Elance Blog

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Raising Startup Funds? Here’s Food For Thought

Occasionally we invite clients to discuss issues of importance to those who work with freelancers on Elance-oDesk. Here are some additional thoughts from Nicholas Wright. He frequently hires freelancers and is one of the founders of AppInstruct, an online course that teaches people how to make an app utilizing the Elance-oDesk platforms.

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Earlier posts in this series have looked at:

How to turn your idea for a new mobile app into an working app

Exploring the concept of minimum viable product

Tips on how the start-up fundraising process works

Equity and control options

This week we’ll run through the two main methods of fundraising for your startup—shares (equity) and convertible notes (debt). We’ll also discuss the advantages and disadvantages of each method.

Shares and equity

Equity (or shares in the company) is the most common method of raising investment for a startup. It’s also likely to be a concept you are familiar with. In exchange for investing a certain amount of money, investors are issued a set number of shares at a certain value per share—such as $1 per share. 

The principal problem faced by founders and investors alike with this approach is agreeing what the company is worth—especially since the startup is yet to launch its product, much less earn any revenue. This valuation is critical, as it determines how large a piece of the company everyone (founders and investors alike) will own, once the investment is received and the shares issued. 

By way of a simple example, if the company raises $500,000 (a standard-sized pre-launch investment ‘seed’ round) at a pre-money valuation of $2 million, after the investment your investors will own 20% and the founders 80% (the seed money is added to the valuation, meaning a post-money company valuation of $2.5 million).

If the company raises $500,000 at a pre-money valuation of $4.5 million, then those same investors will only own 10% of the company post-money. Hence, they would own half the portion of the company at the lower valuation.

This means that there may be a need for a significant amount of negotiation between the founders and investors. This negotiation will consume valuable time from the founders—energy that could otherwise be focused on getting the company’s product perfected.

The other factor with equity is that upon issuing it, there will normally be significant negotiation as to who has control over the company and its decision making. While there are accepted parameters around these negotiations, the need for them often means that an equity investment might take 6-8 weeks to finalize once the investors commit to investing by signing a term sheet. In most cases, during that time period there remains a risk to the company and the founders that the investment will not be finalized and the funds not released.

Convertible notes—debt

Convertible notes differ from equity in that they are a debt instrument. That is, they don’t immediately confer on the investor a share in the company. Instead, they provide the investor with a right for the note to be converted into equity (upon the occurrence of a pre-determined event—normally the company raising a certain amount of funding by way of a share issue). Essentially, they provide a future right to a share in the company, but not immediate ownership of that share.

Advice From An Elancer (Volume 23)

Welcome to Advice From An Elancer – a place to ask your Elance questions (through Elance’s LinkedIn page) and get them answered as thoroughly and personally as possible. My name is Dorothy D. and I have worked with Elance as a freelancer since April 2009. I have always tried to help other Elancers understand how things work and how to accomplish more. Today’s entry is a little bit different…

Proposal Tips and Tricks for Freelancers for Whom English is a Second Language

Elance is a global marketplace with a diverse cultural identity. The primary language used is English, although for many of our Elance freelancers, English is a second language. It can be a challenge to master the intricate details of the grammar and flow of English— even for native speakers.

I have reviewed profiles for several Elance professionals in a variety of categories, from web developers to graphic designers. In several instances, the only problem was clear, grammatically correct translation of their intended message into proper English.

So, for those of you who are global, non-native English speakers, AND for those of you that speak English but still struggle with when to use a semi-colon or a comma, this is for you.

These resources are for all aspects, not just proposals. I mention proposals in the title, because they are so important to the job process. Specific to proposals, while each one should be different (depending on the job), they should each contain:

·       An introduction: Who you are and your understanding of the job

·       The body: What is that makes you best for the job? What strengths do you bring to the table?

·       Conclusion: Thank the client for reading your proposal and samples.

Now for the grammar part…

1.     Online grammar checkers don’t work. I put a run-on, unclear, senseless sentence into four online grammar checkers. They all said there were no errors. These cannot be trusted to check the accuracy of the MEANING of your sentence and the associated grammar and punctuation.

2.     If you wish to improve with online lessons: http://a4esl.org/  This site includes bilingual quizzes and has multiple activities and quizzes on the site. It’s a good place to find lessons of various levels.

3.     Quick and Dirty Tips: http://www.quickanddirtytips.com/grammar-girl Grammar Girl has free podcasts, tips, and easily searchable information online. If you are wondering whether you should use affect or effect, check her site and she’ll make it clear in a very understandable way. This is one of my go-to resources when I’m unsure of something.

4.     More Tips for Everyone: The Purdue University OWL website has grammar and writing resources for every writer. The section specific to ESL Students is: https://owl.english.purdue.edu/owl/section/5/25/ There are also a multitude of resources for writing, writing mechanics, grammar, punctuation, and more.  I love this website.

5.     There is no substitute for a proofreader. Perhaps, in your field, writing in English is not a priority, so you don’t want to commit to lessons. You may not even want to look things up because you don’t know exactly what’s wrong with your sentence. Find a proofreader. If you know someone, great. If not, hire one on Elance for an hourly rate for an undefined period of time. They can check your proposals and any other writing you may need to do. You’ll have peace of mind that your writing is at its best.

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That’s enough for today. If you have questions or want to follow the conversation of other Elancers, visit the Discussion page of our LinkedIn group.

 

How Desert Hippies Can Teach You To Network Like A Pro

Occasionally we invite entrepreneurs to discuss issues of importance to our community. Here are a few thoughts on networking from Danny Schaffer, a freelance writer and marketer from South Africa. Danny was also a runner-up in our recent blog writing competition, which Elance co-sponsored alongside co-working space The Common Room. 

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Sites like Elance and oDesk have shifted the way many of us do business. By connecting clients and freelancers from all over the world, the online marketplaces spark what will often become long-term business relationships.

But relying on digital workplaces alone to grow one’s network is no longer enough. Savvy professionals know the key to building a powerful career in any field is through powerful and intentional networking.

But unless you’re some kind of socialite, networking is awkward. The word alone reeks of contrived self-promotion. 

Most of us at some point or another have tried at least one networking event. And it’s almost always the same ... mildly interesting talks swarmed by people throwing around business cards right and left.

The problem here is a lack of authenticity. People aren’t interested in each other; instead they’re dead bent on a mission to work the room, convincing strangers that they’re worth knowing.

But meeting people face-to-face, having a real conversation, is one of the greatest ways to form genuine connections with people. So how can do this in less used-car-salemanesque way?

Burning Man and the art of powerful networking

I was first introduced to the idea of gifting on a week-long trip to the desert for Afrikburn, an offshoot of the Burning Man festival in Nevada’s Black Rock Desert. While hanging out in the desert for a week may or may not be your bag, there are a number of great lessons we can take away from The Burn. Burning Man was originally founded upon 10 principles, the most important of which in this context is gifting - the act of giving something to someone without expecting anything in return.

At first the concept seems a little alien, but after seeing how it works in practice and reflecting on it after the drugs have worn off, one realizes it’s the most natural way relationships are formed. Give someone something and they want to give you something back, this back-fourth quickly builds trust and sparks a friendship based on mutual benefit.

The key here is to become a giving person in every aspect of your life, always looking for ways to make people’s lives better whether or not they’re able or willing to return the favour.  

Once you’ve integrated a giving attitude into who you are, you can take the next step into a more focused and intentional approach when it comes to networking with the people who interest you.

Focus on the people that matter

Unlike the Burning Man bunch, you’re not just looking to gift yourself and your skills to everyone you meet along your merry way, rather you need to identify a group of specific people who know something you want to find out more about, and add real value to their lives in a unique way.

Death Of The Office? See Your Future Workplace In A New Infographic

No big surprise to those of us who work remotely (or with freelance teams), the folks at Intuit-U.K. have a sneaking suspicion that traditional offices are quickly becoming obsolete.

As technology advances and work/life values shift, they’re noticing that physical locations are less and less important. To spotlight this transformation, they created an enlightening Infographic outlining the evolution of the office. Check it out:

Death of The Office Infographic

Our Hiring Assistance Program: Why We're Helping First Time Hirers

There has been a lot of community discussion lately around Hiring Assistance and I want to clarify a few points.

Hiring Assistance is a program introduced to increase the number of first-time customers who hire freelancers on Elance. A complimentary service, Hiring Assistance has been offered to first-time clients on their first job to help make that first hire through one-on-one phone and email consultation, guidance on writing a good job post, and assistance in sorting proposals.

In the last few months, clients receiving Hiring Assistance have hired 25% more often on their first job than clients without this service. More importantly, first-time clients who received Hiring Assistance are much more likely to come back to Elance and hire again -- which means they were very satisfied with their first hiring experience.

These results are very meaningful, as our entire community benefits when clients expand their hiring on Elance. However, we've also learned a lot through this process and are still tweaking the program. We’ve heard a lot of feedback on how this program could be improved and I am personally working with our Hiring Assistance program leaders to examine specific areas of improvement. We are also making and will continue to make adjustments based on some of your suggestions. We will inform you of any significant changes to this program as they become available.

Finally, we should have done a better job communicating the Hiring Assistance program to our community and I regret making some of you feel in the dark. We will do better moving forward. I fully recognize that you want to be informed of our efforts and how they impact you, and take this also as a personal reminder to communicate more often with all of you.

I want to thank you, our community, for your patience and feedback. We are deeply committed to your success and, it’s no secret, depend on it. Finding ways to better serve you keeps everyone around here humble.

Sincerely, 

Fabio Rosati CEO, Elance-oDesk

*Note: You can find a full list of FAQs regarding Hiring Assistance here.

Secret Sauce: How Elance Frees Me To Run A Monthly Magazine (While Holding Down A 9-5 Job)

Occasionally we invite Elance-oDesk clients to discuss issues of importance to businesses in our community. Here are some thoughts from Foundr Magazine Editor-in-Chief & Publisher Nathan Chan. His Melbourne, Australia-based publication is a digital magazine that’s a must read for entrepreneurs.  

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Upon reading this headline you are probably thinking, how can one man do all this?

The answer: Leveraging the internet through freelance contractors around the world.

I’m just a regular guy doing what I love, and it all started out with ‘a passion project’. This project has now led me to interviewing some of the most influential entrepreneurs around the world.

I was simply sick and tired of hearing about entrepreneurs killing it in life and business, so I set out to find out how these entrepreneurs are doing it, and wanted to share my findings with the world through a cool magazine.

So then Foundr Magazine was born and launched early March last year. Foundr is a monthly digital publication exclusive to the Apple Newsstand for iPad, iPhone & iPod Touch & Google Play Store and is tailored specifically to young entrepreneurs, startups and small businesses.

The truth is none of this would be possible if it wasn’t for an amazing tool like Elance that allows me to leverage overseas talent from all around the world.

Through the ability of outsourcing with Elance I have been able to build up a solid team which consists of a graphic designer, audio/video editor and a team of five writers from all around the world. All talent was sourced via the Elance platform and all tasks and projects for each issue is run via the Elance platform. Essentially without Elance and the power of outsourcing my business wouldn’t be possible, certainly with a full time job.

So what advice do I give to anyone looking to leverage their time in the most effective way?

1.     Try to delegate tasks as much as possible. For example, I give my current graphic designer full creative control when designing the magazine. Not only do I trust him, but I encourage trying new things and pushing the status quo. Not only does this allow me to take a step back from the design side of the magazine, it also allows me to focus on my skill set which is business strategy / marketing.

2.     When bringing on employees or contractors via outsourcing, always look to build a long-term business relationship. Building a long-term business relationship with your contractors allows you to save an enormous amount of time, as once you have trained up that staff member as you do not need to constantly look for someone else to repeat certain tasks. In Elance you can set up a timesheet that can be filled out for regular work, which auto direct debits and pays your contractors. Don’t you just love automation?

3.     Hire a player. Easier said then done, but I cannot tell you the importance of building an A player team. It’s all well and good to use platforms such as Elance to find skilled contractors for the least amount possible, but at the end of the day the old saying rings true “you pay for what you get”. I try and find premium contractors that charge 25-30% more than most, as generally they are the best at what they do.

4.     Recruit members of your team that believe in your vision. If you want your team members to stay with you for the revolution, they have to believe in it. Every single person that I work with is not only doing it for the money, but also because they believe in me and Foundr magazine. This is very powerful when it comes to encouraging your staff to produce their best work.

5.     Go that extra mile with the hiring process. Do many Skype interviews and really invest the time in getting to know who the person is you are working with. For me this has been critical as I have built strong relationships with my team and it allows me to take a step back as I can rely on them fully to fulfil any tasks required.

There you have it. The secret sauce to running a side hustle business with a full time job. Comment here to share advice of your own.

Digital Nomads: The Evolution Of Mankind Continues Through The Digital Age

Elance was excited to sponsor a blog writing competition in South Africa, along with co-working space The Common Room. Bloggers from across the region competed for prizes and bragging rights, waxing poetic on a choice of topics from life as a digital nomad and reinventing work to achieving happiness as a freelancer. Below is the winning post, from Edward Chamberlain-Bell. Enjoy these words of wisdom.

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Mankind has gone full circle from a nomadic existence to a digital experience.

Nothing defines our existence better than our activity on social media platforms, where we share everything from the mundane to the sublime with family, friends, fans, followers and cyberstalkers. We know who had burnt toast for breakfast in Peru, and we also know who is nursing a hangover in Afghanistan. Sometimes we know too much about people we don’t even know when we should be sharing those experiences with the people who are closest to us. Preferably something more substantial than burnt toast and hangovers.

Even the Bible refers to principals and principalities, but these are gradually being eroded as the digital revolution is rapidly becoming a digital revelation. The new god is not an almighty spirit in the sky, it’s wi-fi. Potential employers will scrutinise your online behaviour before offering you a job, future lovers will hunt you down and compare your previous partners, and it’s even possible that your parents are more inclined to believe what you post on Facebook before believing what you say. Perception is no longer based upon the truth, but how your life has become a digitalised representation of everything you share online.

Our economies are no longer based on gold but little bytes of zeros and ones forming a binary code of valuable information. Banks are more likely to trade your personal details than keep your money safe. We are more likely to burn plastic than ask for a cash discount. It’s no longer a cliché to tell a beggar or homeless person that we don’t carry cash because who has cash when companies stopped paying salaries in favour of the ever-efficient EFT.

As our world evolves, especially post-Web 2.0, survival of the fittest will determine how mankind survives the digital evolution. As children we were told that to get ahead in the world we needed to know how to read and write. Typing has replaced writing while search engine optimisation skills have replaced reading. Great writers would write for the love of expressing themselves eloquently through words. Today, we are more concerned if Google will like it.

This is not a criticism, just an observation, because once we embrace the existence of becoming digital nomads, it becomes quite liberating. Yes, we would all like to believe that one man can save the world or end global hunger simply by planting a trees, but the truth is that person is probably not going to be you or me. If it was going to be that easy, then why not all of us plant trees together? If we truly believed planting trees would become the almighty band-aid that could preserve our existence we’d be getting to know the names of our neighbors at weekly tree planting ceremonies. Ironically, as our cities become more densely populated, people are becoming increasingly more isolated. How many people know the names of their neighbours, or even the names of their neighbour’s children that their children play with? Oh right, they don’t.

We’ve become digital nomads in a world where our interconnectivity is defined by our broadband, and not by the people we connect with. There is still that human drive for human contact, which explains why we’re connecting through chat rooms, forums, blogs and social media platforms. We don’t write letters, we email. We don’t visit family, we Skype. And, we don’t stop to consider what is the next step in our digital evolution even though it has already happened. And, some people need to put down their pencils and stop swinging from trees to appreciate that unless they’ve upskilled themselves to function online they will face a life as redundant as an organ grinder selling pencils along the side of a road.

Commercially, the advantage of embracing a digitally nomadic lifestyle is that you are no longer bound by location, nationality or currency. You don’t even need a computer anymore because with any laptop, tablet or smartphone, your business can be transacting in twenty-four time zones a day while simultaneously earning multiple foreign currencies- while you are sipping Pina Coladas on an island resort somewhere that the NSA doesn’t even know about. When we were kids we’d mention how we enjoyed going to the beach to surf while becoming a digital nomad allows you to add that you enjoy surfing the internet while at the beach.

If you’ve never heard of the term ‘Digital Nomad’ you should Google it. It’s not a change to be feared but one to be embraced. You’re probably already more of a digital nomad than you think.

If not: Be afraid, be very afraid!

Love, Whiskey and Elance-oDesk

 
Here’s another post from our roving reporter, Joshua Rodriguez.
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Last weekend, I decided to take my fiancé out for a night downtown. It was an amazing night that included 3-D glow in the dark put-put golf, an arcade, and a nice meal. While we were walking downtown we were thinking of where we were going to eat. We walked past a few food carts and one of them really caught our eye.
 
It was called Love & Whiskey. We stopped in and although the owners were there, the cart hadn’t officially opened yet. We had a great conversation with the owners and they agreed to do an interview with me on their opening day. So, today we’re going to talk about the inspiration behind Love & Whiskey, the journey it took for their food cart to come alive, and how one Elance contractor played a major role in their branding. Here’s how the interview went.
 
I started out with the classic question, “Why did you decide to open a food cart instead of a brick and mortar location?” The answer really caught me off guard. I assumed that it would be associated with how much a brick and mortar restaurant costs to start. Instead, Brandon, the owner explained that “since it’s a small operation, we have the ability to put a lot more love into our food. We’d also like to get a mobile catering business going one day; so, we figured a food cart would be a perfect first step!”
 
The birth of a wonderful business (and more)
 
After that question, we chatted for a little while and I learned that the lady by his side in the cart wasn’t just a co-worker, she was his wife. Brandon and Jadie met in culinary school, and it was there where they fell in love and started to come up with big plans for their future. Today, they’re married and have a 6 month old baby girl. Throughout the last several years, Brandon had worked as a cook at several different restaurants. However, there came a point where he realized that holding his day job as a cook took far too much time away from his family. So, his dream became to open a business he could call his own in order to provide for his family while still being able to be part of their lives.
 
At one point in the conversation, I asked him what his signature dish was. He replied with “All of them”. He went on to explain that everything he makes is made with love and made in house. Brandon and Jadie even cure the bacon, pickle the red onion, and make the sauces all on their own! He also told me that they make it a point to reach for perfection in all of the dishes they create. So, they are all equally perfect!
 
Then again he’s the chef, he’s going to say that right? Well guess what…I got to try some of the food! During our visit, Jadie started us off with a fish taco. It was made with a corn tortilla, fresh snapper, Napa cabbage slaw, mango habanero pico de gallo, pickled red onion and more! I’ve got to say, it was absolutely amazing! Next, Jadie served me a fresh Frisco Burger. It was a fresh burger topped with fried jalapeno, Tillamook cheddar, chipotle ole, house sauce, tomato, and butter sauce. The burger was also absolutely amazing!
 
The Elance connection
 
After the food, one of my favorite questions came up. “Have you ever heard of Elance?” Brandon’s eyes lit up as he told me that he wanted to make sure that the branding for his food cart was done perfectly. He wasn’t sure who to hire or what to do when it came time to have his logo designed. So, he went on an online search. That’s where he found Elance. An Elance contractor helped him through the process of designing the simple, yet perfect logo; and he plans to reach out to Elance contractors for future design or development jobs!
 
To keep up with the theme of Love & Whiskey, I decided to bring a gift when I went to meet him. To ring in our new found friendship, I brought along a small bottle of Jameson Irish Whiskey. I offered a toast and Brandon and Jadie were happy to oblige. 
 
After the toast, I asked the final question…”So what is the idea behind love and whiskey?” In the smiley, fun manner he generally responded to questions with, he said “Mostly because it took a lot of love and whisky over the last couple of years to get here!” and let off a chuckle. He went on to explain …”Me and my wife are a team that runs off of love. We also like to incorporate a lot of whiskey and bourbon into our food. The name just seemed to fit!” 
 
Final thoughts
 
After meeting Brandon and Jadie, I can honestly say it was a pleasure getting the opportunity to get to know them. With bubbly, fun loving personalities, amazing recipes, and signs of love everywhere (even on their door into their kitchen), I’m sure they’re going to go far! It was nice to see Brandon’s face when he was talking about having the ability to spend time with his family; as well as watch how well Jadie and Brandon worked together from behind the scenes (The interview was at 12:30pm on Wednesday in Downtown Portland, OR). I also think that it was awesome that an Elance contractor helped them come up with a logo design that worked well for them. I wish them all the best!
 

Elance-oDesk Shocks An Industry As First Ever Online Business Included in US Staffing Company Ranking

The business world is buying into online work, literally putting their money where the best talent is more accessible today — online. Elance-oDesk is the only online business—and the first ever—to be included in the annual listing of the top U.S. staffing firms by Staffing Industry Analysts (SIA).

Ranked 29 out of 124 companies listed, Elance-oDesk’s position is remarkable not only because of the innovation in staffing it indicates, but also because it already outranks 75 percent of the traditional firms.

“Staffing Industry Analysts changed its 2014 U.S. staffing and talent engagement market share report to include online staffing companies. Based on revenue managed through their system, Elance-oDesk is the U.S. market leader in the online staffing category,” stated Timothy Landhuis, senior research analyst.

According to SIA, companies spent $1.3 billion on online staffing last year. Elance-oDesk accounted for more than half of that at $750 million.

Online work lets businesses find talent when they need it, hire on demand and work directly with these professionals—a change from traditional staffing firms, which act as intermediaries between organizations and the freelancers they want to engage.

This gives businesses of all sizes control and flexibility. SIA predicts the online staffing industry could grow to $47 billion by 2020.

This shift is making it faster and easier for businesses to hire for the skills they need, when they need them, while freeing professionals to work anytime, from anywhere.

“An average job on our platform fills within three days and about a quarter of jobs fill in 24 hours or less,” said Jon Diller, VP of Enterprise Solutions at Elance-oDesk. “Our customers are delighted by this efficiency because it helps them get to work faster.”

Click here if you’d like to learn more about how to get started hiring online.

Repeat Business: Key To Success On Elance-oDesk

Occasionally we invite Elance-oDesk clients and freelancers to discuss issues of importance to our community.  Here are some thoughts from Sarah-Elizabeth Ratliff. As the owner of Coqui Prose Content Marketing, Sarah has been an Elancer since 2010. She’s also one of the founders of FreelancetoWin.com, a site dedicated to helping fellow Elancers succeed in the competitive online freelancing world.

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When I registered with Elance in March 2010, my family and I were broke. I don’t mean broke like we still had our brownstone in Manhattan, but we may have had to sell the house in the Hamptons. And I don’t mean the kind of “dead broke” that gets journalists’ and political analysts’ tongues-a-wagging, either.

I’m talking about the kind of broke where we had $40 in our checking account, several mouths to feed and overdue bills to pay.

To suggest I needed to make money immediately is putting it mildly.

Because of this, I did as many do when they first discover the virtual world of connecting clients with freelancers: I bid on practically every job in the Writing & Translation category that I felt was even remotely a match with my expertise.

Tip: Under promise and over deliver.

I landed my first Elance job after five days on the platform. The job was to write three articles about baby cribs. It wasn’t particularly academic or even terribly exciting, but I still bid, and I won.

My motivation for how I delivered work wasn’t about getting repeat business or even receiving great feedback. It was about survival: getting paid, eating, paying a bill or two, and then moving on to the next job as quickly as possible.

Promising to deliver this client’s work within five days, I stayed up all night the day I won the job in order to learn as much as I could about baby cribs. The next day I crashed for about five hours and when I woke up, I wrote all three articles in under two hours.

I delivered the client’s work three days early.

Although I can still to this day remember his name (as I can with every client who’s hired me on Elance) and the amount I was paid, all I could think about was bidding on the next job so I could pay a few more bills. I almost didn’t notice he’d left me 5-star feedback. Why? Because I was too busy negotiating with my next client to realize he was pleased enough with the quality of my work.

This was my modus operandi for the first few weeks I was bidding, winning and completing jobs on Elance. Then one day I realized I’d paid off the backlog of bills and we had a little left over to splurge on a bottle of wine to go with our dinner. I had racked up several jobs, all with 5-star feedback.

I never drank the wine. I slept for two solid days.

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