How do people go about starting their own businesses?
July 3, 2018 8:25 PM   Subscribe

Alright, so first off I already have a plan, I have partner, that just like me doesn't want to spend his time working for someone else. We want to make our own money. However, we don't know much and I'm not really sure where you learn this stuff. I am sure though, that the only way to learn is to do it. I'm a software engineer, he's a lawyer, he's got the contacts, I have the leadership skills. Nonetheless, I feel like we need more people, in my opinion we need another engineer besides me, a UI/UX designer and someone who's good with money, logistics and financing so that he or she can keep us from blowing all our money. I'm not sure where I'd find those people. I'm not sure how I will find clients, though me and my lawyer friend had some ideas but we're just making it up as we go along. I'm not sure if that's the best way of doing this.

I feel as if I should say a little about myself as well. First, I'm a recent graduate, I graduated in CS last year. I found a job in April, I should consider myself lucky, most of my classmates don't have jobs yet. However, there is one thing that is very clear to me, and this thought has come up twice already both times where the first day I stepped into an office. First in my internship and then at this current job I have, I knew that working for someone would not be enough for me, it just isn't and I'm going to be frank I just hate it, I hate working under someone else's rules.

My current job is boring, dull and uninteresting. It is too structured, it offers no challenges and I don't want to be an arrogant ass but it's just too easy for me. Some people might be happy with something like that but I'm not, and it has only been three months since I started working there. I see this job as nothing more than a paycheck and a way to gain experience, I can't really grow in there because the career path is crap. It is a good place to start, but I don't see myself staying there for more than 2 years and to be honest I'm not sure I will be able to put up with that job for that long, I know people who've been there ten years, and they're just becoming leads until now, the guy who works next to me has five years of experience, just 1 year at that job and he earns the same money I earn, even though he should be a senior developer. I don't want to end up stuck in that place.

In short working for someone is starting to feel like it isn't for me. I don't know if it is just me or what, but honestly sometimes I feel like my boss cheated me when he was interviewing me, he exaggerated the truth about that place. I also feel like he can't be trusted, he looks like he's a talker who's out for glory. I don't think he'd screwed me over, but I don't see him a someone who I'd follow anywhere.

I want my own business, I really don't like to be bossed around and I think I can do a better job than all of them in that company.
posted by Braxis to Work & Money (24 answers total) 18 users marked this as a favorite
Head on over to your local bookstore or library and look at some books about starting your own business. That will be a good starting point.

That being said, if you only just graduated and you're the typical age for a college graduate (early 20s) then you should know that your working experience is typical and that not every job is interesting, and certainly no job is interesting every day, even if you love what you're doing. You should also know that being in business for yourself costs a lot more money and work for a lot less return, particularly in the early years. The vast majority of businesses fail, even ones with solid business plans and relevant markets.

"Working under someone else's rules" is something people say when they don't understand how business works, and why there is such a thing as process. The rules exist because business regulations exist. The rules exist because best practices are a thing, and because a lot of people have already done the legwork and determined that this is the best way to do things. That doesn't mean that your current employer uses best practices--maybe they don't. A lot of companies are run by idiots who wouldn't know a best practice if it punched them in the face. Those companies are very dysfunctional, and usually have top-heavy organizations and don't actually understand their own mission. If you don't want to be one of those companies, and if your intention is to eventually form your own company, then you need to know:

1. What your business will do. Identify your target market and determine the competition and how you would differ from it.
2. How much money is going to be needed to start up, and who would provide it.
3. How many employees you would need to make a viable product or service, and how much you need to pay them. (Hint: market salary)
4. How long it will take for your product or service to hit the market.
5. How long it would take post-launch for your business to become profitable.

There are plenty of books that will tell you how to form a business plan and how to research the above, so that you can get a good sketch for your potential business and see what would be required to make a real shot at it. You can also go to your local community college, or even your local 4-year university, and start taking business classes. You're a software engineer, your focus is in development and not business, and you NEED a business background before you start your own business. There are a million failed or failing start-ups begun by programmers who could code a product, but had no idea how to actually run a business. Don't be one of them. Again, there are rules for a reason in regard to best practices in a business, and you need to know what those are. You wouldn't hand a laptop to an MBA and expect her to crank out a working mobile app, and nor should you expect that because you have expertise in one field, it will automatically translate to another. It doesn't. There are a lot of soft skills and political acumen required in courting investors and pitching a business plan, and even if you don't do that work yourself, you should know enough about it to be able to hire someone good for your theoretical CFO position.

So, don't quit your day job just yet. Start with the "How to start your own business" books and go from there.
posted by Autumnheart at 8:49 PM on July 3, 2018 [23 favorites]

1. Go to your local Small Business Administration office to get advice including what you need to include in your business plan.
2. Write a business plan - a very in-depth business plan.
3. Think hard about your money and what you can realistically afford.
4. I've tried several times to start my own business and the place I always fell down was in marketing myself and my business. One of you must be confident enough in themselves and the business to focus on how to get the word out and able to keep it consistent. In my experience I should have hired a local college student majoring in marketing who would pitch my product to shops.
5. I wouldn't necessarily think that starting a business was an instant panacea to job stress.

I don't want to lecture but I want to make sure that you plan as much in advance as you can and are as clear as possible on what's involved.

Best of luck to you!
posted by bendy at 9:24 PM on July 3, 2018 [2 favorites]

Nonetheless, I feel like we need more people, in my opinion we need another engineer besides me, a UI/UX designer and someone who's good with money, logistics and financing so that he or she can keep us from blowing all our money.

These are all luxuries. You're bootstrapping. You do all this stuff yourself.

Anyway, you need to articulate what it is you want to do: what problem are you trying to solve, whose problem you're going to solve, and how you're going to solve it. You need to figure out what the market is, how much they will pay, how much it will cost you to create that solution.

Generally you would write a business plan. If you have a partner, how much time, energy, interest and effort each of you devotes to the plan is a good indication of how your partnership will (or will not) work in the future.

Many cities will also have government-run or -supported services for entrepreneurs. Here's one in Boulder, a small town that is very successful building its tech sector.

Here's one in Victoria, where I'm located.

Your city should have some sort of program aimed at fostering startups and entrepreneurs. Sometimes you have to pay to enter the program, but quite often they'll be able to plug you in to qualified mentors.

Besides bootstrapping and sweat equity, you're going to need the support of a community -- people you can connect with for advice and information. Community is important.
posted by JamesBay at 9:24 PM on July 3, 2018


It's a national organization of successful business owners that "want to pay back". The previous reply are excellent but sitting down and talking to folks that have live the life will pay dividends, big.
posted by sammyo at 9:27 PM on July 3, 2018 [2 favorites]

So as to not abuse the edit window I'll add this. I got my Oregon real estate broker's license a couple years ago because I'm passionate about real estate and I was tired of working for the man. It was a very disappointing experience in that I realized I'd have to cold-call anyone I could find and build my personal network. For every 30 contacts - emails, texts, voice mails, in-person meetings - I might get one response with little likelihood that the person would want to work with me.

There was literally nothing in my experience as a broker that contributed anything to my passion for real estate or my passion for helping people find a home they loved.

Again, all the best to you - I wish you great success.
posted by bendy at 9:31 PM on July 3, 2018 [2 favorites]

Nonetheless, I feel like we need more people, in my opinion we need another engineer besides me, a UI/UX designer and someone who's good with money, logistics and financing so that he or she can keep us from blowing all our money.

And by hiring any one, let alone 3 people, you will burn through your cash like nobody’s business. Nthing the idea that the point at which you hire people is when you absolutely cannot cope with the work load, not because it’d be nice to have specialist skills at your disposal. You can get that cheaper by identifying freelancers you can work with if something is truly beyond what you can do. Most small business owners manage the money themselves and occasionally give the information to the accountant to do their tax returns.
posted by koahiatamadl at 10:00 PM on July 3, 2018 [1 favorite]

Don't quit your job.

Get a freelance client on the side. Everything about running a business you can start learning from getting a freelance client.
- Difficulty finding a client? How will you find customers for your business?
- Difficult working with a client? How will you work with your team/business?
- Communicating clearly and scheduling timelines? How will you do that within your business?

Read books, but don't rely on them too much. Remember, plans are worthless, but planning is everything. Make sure you're planning, and then do it.

Having a business and working for yourself means that you have to be extra structured/disciplined in your practice.
posted by suedehead at 11:04 PM on July 3, 2018 [12 favorites]

And by hiring any one, let alone 3 people, you will burn through your cash like nobody’s business. Nthing the idea that the point at which you hire people is when you absolutely cannot cope with the work load, not because it’d be nice to have specialist skills at your disposal.

No it's not - it's before you absolutely cannot cope with the work load. By the time you're feeling it, it's too late to bring more people in and you'll just keep getting hammered until your new people catch up - if you have the time to train them.
posted by each day we work at 11:11 PM on July 3, 2018

Don't hire anyone. Get an accountant. Get an account now, and do a business plan. "Someone who knows something about money" absolves you of responsibility for the money. It is your business; you are responsible for the money.

Contract the UX until you have cash flow.
posted by DarlingBri at 11:14 PM on July 3, 2018 [3 favorites]

Best answer: Started a small business with a business partner seven years ago, and still going. Here are some random tips from my experience, in no particular order. Some may be applicable to your situation, some not. Readers with their own business experiences may disagree with some elements of my approach, but my bank account is a testament to a reasonable amount of success.

1. Pay yourself last. Pay suppliers, services, contractors and freelancers before you pay yourself. If after paying out all your obligations there isn’t enough cash in the kitty to pay yourself, tighten your belt for a few weeks.

2. Pay out fast. Everyone, and I mean EVERONE, wants to be there for the business that pays them without delay. We try to pay out within a few hours of being invoiced. A day at most. People really, really, really appreciate that. “I can’t pay you until my client pays me,” is NOT a valid excuse ever. It’s fucking lame. Pay quickly and people will go to the ends of the Earth for you.

3. Pay yourself the bare minimum. If your business experiences a windfall, store the money against future emergencies. Resist the urge to give yourself a bonus. If such monies accumulate you can take some in the form of dividends at your financial year end. Do not reward yourself prematurely.

4. If you need your business partner to make the business work, and if your business partner needs you to make the business work, then you both need each other and you should decide now to split revenue fifty-fifty, and move on. Quibbling over who was responsible for more revenue this quarter or that quarter, or who worked more hours last Thursday, is a never ending pit of debate that will sour the relationship. In my business my work brings in two thirds of the revenue, but it is my partner’s work that enables that to happen, so I am satisfied the arrangement is as fair as it needs to be for practical purposes. If fifty-fifty does not fit your situation you’re not really “partners” and you should work out a corporate structure that reflects that.

5. Don’t get hung up on minutiae like business cards, website, marketing. Your best jobs come through connections, and your next jobs come from doing a spectacular job on the last job. Casting a wider net is not a “stage one concern” in most small business industries. There will be plenty of time to refine branding and messaging once you’re actually making a living. Net net? Don’t fuss over business accessorizing — get on with your work, instead. Make sure it’s great, every time. The rest will follow.

6. Specialize. You can’t both be “the money guy.” Trust. Get on with the work.

7. Nobody gives a fuck about the clever name you came up with for your small business. It’s about you. Smile. Eye contact. Warm handshakes. Speak briefly and to the point. Earn trust.

8. Don’t pretend to be bigger than you are. Nobody is fooled.

9. Be prepared to work much harder than somebody hired into a job, especially at the beginning. Much, much harder. Much. Harder.

10. Accept your small defeats gracefully, take responsibility for your small failures immediately, stay positive and practise good sleep hygiene. Some eggs are gonna break. Deal with it and move on. Celebrate your small successes. Setbacks happen. You can do the thing!
posted by Construction Concern at 5:19 AM on July 4, 2018 [22 favorites]

Just about every business that stays in business has a competitive advantage, however small. It might be a particular skill or a proprietary product, but usually it's one of the old standbys: price, location, customer service.

For a very small programming company, one of the most common advantages is that they will take the jobs no one else wants. Be prepared to do the tedious, time-consuming things that make a job unattractive to the big guys.
posted by SemiSalt at 6:10 AM on July 4, 2018

Response by poster: Great answers. This place was really worth the investment.

First things first, the people who say clients are my bosses. Yeah I get that but you can pick your clients, you can't pick your boss at the job. Besides even if my clients are my bosses it's my business, I am working for something I did, for my own goals not for some clown who I don't even know.

As for the risks and getting little in return. I don't care about that, I thrive in situations like that. The whole "playing it safe" thing isn't for me, it is part of the reason I don't like my job and as for being disciplined, I excel at that, I am very organized and I know how to get things done well and fast. The reason I say that my job is too structured, is that they really don't like it when people think outside of the box and I do that a lot. It feels sort of like being caged.

I do have things figured out a bit though, I know who my client will be. I have a product in mind. However, when I said I needed more people I didn't mean it in the way of hiring, I meant it as more associates who would like to join us as partners. However, that doesn't seem necessary anymore, at least not after reading these answers.

In short I plan to do whatever it takes to build a business. I just feel like this is the best way to develop my potential, and I'm willing to try until I succeed, my partner is also in the same boat too.
posted by Braxis at 6:12 AM on July 4, 2018

I'm going to gently suggest you get out there and learn how to start a business and lose the arrogant attitude. In early days of your own business, you will be desperate for clients and will not have the luxury of being choosy. You need to find the happy medium of being clever and hirable versus a know it all renegade.

Look, it's terrific to want to do your own thing but you're not entirely getting what people are telling you which is sort of reinforcing this unattractive arrogant attitude. With any luck, you will have clients, and they will be clowns you don't even know, and they will be ridiculous and drive you nutty and sometimes after all that, they won't pay you.

Starting your own business is going to have just as many headaches as working for a clown you don't know--maybe even more initially because you may lose money for years. That's not to say you shouldn't go for it, but you should reconsider this whole better than everyone else attitude you've got going on.
posted by yes I said yes I will Yes at 6:19 AM on July 4, 2018 [22 favorites]

Construction Concern speaks so much truth you should just read that again. I’ve had a business for over 10 years and agree with all of it.

I didn’t have a business plan or anything, it just kind of happened and we figured it out as we went along. My advice to you is get your first client while you still have a job. Then keep doing that until you can’t keep your job anymore.

You also learn a lot about yourself and work by having a job. As well as getting a steady paycheck and benefits. So keep doing that until you can’t do both anymore.

I also feel bored and understimilated having a “real” job, working for myself is so much more fulfilling. I dream of being choosy with my clients, though. That’s a real privilege and a constant challenge. My advice on that front is to try to get your first clients in a niche that interests you very much, so the clients you want start to be aware of your work. Heads up, many jobs do not become nightmares until you’re deep in them; and a lot of “bad clients” can also be blamed on you (a relationship goes two ways). Time and experience will help you avoid that as much as possible but it’s a reality of all self-employed people.
posted by jeweled accumulation at 6:54 AM on July 4, 2018 [4 favorites]

Response by poster: Alright, I understand what you're saying. I'm sorry if I came across as arrogant. I know that there will be tough clients, that there will be headaches and stuff I won't like, just like with everything.

What I am trying to say, however, is that despite all those things, I think I am a better fit for something like that than working for someone else. I'm used to leading, and I know I don't need a business for that, but I feel it is the best way to apply that skill and my other skills. Yes, it won't be easy, yes I will lose money and yes there may come a point in which I might want to call it quits. However, I have faced many challenges before, I don't know if they're comparable to this or not, but I never gave up when I faced most of that stuff.
posted by Braxis at 7:08 AM on July 4, 2018

First, think about the pre-nup. Having business partners are like being married, but without the sex. When you are doing the plan and agreements, plan out the exit strategy. What if one of you wants to leave, one gets disabled, one stops giving a damn. What happens if the business is sold? If a partner gets divorced and now spouse owns half of the partner's shares?

A dated but still worthwhile book is Why S. O. B.'s Succeed and Nice Guys Fail in Small Business

Learn from other's misfortune, read the Clients From Hell website and listen to their podcasts.
posted by Sophont at 7:51 AM on July 4, 2018

Response by poster: I see, I will take a look at that.
posted by Braxis at 9:21 AM on July 4, 2018

Best answer: Frankly, IME people who aren't at least a little bit arrogant and foolhardy don't tend to start their own companies, because the odds are stacked so much against your success. I'm a consultant who's worked with a ton of startups, and you sound like a lot of the founders I know. So you've got that going for you.

The red flag -- and it's a gigantic one -- is that you have literally zero experience in the business world; at a mere three months into your career there's just a ridiculous amount of stuff that you don't even know you don't know... which would be obvious even if you hadn't told us you were fresh out of school.

Things for example like your list of prospective first hires including someone who duplicates your own skills, and omitting sales and marketing completely; and "I know who my client [singular] will be", and "when I said I needed more people I didn't mean it in the way of hiring, I meant it as more associates who would like to join us as partners," really make it clear that you have no idea what you're getting into. (A large founder pool means lots of conflicting opinions, which means a wheelspinning and directionlessness company; it also guarantees that even if you do succeed the payoff will be spread too thin to be worthwhile. You want inexpensive Losers, not competitor Sociopaths. I say this only slightly tongue-in-cheek.)

If your lawyer friend is older and has real experience under his belt he might be able to coach you past these kinds of naive mistakes; if he's also a very recent grad then I'd strongly strongly strongly suggest you both spend a few more years learning how businesses actually work before you go off and try to start your own.

Think of this as a an opportunity to study the enemy: pay attention to how the product gets sold and how the money flows through the company; practice your leadership skills on somebody else's dime instead of when your livelihood is on the line; keep your eyes out for potential employees you can poach and potential customers you'll want to pitch to once you do break out on your own. Pay particular attention to the departments outside your own comfort zone, especially the ones you currently think are bureaucratic or useless. Learn why they exist and what value they add.

You don't necessarily need an MBA, but if you don't understand why that degree has value, if you're the kind of software dev who believes the engineers are the ones doing the real work and everybody else is just bureaucracy, then you're not ready to start a company.

(Don't take this too hard; I'm basically describing myself too. It took me decades to learn any respect at all for that side of the business, which has cost me tremendously. Don't be me.)

So, assuming you're going to ignore all of that and go for it anyway, Construction Concern's advice above is excellent. To it I'd add:

* If your real goal is to be a software developer but without a boss, then ditch the lawyer friend, stop thinking of it as "starting a business", and just go the freelance consultant route. It's easier, much lower risk, and much more consistently profitable. If you start a business you're unlikely to be able to continue writing code for long; there will be too many other draws on your attention.

* The "how do we find clients / customers" question is the one thing you really can't make up as you go along. Everything else you can fake for a surprisingly long time, but if you don't have customers, you don't have a business; it's that simple. For at least the first few years as a founder, your primary job is as a salesman. Not a software developer, not a business owner -- those are ancillary.

* "Sales" doesn't necessarily mean "salesmen", and "marketing" doesn't necessarily mean "advertising". The most effective approaches for each of those will depend on what kind of business you're trying to build.

* Recurring revenue is better than single-sale products. B2B or "enterprise" sales are far more profitable than individual consumer sales (and if you have the right contacts are far easier to achieve). Service businesses aren't inherently better or worse than product businesses, but the way they work is completely different (both internally and in terms of how they relate to the rest of the business ecosystem.) (Given your self-description, though, you probably don't want to run a service business; it's not that dissimilar to managing an in-house team, but with more financial risk.)

* Have clear, concise, and compelling answers to these three questions: "What is it?" "Why should I pay for it?" "Why should I pay you for it?"

* What exactly is your target market? How many of them are there? How many of them are likely to switch from whatever they're currently using to your product? How much will they be willing to pay? How much will you have to spend in order to build the product, to reach those customers, and to convince them to buy yours instead of someone else's? How many competitors have already tried and failed to tackle that same market? And what caused them to fail? If there are no competitors in the space, why not? (Often it's not because your idea is new and unique, it's because there's no viable market for it so nobody else is bothering.) All that annoying bizdev jargon about market share, conversion funnels, relationship management, etc -- turns out that stuff isn't BS, it's important. It's really easy to handwave over all the suggestions you're going to get to "draw up a business plan" and assume it's just more paperwork -- but researching all this stuff as specifically and as accurately as possible is super important. You don't want to put a ton of energy into building a business that would need to capture an unrealistic market share to be profitable.

* Don't take on investment if you can avoid it. If you don't like having a boss, you're *really* not going to like having VC breathing down your neck. (Not that this will be an issue for the time being, unless you have a wealthy and gullible friend.)

* Since you're a software developer, you're probably under the impression that the quality of your code is important. It isn't. If the customer can't see it, then it doesn't matter, as long as it mostly works. You're going to be throwing most of it out anyway, whether you plan on that or not; in the meantime make all the spaghetti you want.
posted by ook at 9:51 AM on July 4, 2018 [10 favorites]

* If your real goal is to be a software developer but without a boss, then ditch the lawyer friend, stop thinking of it as "starting a business", and just go the freelance consultant route. It's easier, much lower risk, and much more consistently profitable. If you start a business you're unlikely to be able to continue writing code for long; there will be too many other draws on your attention.

I agree with this, and I also nth that being in business for yourself means not only that you have a lot of bosses, but that there won't be anyone or anything shielding you from their demands. A decent boss acts as a barrier between the demands of other business units and you; a decent corporate structure allows you to go up the chain when you can't make progress. There won't be a boss protecting you from the unreasonable demands of your clients; you won't share a corporate structure with vendors who are delivering as you want.

It sounds like you are struggling to thrive in a corporate environment, and negotiating relationships in a corporate environment is easier than doing it as a business owner. Give yourself another year at your job and learn about all the areas of the business that you don't understand, and make friends with as many people as possible within the business. You sound like you have the basic tools and attitude to succeed at running your own business, but you are not yet seasoned enough-you don't yet know what you don't know. You'll almost certainly fail at your first go-around in business, but I worry that if you go fail now, you aren't yet in a position to learn the things from your failure to give your next go-round a chance to be successful.
posted by Kwine at 10:42 AM on July 4, 2018 [2 favorites]

1) Read up on Business Model Canvas. Fill it out. It will help you understand if you truly have a business and not just an idea.

2) ook offers really solid advice. Read it multiple times.

3) Learn the basics of business. I recommend you take the time to read The Personal MBA . At the end of the day business is really straightforward at a high level but it helps to understand stuff like lead generation, pricing, sales funnel, positioning, contracts, accounts payable, etc. You don’t need to know the intracasies of GAAP or contract law but the basics will help a lot.

4) I am sure you are a super smart person. You may already know this but there are a lot of different types of smarts. Being really good at building rapport with a stranger and convincing them to buy something they didn’t even know they needed if far different than developing a full stack software application. Don’t assume your software smarts will immediately transfer to expertise in other areas. You most likely have the horsepower but you may also have a lot of blind spots this early in your career. If you think everyone is stupid it may be because you don’t have all the same information or perspective that they do. Don’t underestimate how politics, budgets, and psychology can effect why people do the things they do. Keep an open mind, ask questions, and learn.....even if that learning comes from people who may be incompetent. There are many ways to learn.

Good luck. Would love to hear more about your “product”
posted by jasondigitized at 5:33 PM on July 4, 2018

Response by poster: Yeah, I have some blind spots. No I don't think my ability to create software will fix everything. I am getting into machine learning and automation. I hope those things can help me out when I do this.

I don't think most people are idiots, I'm sorry if it sounded that way. I just want to be in charge and I want to take my chances running things instead of letting someone else do that.
posted by Braxis at 6:10 PM on July 4, 2018

If you haven't already read The $100 Startup by Chris Guillebeau, I really think that's a great resource to check out. He covers a lot of the practical aspects of setting up a business while keeping initial costs as lean as possible and there are a lot of really great examples and case studies.

While we're on the subject of Chris Guillebeau, who also wrote an excellent book called Side Hustle and who hosts an excellent short daily podcast called Side Hustle School, you may want to consider starting this business out as a side hustle at first? A lot of successful entrepreneurs have started out this way, keeping their steady day job income until they could parlay their side business into a financially stable and sustainable full-time job.

I definitely agree with the others in this thread that it sounds like there is an element of the cavalier to your attitude and approach to leaving your job to "be your own boss". That high risk tolerance will probably serve you well in the long run, and I can appreciate the desire for the freedom to thrive or fail on your own terms, but without a business background (and even if you had one), I would strongly suggest doing way more than just due diligence on the business plan, networking, market research, building a potential client base, reading and learning more about the nuts and bolts and potential pitfalls of starting a business, etc. before jumping in with both feet. There are a lot of great books, blogs, and podcasts out there that can help you build that foundation so that when you do launch your business, you have a much greater chance of long-term success.
posted by helloimjennsco at 8:38 AM on July 5, 2018 [1 favorite]

Response by poster: Yes, I will wait, I have come to a conclusion that it better to learn how to do that and jump in tban doing it blind and figuring out as I go.
posted by Braxis at 7:02 PM on July 5, 2018

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