Monthly Archives: September 2013

Don’t Miss the ‘Good to Great’ Way to Startup Success

By Andrew Johnson, Ph.D.

Rocket blast off

Achieving breakout success for your startup is all dependent on what you do before anyone has even heard of you. Do this right and there is no stopping the heights you will attain and the success you will enjoy.

There are no shortages of stories of great ideas and entrepreneurs that, for one reason or another, failed to achieve commercial success.  Is there some secret to getting this right that is being tightly held by the winners in this Darwinian race to startup glory?

Jim Collins investigated this phenomenon in his book, ‘Good to Great:  Why Some Companies Make the Leap and Other’s Don’t’ more than a decade ago.  He selected 11 publicly traded US companies from the ‘Fortune 500’ that consistently out-performed the market by 30% for at least 15 years after an initially lackluster performance of 15 years.  He compared these ‘breakout’ companies to their industry matched (same size, market, revenues in the previous 15 year period) counterparts to see what was behind these company’s’ incredible success.   Mr. Collins and his team used publically traded US companies since there was a wealth of publically available data for him and his team to use to figure this puzzle out.

A look at the stock market valuations of the ‘breakout’ companies compared to their market average counterparts shows that any two comparison companies tracked one another for at least 15 years and then the graph of the returns for the breakout company would just skyrocket up consistently for at least 15 years (some showed even more dramatic growth both in size and duration).  This is the type of financial performance and success that every startup team dreams of achieving as well.  However, this study was originally done with well-established companies whose revenues were high enough to rank them as the top earners in the US.  What, if any, of the findings here could be relevant to a startup?

The Secret Sauce
The answer:  Many of the ‘Good to Great’ findings are a perfect fit for startups as well.  Many of the principles that drove the success of the ‘breakout’ companies in Jim Collins’ study are applicable to startups today.  The following insights are inspired by the findings of the ‘Good to Great’ team but have been adapted for startup stage companies.

  • Selecting your leadership:  The ‘breakout companies’ were all lead by top performing CEO’s that many had not heard of before.  This is because they were not celebrity CEO’s that were interested in driving their own ego’s and compensation, but passionate ‘get-it-done’ leaders.  Startup CEO’s rarely have this issue.  The reason is that entrepreneurial leaders are passionate for transforming their startup into a successful company.  The only ‘watch-out’ here is that sometimes investors will insist on the placement of an experienced executive (well-known outsider) at the helm based on the misconception that this will boost the chances for success.  When this occurs, it is important to make sure that this leader shares the passion for driving the company’s success (rather than their own) first.  In other words, a leader that has an enviable track record of creating long-lasting successful companies rather than just a big name in the industry.
  • Building your team:  The ‘Good to Great’ findings showed that all breakout companies spent some time making sure that they had the right team in place before they worried about their strategy for transformation.  The startup is spared the need of ridding the team of ‘dead wood’ if it focuses on only hiring the very best from day one.  The reason that this effort precedes developing your strategy is that you need the input of a top performing team to come up with the best strategy here.  Another benefit of hiring the very best even before you fully know exactly what all of your needs are is that they will require much less care and handling and help to create a culture of excellence from day one.
  • Facing the music:  All great ‘breakout companies’ had some moments of truth were they discovered that they were in the wrong business or that the market had changed in such a way that they could no longer count on being number 1 or even 2.  Once the truth has been faced, the team can then rally to develop a strategy to redirect the company into a more successful and profitable direction.  Startups with a good leader and a solid team can face the realization that they might have a great technology that has no compelling market early on.  This team , working from these facts, is now in the best position to make the necessary pivots in the early days (before too much cash and time) is wasted to direct the company in a new and more promising direction.
  • Refining and sticking to your focus:  Jim Collins called this the ‘Hedgehog Concept’ (The Fox knows many things but it is the Hedgehog that knows the one most important thing).  This is all about focus and not being distracted by outside interests that do not serve your central strategy to succeed.  The ‘Good to Great’ team found that this central guiding concept (The Hedgehog Concept) was composed of 3 things that are roughly 1) identifying what you are best in the world at, 2) what you are most passionate about and 3)what business model will best transform this passion and world-class talent into financial success.  The startup concern will need to do the same reckoning and this is not always an easy thing to do.  Insight will come from both an honest assessment of the capabilities and talents of the team as well as a reasonably good estimate of how you can successfully commercialize this.  Focus is usually not an issue in the early days for the startup.  This becomes more of an issue after the company has enjoyed some commercial success.  The key here is to stick to this central focus of the company (The strategy for taking you to number 1 in the market) when exploring opportunities for growth from everything from product line expansions to strategic partnerships and acquisitions.  Anything that does not contribute to your core strategy should be ignored.
  • Nurturing a culture of discipline:  Remember that we recommended hiring only the best people for your team.  If you have done this well, you will already have built a culture of discipline.  Many of us have seen the gimmicks and marketing efforts that companies use to ‘motivate’ their employees to do more for the company.  If you have the right people in the company in the first place you won’t waste one minute or one dollar on this since everyone is already aligned with your goals for the company.  Essentially with a culture of discipline, you will not need to find ways to get your employees to get the job done as they will likely already be well on their way to completing this.  Make sure that you continue to follow the high standards you used in the early days as you continue to grow the team.  ‘Quality People’ over finding the cheapest person to do the job will always be more valuable in the end.
  • Turning the ‘Flywheel of Success’:  Success does not come overnight.  The ‘Good to Great’ team found that there was never one event or decision that lead to the company’s success.  It turns out that it was the accumulation of a thousand little things being done right that lead to breakout.  For a startup, this is about meeting challenges every day and working together to achieve that one central goal of first getting the company to market and then building its fortunes after a successful launch.  This last point is kind of a recap of all the others in that with the right leadership, the right team will be hired and with the right team and leadership the right path to success will be found and then the team will work hard together to achieve this goal step by step every day.  Judicious and frequent use of refining and following your central strategy will easily allow the team to determine if a given action or decision will be a push that increases the momentum of the ‘flywheel’ or not.

Putting it all together
It can often look like ‘breakout companies’ just popped up out of nowhere.  Whether they are the next Apple Computer or Genzyme, startup or well-established, this comes about more from the way that the popular press covers these companies than reality.  Jim Collins and his team found this to be true in his study and it is true for the budding startup as well.  The ultimate factors that best predicted for success turn out to be with those companies that are fortunate to have a passionate and capable leader, strong ‘results focused’ team and a single minded discipline and focus to do what is most important for the growth of the company.  The road to success may be long but following these great insights will insure that you stay on track.

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Google Glass: A Primer for the Life Sciences Market

By:  Chris Cullmann

Google Glass

Google Glass

Your rep is in the lab because your customer is tweeting his 2000+ followers that the $300K sequencing system your company just installed is “a piece of garbage.”

“Poor resolution. Unreliable reproducibility. Low reads. I might as well do this manually” says your customer, the director of a regional sequencing center.

The rep picks up the vial of polymerase from the ice bucket long enough to tell her Google Glass (AKA “Glass”) to scan the lot-number bar code and check the corporate database for manufacturing date and for other complaints. Moments later, her Glass display indicates that 4 labs in the US, 3 in London, and 6 facilities in Italy reported similar issues. The rep verbally tells Glass to add her complaint to the database and to e-mail her manager and the director of quality control about the issue.

Your rep replaces the suspect lot with the one she brought to the lab and tells Glass to add to her calendar a follow-up visit to the same lab in 2 days to check on the performance of the new enzyme prep, and then moves on to her next account, but not before she tells Glass to e-mail her manager that she’s on the way.

Google Glass can accomplish some of these functions today. Now is the time to prepare for what Glass will accomplish tomorrow.

Google Glass: how it works
Google Glass is the most recognizable example of a new generation of connected devices—wearable computing. When paired with an Internet-connected smartphone, Glass provides users with information delivered via the Internet and stored in the paired phone. Glass also records images, video, and audio from the user’s perspective.

The concept of Glass is brilliantly simple—provide information to users in a discrete heads-up display in the wearer’s peripheral vision. The computing elements and display populate an eyeglass-like unit that the user wears like standard eyeglasses. Via audio prompts, users access information from search engines, personal files, calendar events, text messages, and beyond.

Much of this functionality is available on our smartphones right now. Why is this so exciting and such a noteworthy change?

Glass delivers on the promise of science fiction writers and IT department heads—a near-neural implant putting all your company’s (and the world’s) information available on command.

Today: a capabilities showcase
Out of the box, Glass provides seamless integration with Google’s own services. Text messages, search, calendar events, video-chat service “Hangouts,” and social sharing via Google+ all are integrated into Glass. It’s a demonstration of capabilities and integration above all else. But keep in mind that the product is still in beta testing and not commercially available.

If you’re searching for a broader context, the message from Google is clear: “Glass is coming.”

Tomorrow: a new interface for information management
At face value, the most powerful feature of Glass is the ability to share, on command, photos and video from the point-of-view camera. Imagery captured via Glass documents and details an activity or event, and does so in real time. Sharing experiences and creating a new genre of digital first-person media are key components of the Glass value proposition.

Sharing information in real time
From a commercial standpoint, the ability to simulcast makes it a tremendous utility for the scientific, healthcare, and education communities. What makes Glass so powerful? Unlike smartphones, wearable technology records, transmits, and receives audio and visual feedback non-disruptively.

Scientists can gain the insights of peers or groups of peers and spawn symposia of in-the-moment discourse. Clinical researchers can leverage expertise from the other side of the globe to diagnose and treat patients. Sales teams can get in-field feedback and tips from sales veterans or support teams to provide the expertise of an entire company—on the spot.

As described at the beginning of this article, the love would flow in both directions. Field information from the user’s point of view—images, video, and audio—could be captured, stored, and made available for distribution throughout the entire business enterprise.

Making Glass work in the business world
Glass has been a toe in the water for wearable computing, and it’s not difficult to envision how something so integrated can change how we apply information and technology to our daily business lives. Does Glass become a new interface for the infrastructure we already use?

Yes. Good or bad, enterprise will quickly adopt Glass or it’s next iteration as a way to provide workers with access to the spectrum of corporate information and wisdom, including but not limited to:

  • Inventory
  • Up-to-the-minute pricing information
  • Product identification
  • Customer information

Let’s take a closer look at customer information, but with a focus on context.

Glass can provide a discrete vehicle for information about our contacts. Who are they? Who are they connected to? Do they have decision-making ability? Are they eligible for discounts? What is the financial status of their account?

It doesn’t take long to see how tools like Glass can evolve business practices, but there are real-world issues that need to be addressed.

Etiquette and legality
Our social construct is changing quickly. Consider the issues raised by existing mobile technologies. Is it acceptable to take a phone call during a conversation or to rely on a tablet for note taking during meetings? The agreed-upon norms are changing daily and without much perspective on generational differences.

So what will be the social implications of Google Glass and subsequent wearable computers? How will the ability of Glass to capture information at any time be received? At meetings will Glass be as acceptable as open laptops and tablets, or will its use be restricted?

Confidential information and privacy. These are critical issues for academic and commercial research in the life sciences and for the public at large, so much so that Google is unsure what functionality to include in Glass and how much data should be made accessible to Google or other parties. For example, Google has developed facial recognition technology, but doesn’t include it with Glass (or its Android operating system). The technology would enable a Glass user to capture an image of any person at any time, identify them, and deliver as much information that is publicly available to the Glass user without the observed person’s knowledge.

Your customers might consider the above an invasion of their privacy.

But similar recognition technology applied to bar codes or other labels could also benefit life science researchers:

  • By identifying hazardous materials and providing safe-handling instructions
  • By recognizing equipment and providing instructions in the heads-up display

Many commercial life science businesses bar their employees and vendors from bringing image-capturing devices into their facilities. Despite the many benefits of data capture and recognition technologies, rules have to be developed that will impact Glass deployment and use.

Can Google Glass become a crystal ball?
Currently, most everything that Google Glass does is reactive. You command, Glass acts.

The vision for Glass is to predict your needs and provide the information—before it’s needed—which might be its greatest challenge and most significant accomplishment.

In this capacity, Glass would analyse your digital activity (e-mail, product ordering, journal-article downloads, visits to help forums such as Scientist Solutions and Biocompare) to search for patterns. Over time, such trends would comprise a large information fabric that would be mined for insights that inform accurate predictions.

Google Glass is a bellwether
Relevant information that is ubiquitous, accessible on demand, and rapidly shared is central to business success. Glass advances this cause by speeding the evolution of information management from desktop experience to the Internet.

Glass isn’t in final form, but a first glimpse. Like viewing the first television, it provides a view of something very important to your business world. Glass isn’t commercially available and registration for beta trials closed, but you can sign up for Glass updates.

Building a Strong Life Science Company by Avoiding These 5 Common Patent Pitfalls

By:  Peter Kim, Principal – Irvine Pointe Advisory, LLC

King Leonidas

Make sure that your intellectual property is strongly guarded by following these simple steps.

Let’s imagine you came up with a great idea.  You hired a great patent attorney, who interviewed you in detail.  After a few weeks, he emails you the patent application, and asks you to review it before he files it with the U.S. Patent and Trademark Office.  What exactly are you supposed to be checking for when reading a patent?  What is the simplest way to read a patent?  What are the 5 most critical pitfalls in patent drafting?  I’ll give you a hint: most of your time should be spent reviewing the “claims” section.

To infringe a claim or not to infringe a claim:  That IS the question
Why is the claims section important?  A patent claim is a “checklist” for whether someone has copied your invention (i.e. a checklist for infringement).  In a patent lawsuit, the patent claims are what the court and the lawyers will be reviewing, to see who’s right.  Here’s the surprise to most inventors: in order for someone to infringe your patent, they must be copying everything in a patent claim.  “Fairly close copying” doesn’t count.  If someone copies 50% of a patent claim, they are NOT infringing.  If someone copies 75% of a patent claim, they are NOT infringing.  If someone copies 90% of a patent claim, they are NOT infringing.  That’s why it’s so important to get the patent claims right.  The good news is that you can include multiple claims in a single patent.  And someone needs to infringe only one of the claims.

How to review a patent: Tips for the inventor
When I read a patent, I start with the claim section before anything else, because it’s so important.  The claims are the last section of a patent, so start from the back.  I always start with reading the independent claims.  (If an independent claim is not infringed, then it’s impossible that the dependent claim is infringed.  Dependent claims reference a different claim; independent claims do not reference another claim.  Dependent claims can be important if an independent claim is “invalidated” due to prior art.)

Here are the 5 common pitfalls to patent claims:

      1. Claim has multiple ‘actors’
        A claim is like a checklist for infringement.  But the checklist should only be applied to one infringer at a time.  If the claim was a screenplay of a movie, there should only be one “actor” in this movie.  This is important because if the infringement requires multiple entities, each will blame the responsibility on the others.  The law makes it very difficult to sort out these ensemble infringement issues (e.g. contributory infringement or inducement).  This is one of the most common pitfalls in a patent, and also the easiest mistake to correct.  Make sure the claim describes the activity of a single infringer.
      2. Claim is unnecessarily long
        A claim should be as long as it needs to be, and not any longer.  Why?  Because proving infringement requires that everything in the claim has been copied.  A longer-than-necessary claim means that proving infringement is longer and more complicated than it needs to be.  If the claim seems to have many unnecessary details in it, work with the attorney on figuring out if any of the details can be moved to a dependent claim.  Ask whether someone could infringe your patent with a shorter version of the claim, and if that shorter claim still covers your invention.  Make sure the claim is not excessively long.
      3. Claim would be invisible or undetectable in the ‘real-world’
        A claim should describe things that would be visible and detectable in the ‘real-world’ (i.e. can be reverse-engineered from the product or service).  It might take some hard work to detect, but the infringement shouldn’t be invisible.  Examples of invisible features might be software code, or a secret manufacturing process.  If you file a lawsuit for infringement, the court requires solid evidence when you file the lawsuit.  Stated differently, the court will not let you file a lawsuit as a ‘fishing expedition’, in order to guess at infringement.  Make sure the claim describes infringement that can be seen or detected.
      4. Claim uses unusual words that are not well defined somewhere in the patent
        A claim should use simple plain and understandable language, whenever possible.  However, there are some situations when a patent attorney must use an unusual word because it’s being used with a very specific meaning.  If you don’t understand any of the words in a claim, look in the rest of the patent to see if there is an explicit definition or list of examples.  If you explicitly define the words in the patent, the court will give your own definition deference.  But if you don’t define it, the court will decide the meaning during the lawsuit.  Make sure the claim uses understandable and well-defined language.
      5. Claim describes a different idea than what the inventor discussed
        Every invention begins with an important idea.  An inventor should work with a patent attorney to capture that idea in a patent.  And a great patent attorney will provide input on how to focus the idea in the most beneficial way.  But ultimately, the claim should describe the idea that the inventor and attorney have discussed.  If the claim describes something different, there may have been a miscommunication along the way.  Make sure the claim describes the idea that you discussed.

In summary…
One of the most important jobs of an inventor is to read the patent application before it is filed.  These 5 patent pitfalls are very simple to watch for, and don’t require any special legal or technical training.  Spending an hour reading the patent claims will save you countless time and money in the courtroom later on.  And if you make sure these 5 items are covered, most of the hard work of reading a patent has been accomplished.

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The Next Step: Partnership or Business Alliance?

By:  Michael Kaiser

4 people and puzzle

Business partnership or alliance? Get this right and build your company.

Here is an imaginary (yet realistic) scenario: after much effort, your company has earned the “growing business” label in your industry. In order to keep its growth momentum, the time has come to choose one of the two alternatives listed below.

A partnership is an   arrangement where parties agree to cooperate to advance their mutual   interests. In the most frequently associated instance of the term, a   partnership is formed between one or more businesses in which partners   (owners) co-labor to achieve and share profits and losses.

A business partner is a commercial entity with which   another commercial entity has some form of alliance. This relationship may be   a contractual, exclusive bond in which both entities commit not to ally with   third parties. Alternatively, it may be a very loose arrangement designed   largely to impress customers and competitors with the size of the network the   business partners belong to.

Of course, there are also downsides to partnerships, the   most significant ones being:

“1) The business-related acts of one partner can legally   bind all other partners. So it’s essential that you enter into partnerships   only with people you trust. It is equally essential that, no matter how much   you trust your partners, you execute a written partnership agreement   establishing each partner’s share of profits or losses, day-to-day duties,   and what happens if one partner dies or retires.

2) A disadvantage of doing business as a general   partnership is that all partners are potentially personally liable for all   business debts and lawsuits. Each partner is financially responsible for his   or her share of the business debt. But in many cases, it is the partner with   the greatest assets who loses the most if the business fails. Of course, a   good insurance policy can help reduce lawsuit worries, and many small, savvy   businesses don’t have debt problems.” (Yahoo)

However, to make up for the above, one of the most   important aspects (and advantage) of a partnership is the ability to work   under the umbrella of a Limited Liability Company (LLC), described as a   flexible form of enterprise that blends elements of partnership and corporate   structures.

“An LLC is not a corporation; it is a legal form of company that   provides limited liability to its owners in the vast majority of United   States jurisdictions. LLCs do not need to be organized for profit. Certain   types of businesses that provide professional services requiring a state   professional license, such as legal or medical services, may not form an LLC   but use a very similar form called a Professional Limited Liability Company   (PLLC).” (Wikipedia)

Business alliance
A business alliance is an agreement between businesses, usually motivated by cost reduction and improved service for the customer. Alliances are often bounded by a single agreement with equitable risk and opportunity share for all parties involved and are typically managed by an integrated project team. There are five basic categories or types of alliances:

  • Sales alliance
  • Solution-specific alliance
  • Geographic-specific alliance
  • Investment alliance
  • Joint venture alliance

“In many cases, alliances between companies can involve two or more categories or types of alliances.” (Wikipedia)

A sales alliance occurs when two companies agree to go to market together to sell complementary products and services. A solution-specific alliance occurs when two companies agree to jointly develop and sell a specific marketplace solution.

A geographic-specific alliance is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region. An investment alliance occurs when two companies agree to join their funds for mutual investment.

A joint venture is an alliance that occurs when two or more companies agree to undertake economic activity together. It is an agreement whereby the parties agree to develop, for a specific time, a new business entity and new assets by contributing equity, i.e., they share revenues, expenses and assets.

There is a difference between a partnership and an alliance as described below:

“An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. A strategic alliance is less involved and less permanent than a joint venture, in which two companies typically pool resources to create a separate business entity. In a strategic alliance, each company maintains its autonomy while gaining a new opportunity. A strategic alliance could help a company develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities.” (Investopedia)

There are specific advantages for a growing company to either seek a partnership or a business alliance, but it must be remembered that those advantages are quite different, one from the other. In general, a business alliance should not be undertaken unless you started with a partnership and are protected either by and LLC or S-Corporation shield.
Recommended sources

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The Startup Business Plan: Charting Your Path to Success without Wasting Time

Treasure Map

Your startup business plan will be like a treasure map to show you and the team the shortest path to the gold while avoiding dangerous traps.

By:  Andrew Johnson, Ph.D.

It might seem trendy to ‘just do it’ but it is pretty difficult to make sure that you are ‘doing’ the right things if little forethought has gone into what is critical for your company’s success.   There are those who propose skipping this step, calling it a waste of time.  The reasons given are that as soon as the plan is ready it is already out of date or “we know what we need to do already”.  Many of these views come about from a misconception of what a business plan really is and what it can do.

A business plan is…
A good business plan gives founders the opportunity to clearly state and communicate their vision of the company with the rest of the team,  investors, key opinion leaders and other VIP’s that are critical to the success of the company.  The founder, his senior team and trusted advisors will be able to use the exercise of preparing a solid business plan to simulate how the proposed company will ultimately achieve success.  Think of it as a dry-run.  Gaps in the business model, feasibility issues with the underlying technology, manufacturing scale-up issues and other key elements that are critical for success will easily be uncovered during this effort.  Since this is essentially a simulation of how you envision things to go, any gaps and pitfalls can be identified early before any time, effort or money is wasted.  In addition to this, the business plan will allow the senior team to get valuable feedback from outside industry experts that will have a direct bearing on the company.

A business plan is not…
Having a clear understanding of what does not constitute a good business plan will not only help you in the preparation of the right plan for your organization but allow you to avoid wasting time.

  • Needed only to attract investors:  Yes, it is true that most investors will insist on reviewing your business plan (often they only read the executive summary) before deciding whether they have any interest in a further relationship (never mind making an investment).  However, the real value here is that you will have a detailed strategy mapped out to guide your progress and even a detailed task list for the team.
  • A long, boring document for ‘business types’:  Nobody wants to read or review anything that is boring or valueless.  If you can cover all of the essentials of your business in 5 pages then that is how long your plan will be.  In fact, it is better to start with a shorter plan in the beginning and then amend it as you make progress and learn more about the things that are most important for your success.
  • A static document:  The preparation of a business plan it not something that you complete and then file away for posterity.  It should be a living document that changes as your company grows and as market conditions that impact it are uncovered.  The key here is that with a good plan in place, you and the team will make conscious decisions to make a change rather than just changing course every time something new comes along.  A business without an ‘Evolving Business Plan’ is doomed to run out of time and money by constantly chasing issues that really should be ignored.
  • Something that can be outsourced:  Some of the hard work here can be defrayed by hiring an experienced consultant.  The founder and the senior leadership team will need to work closely with this ‘hired gun’ to make sure that the final product is a business plan that will drive the success of the company rather than a generic business plan (a true waste of time and money) that has little to do with the particulars of your company.

Spending your time creating the world’s best business plan is a waste of time and money
You don’t need the world’s best business plan.  You need the business plan that will provide you with the details and guidance to chart your company’s path to growth and success.  It should be no longer than that and it need not be fancy looking or printed on heavy bond, acid-free paper.  Spend the quality time you need with your leadership team (and consultant if needed) to draft up the best plan you can in a week or less.  You will need to keep updating it and filling gaps but get at least a reasonable one in place early.  The leadership team will frequently make changes to it as progress is made and new findings are uncovered.  Someone with expertise in creating effective business plans can be a great asset to your team in terms of creating a version of it that will be most appealing to potential investors in your market.

Take Home Points:
You need a right-sized plan to help you avoid wasting time and money and…

  • Avoid creating a great product that does not have a ready market
  • Discover that a huge need in the marketplace does not have a viable business model for growing a profitable company
  • Identify what  the next most important tasks are
  • Reveal underlying risks and opportunities that may not be obvious at first


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