution as the first amendment.

In the last few years I’ve traveled to lots of countries that understand that the rise of entrepreneurship will be an economic engine for the 21st century. In several of these countries, the government is pouring enormous sums into building entrepreneurship programs, faculties and even cities. Yet time and again when I ask the local entrepreneurs themselves what questions they have, most often the first question is, “How do I get a visa to the United States?’

For years I thought the reason hands were raised was simply an economic one. The same countries that repress dissent tend to have institutionalized corruption, meaning the quality of your idea isn’t sufficient enough to succeed by itself, you now need new “friends in the right places.” But I now see that these are all part of the same package. It’s hard to focus on being creative when a good part of your creative energies are spent trying to figure out how to work within a system that doesn’t tolerate dissent.

Lessons Learned

  • Entrepreneurs require the same creative freedom as artists and dissidents
  • Without that freedom, countries will be relegated to cloning others’ business models or creating better versions of existing products
  • History has shown that the most creative people leave repressive regimes and create elsewhere

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10,000 Startups – Startup Weekend Next

Today we are announcing the biggest entrepreneurial program ever launched – Startup Weekend Next. A partnership of Startup WeekendStartup AmericaTechStars and UdacityStartup Weekend Next brings four weeks of amazing hands-on training learning to build your startup to cities around the world. Our goal– to inspire, educate and empower hundred’s of thousands of entrepreneurs and help create 10,000 startups.

The Lean LaunchPad Class
You may have read my previous posts about the Lean LaunchPad entrepreneurship class. The class teaches founders how to dramatically reduce their failure rate through the combination of business model design, customer development and agile development using the Startup Owners Manual. Just a crazy idea two years ago, the class is now taught at Stanford, Berkeley, Columbia, Caltech, Princeton and for the National Science Foundation at the University of Michigan and Georgia Tech.

And in the thirty days since we’ve put the Lean LaunchPad class online at Udacity50,000 students have been taking it.

While the Lean LaunchPad online has received rave reviews (it’s being translated into Spanish, French, Russian, Japanese and Greek, and it’s being used as part of a “flipped classroom” in other entrepreneurship courses), it’s different than taking the class in person. It doesn’t require you to form a team, and there’s no immediate instructor feedback. More importantly, it makes no demands of you to stand and deliver your weekly customer development progress in front of your peers. In sum, it lacks the rigorous and collaborative hands-on experience that entrepreneurs get in our university classes.

We thought long and hard about how we could take the Lean LaunchPad Online to the next level and deliver the same level of experiential instruction to tens and hundreds of thousands of entrepreneurs around the world.

The result – Startup Weekend Next.

Hands-On in 100’s of Cities
Startup Weekend Next is a four-week version of the Lean LaunchPad class with hands-on instructors and mentors – and we will teach it in hundreds of cities around the world.

I’m partnered with four great organizations to deliver the program. The class is organized, led and delivered by Startup Weekend, the global non-profit that teaches entrepreneurs how to launch a startup in 54 hours. They’ve hosted close to 800 Startup Weekend events in over 350 cities worldwide educating a staggering 57,000 entrepreneurs who’ve created over 5,000 startups. Today they are going to take Startup Weekend to the next level by organizing and teaching a four-week version of the Lean LaunchPad class as their Startup Weekend Next course. Their reach and scale means our goal of helping to create 10,000 startups is within our grasp.

(If you can’t see the video above click here.)

In addition, the leading experts in building entrepreneurial companies and regions, TechStars and Startup America are partnering with us in this endeavor.

In the U.S, Startup America will leverage its network of 30 startup regions to engage entrepreneurial leaders throughout the country. And TechStars will use its broad and unparalleled network of mentors (experienced entrepreneurs and investors) to coach the teams. And Udacity has put their awesome production resources behind the class and hosts the Lean LaunchPad online lectures.  And we are looking for other partners worldwide to help make this successful.

The first four-week Startup Weekend Next classes will start on Nov. 28 in more than 25 cities worldwide. The program expands to all of Startup Weekend’s 350 member communities in 2013 where it will be offered up to five times a year in each city.

The cost of attending a Startup Weekend Next is ridiculously inexpensive. It doesn’t take equity and just has a small fee that varies by city ($140 to $299), to cover event operations and expenses.

How it Works
We now know how to crack the entrepreneurial code by creating an Entrepreneurship API - a standard language for entrepreneurs. When you leave the class, you’ll know how to think about your startup in the now standard  “language” of the business model canvas. You’ll understand the customer development process used to test those hypotheses and learn how to iterate or pivot when your hypotheses need to change.  And you’ll learn about how to build a minimal viable product to get feedback early and often from customers.

Here’s how the four intense weeks in a Startup Weekend Next class works.

  • You form a startup team (if you don’t have one, taking the 54-hour Startup Weekend class is a great a way to find one) and come into class with an initial idea
  • Your team arrives with an initial Business Model Canvas. (Your pre-class reading is to watch the Lean LaunchPad initial lectures on Udacity)
  • You present your hypotheses and what you learned in front of your peers and coaches
  • Your team gets live coaching and advice from Startup Weekend Next mentors.
  • You’ll take the suggestions from the meeting, get out of the building and talk to ten plus customers per week.
  • You’ll refine your business model by iterating or pivoting your product, your target customers, pricing, channels, partners, etc.
  • Repeat for four weeks– all while working with volunteer mentor partners from Startup Weekend, Startup America and TechStars – serial entrepreneurs and seasoned startup investors – to see whether your business idea was truly a vision or simply a hallucination.

The Big Idea – Incubators – Accelerators – and Something New
In the last decade startup incubators have become increasingly popular. These incubators which provides new startups with year-round physical office space, infrastructure and advice in exchange for a fee (often in equity.)  They may be privately run but often are non-profit, attached to a university or in some locations a local government.  There is no formal “start date” so there is a no fixed time for their stay. (For some incubators, entrepreneurs can stay as long as they want.) There is no curriculum and seldom any formal instructors or mentors. There is no guaranteed funding. Think of incubators as “shelter from the storm.”

In contrast, the goal of an accelerator is not physical office space, it’s a fundable company. Startups enter and leave as a cohort (starting and ending the program at the same time) in a program of a set length. While there is no formal curriculum, most offer weekly expert lectures, experienced mentors, coaching and introductions.  Accelerators provide funding at the end of the program.  Getting into an accelerator is more competitive than grad school.

Startup Weekend Next represents something new – a pre-accelerator.

Like an accelerator there is no physical office space, and startups enter and leave as a cohort in a program of a set length. But the key difference is that Startup Weekend Next engages you in a formal curriculum. We believe we know what startups need to learn, and we focus on teaching you that. Instead of guest lecturers, you get out of the building and you learn by doing. Like the best accelerators, you get experienced mentors, coaching and introductions. Unlike accelerators, there is no funding at the end of the program.  But you leave knowing a lot more of what it takes to build a company beyond a PowerPoint deck for a VC presentation.

Lessons Learned

If you have passion, an idea and a team, and you want to take advantage of the most advanced entrepreneurial training program, sign up at Startup Weekend Next

and wait until you see what we do next.
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10,000 Startups

In 24 hours we’ll announce something revolutionary.

Moving entrepreneurship forward.

How We Fight – Cofounders in Love and War

I often get asked about finding cofounders and I usually give the standard list of characteristics of what I look for in a founder.  And I emphasize the value of a founding team with complementary skills sets – i.e. the hacker/hustler/designer cofounder archetype for web/mobile apps.  But Jessica Alter, Cofounder & CEO of FounderDating, pointed out that cofounders did not mean two founders in the same room.  She suggested that I was missing one of the key attributes of what makes successful startup teams powerful. She suggested that how cofounders fight was a key metric in predicting the success of a founding team.  So I asked her to write a guest post.

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I think about [cofounding] teams a lot – an insane amount.  And, not surprisingly, I frequently get asked what to look for or what to think about when starting the process of finding a cofounder – a true partner to start your next company with.

Like second nature, I start to recite a list of important attributes: complimentary skill sets, common visions, the notion of not trying to make someone fall in love with your idea (because the idea will likely change and then where are you?).  There are plenty more and they are important. But a few weeks ago after I sat on a panel about cofounders at Startup2Startup there was a small group dinner conversation to dig deeper on the topic.  Garry Tan (Posterous, YC), in recounting his personal experience said, “success can cover up a lot.”

And it clicked in my head – one of the key things to pay attention to in a search for a cofounder is how you fight.

Taking Time
How you fight with your potential cofounder(s) matters for a lot of reasons, the simplest of which is that you have time to fight – meaning you’ve worked together long enough to hit disagreements or bumps.  It’s one of the most common mistakes we see. I literally just received an email from someone (that I don’t know) asking to me to meet with them so that they can circumvent our regular process because, “I don’t feel like I have time for the regular FounderDating process.“  Quick advice to people that think finding a cofounder is a box to check and “don’t have time” – you won’t find someone and if you do the relationship is unlikely to last.  You’re looking for an employee, not a partner.

We tell all our FounderDating members that we’re a great starting point to connect with amazing people all with high intent to start something. But in order to figure out if you can work together you have to (wait for it…) actually work together.  That could be starting a side-project, heading over to a Startup Weekend or other hackathon, working full-time for a few months or some combination of those options.  However you do it, you need to build something together.  It doesn’t ultimately matter it if ends up being the right product, you will still have areas you disagree on throughout the process. Ask yourself: Have we had disagreements? If you haven’t, maybe you should consider a longer courtship period.

Simulating Real-Life
Consider what real startup life is going to be like.  For a long-time (longer than you plan) things are not going to work and you’ll have to figure out what to do – together.  If you do eventually reach a point where the company is making real progress, you’re still going hit crazy challenges on a regular basis that you’ll have to navigate together. This pressure – which is compounded by the sound of the ticking clock if you took money – will up the stress levels and hence the propensity to disagree.

If you don’t have at least a taste of what that’s going to be like, not only have you not done your homework, but also could be in for a rude awakening. So, let’s agree you’re going to fight. That, in and of itself, doesn’t mean anything. In fact, it’s quite healthy. What matters in real life is what are the fights like? Do they escalate rapidly or become knock down, drag outs? Can you recover quickly and keep moving? Entrepreneurship and early stage companies are about moving fast; if you’re caught in a disagreement for days at a time it means decisions are not being made and/or people are walking around feeling resentful.  Either one will eventually lead to failure.  Ask yourself: When we fight do we get over it quickly and respectfully?

What Are You Fighting About?
Finally, and this is insanely important, it matters what the fights are about.  Are you fighting about whether a button should be green or blue or are you fighting about whether or not you want to raise money?

A lot of people approach finding cofounders as just a skill set need and believe once that box is checked, everything will be smooth sailing. Complimentary skill sets are important and if you’re fighting about one functional area  (e.g. design, product) it might be a sign you have too much skill set overlap. But if it were just about complimentary skill set matching it wouldn’t be very hard.

What’s difficult is making sure you’re aligned on the softer side: Why do you want to build a company? What kind of company you want to build? What are your working styles? What are your values?  What are your other priorities (family, etc.)?  We don’t care if entrepreneurs want to build lifestyle businesses or go for IPOs, if they are tethered to their email or check out at 7pm – that’s a personal decision. But you better make sure you’re on the same page as your potential cofounder about those topics. These are the issues that break up relationships, not button colors.

Ask yourself: What are we fighting about and why?

Make no mistake; I’m not suggesting you should manufacture a fight. But every relationship has ups and downs, the ones that last are able to bounce back from the downs quickly and respectfully and be better for it.  So give yourselves permission and time to fight and reflect on how you do it before you take the leap together.
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How to Get a VC Meeting – the flowchart

I often get asked, “how do I get a meeting with a VC?”  Here is my slightly tongue-in-cheek view.

 

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