Monday, December 22, 2014

10 Barriers To Change That Limit Entrepreneur Growth

thinking-creative Successful entrepreneurs are the ones who think the most creatively, not only in their initial product or service, but more importantly all through the stages of growth from startup to maturity. But even the best of them can easily slip into some bad decision habits that limit or hurt their business, due to natural human tendencies and the pressures of business challenges.

Obviously, the business of business has been around a long time, with many “best practices” well-defined and well documented, so creativity that ignores these is usually not a good thing. Thus every entrepreneur struggles to achieve that balance between methodically following “proven” processes, versus a new and creative approach which may be a real differentiator.

In my experience as a mentor, I find that keeping creative thinking in the balance is a challenge for every startup, due to the natural employee tendency to resist change. I agree with the book by Ros Taylor, “Creativity at Work: Supercharge Your Brain and Make Your Ideas Stick,” which outlines some key psychological impediments to creative business thinking and change:

  1. Just use the data metrics. Shocking statistics, like unexpected losses last quarter, can generate a knee-jerk cost cutting decision, when further analysis and creative thinking might better close the gap with new revenue sources. Using data metrics alone for decisions, without seeking the root problem and alternative solutions, kills creativity.

  2. Let’s just be optimistic. Optimism is essential for long-term success, but it can delay or cloud short-term decision requirements. Entrepreneurs have to be careful not to look too hard for evidence that confirms their passion and positive perspective. Be a realist when making a decision and an optimist when implanting it.

  3. The way we do things. It’s human nature to believe that the way we have first learned and long done things is the best way, and other ways won’t work as well. It stops us from having to learn anything new. One of the reasons change is hard is that people have to unlearn the old way first, which is twice as hard as just learning something new.

  4. Tricked by recency. We tend to remember the first and the last things we hear – the primacy and recency effect. Sales people tend to remember the latest product when selling to clients, not the one best for that customer. So when decisions are to be made, we tend to remember recent information and issues. Not always to good effect.

  5. Group think will give the best results. Group results are often dominated by an autocratic leader, or represent assimilation of the lowest common denominator. Most people tend to be compliant, rather than risk conflict. Creative ideas are the outliers, and tend to be eliminated first, rather than evaluated fully. Diversity challenges group think.

  6. Low appetite for risk. With humans as well as with animals, you tend to get what you reward. If you reward ‘right first time behavior,’ you might get fewer mistakes but you will also get fewer attempts at trying new things. ‘Fast failure’ and ‘minimum viable product’ are startup concepts geared to facilitate creativity while still mitigating risk.

  7. Polarized thinking. Early failures tend to swing later decisions entirely in the opposite direction, which can have equally traumatic results. Some people tend to manage challenges with “either/or” thinking, rather than creative “both/and” thinking to try to solve the problem. If there are polar opposites, look for the positives on both ends.

  8. Generate more stress. The more critical a problem becomes, the less creative our decision making will be. Concentration is impaired by stress, judgment and logical thinking deteriorates, we tend not to communicate well, we tend to stop gathering data, and we tend to make quick, impulsive, short-term decisions. Work on reducing stress.

  9. No feedback or results analysis. Every decision needs review and continuous feedback from constituents for validation and tuning. In the world of business today, the only constant is change. Even good decisions today will require adjustments as the environment or customers change. Avoid the tendency to fix blame and look for excuses.

  10. Failure to learn. Experience is inevitable; learning is not. Review and measuring decision results facilitates learning, just like sales metrics facilitate a better understanding of sales. Creativity without learning will be short-lived and ineffective. Learning required effective listening, and creative thinking to make sense out of tough experiences.

It’s time to get past the myths and mystery about creativity. Creative people don’t have to have eccentric personalities, work in the arts, or work in isolation, to achieve results. It is possible to be creative on demand, and to demand creativity in your startup. In fact, if you don’t, your startup will too quickly join the ranks of the corporate world that you love to hate. Think about that one.

Marty Zwilling


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Sunday, December 21, 2014

The Discipline Of Execution Defines An Entrepreneur

TED-Conference-Dream When entrepreneurs come to me with that “million dollar idea,” I have to tell them that an idea alone is really worth nothing. It’s all about the execution, and investors invest in the people who can execute, or even better, have a history of successful execution. Execution is making things happen, and for startups it usually means making change happen, which is even more difficult.

For most people, execution is one of those things that seems obvious after the fact when done correctly, but is hard to specify for those trying to learn to do it better. I found a book on this subject, “The 4 Disciplines of Execution,” by Chris McChesney, Sean Covey, and Jim Huling, which seems to talk well to startups as well as the corporate world it was written for.

These authors argue effectively that the hard part of executing most strategies is changing human behavior – first the people on your team, then partners, vendors, and most importantly, customers. No startup founder or leader can just order these changes to happen, because it isn’t that easy to get other people to change their ways. Changing yourself is tough enough.

Here are four key disciplines that I believe the best entrepreneurs follow to expedite the change and forward progress implicit in the successful execution of a million dollar idea:

  1. Focus always on one or two top priority goals. We all live with the stark reality that the more we try to do, the less well we do on any of the elements. Thus focus is a natural principle. Narrow you and your team’s focus to one or two wildly important goals, and don’t let these get lost in the whirlwind of daily urgent tasks and communications.

  2. Identify and act on leading measures first. Some actions have more impact than others when reaching for a goal. Hold the lagging measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). For example, more customer leads are predictive of more sales revenue later.

  3. Define a compelling scoreboard. People on your team play differently when someone is keeping score, and even better when they are keeping score, and even better when they have defined how their score is measured. This is the discipline of engagement. If the scoreboard isn’t clear, play will be abandoned in the whirlwind of other activities.

  4. Create a frequent forum for accountability. Unless we feel accountability, and see accountability on a regular cadence, it also disintegrates in the daily whirlwind. It’s even better if team members create their own commitments, which become promises to the team, rather than simply job performance. People want to make a contribution and win.

These four disciplines must be implemented as a process, not as an event. That means your team needs to see them as a normal and continuous focus, not a one-time push which fades in the rush of other daily priorities. The team needs to see the process practiced by the startup founder, as well as preached regularly.

Startup founders also need to realize that building and managing a company is quite different from learning to search for and solidify an idea that can grow into a company. Every entrepreneur has to navigate that personal change from thinking to doing to managing.

It’s not only the change from thinking to managing, but also the change and learning from constant iterations. Major changes, called pivots, are terrifying to a team that has put months of constant focus into executing what they thought was a great idea. If you don’t have an execution process, you have chaos.

Overall, every entrepreneur should be concerned if they don’t regularly feel stretched beyond their comfort zone, meaning mastering the art of execution if you are mainly creative, or developing creativity if you are mainly process driven. Don’t forget that the fun and challenge is in the learning, so enjoy the ride. The entrepreneur lifestyle is not meant to be comfortable.

Marty Zwilling


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Saturday, December 20, 2014

10 Approaches to Handle the Burden of Leadership

leadership-burden Most new entrepreneurs don’t anticipate the burdens of being the leader, including the sense of loneliness and isolation at the top. People outside the team can’t relate to the pressures of “the buck stops here,” and everyone on the team assumes that they are the primary ones under pressure to deliver. Even in a single entrepreneur startup, the leader carries a heavy weight.

This unexpected burden often results in a dysfunctional startup, as the entrepreneur reverts to micro-management, burnout or even grandstanding to get some attention or sense of direction and feedback. Those who have big egos often fall into the use of intimidation, edicts and even deception. Of course, that only leads to antagonism and further isolation.

As with other challenges, it takes effort and a special focus to lessen the burden and avoid the loneliness of being a founder or top executive. Here are some key approaches endorsed by successful entrepreneurs and leaders to stay healthy, and be a respected leader:

  1. Seek affirmation and guidance from your peers. Every business domain has organizations of peers, such as Vistage or Young Entrepreneurs’ Organization (YEO), where entrepreneur leaders can find and give support, and resolve problems with no jeopardy among like-minded leaders who face similar challenges.

  2. Actively solicit guidance from trusted members of your team. Even if they don’t see you as a peer, it’s your view that counts here. Don’t isolate yourself. You can always learn from the experience of others on your team. If your startup is a one-man show, there are outside advisors who can offer you an unbiased view as a team member.

  3. Keep your family and friends in sync with you as peers. Their feedback and perspective is vital to your health and success, if you maintain a balance between business and personal. Their guidance will help to keep you centered and effective. The best leaders learn to sometimes say no to work, and learn how to mix work and play.

  4. Separate your work and play environments. Everyone needs a regular change of scenery and separate time to switch modes from work to external challenges. These outside activities may be sports, non-profits or family activities where you can change roles, rely on someone else for leadership, or simply relax and recharge.

  5. Interact with customers in a non-pressure situation. Social-media vehicles, including Twitter and LinkedIn, allow interactions with hundreds of people, or one on one, without the pressure of your leadership role. Use the opportunity to anonymously test new ideas and strategies, with direct and unfiltered feedback.

  6. Proactively schedule business networking opportunities. Take the initiative on a regular basis to ask for time with peers or even competitors that you respect, without waiting for them to come to you. This not only counters isolation, but helps balance your business focus, and keep you up to speed on new developments in your industry.

  7. Actively improve your charismatic image. Charisma is that magnetic energy implying confidence and strength, arousing loyalty and admiration from others. Charismatic leaders don’t succumb to loneliness, and develop a wide range of positive habits. Key elements of charisma are listening actively to others, and reading body language.

  8. Inspire and empower your team members. The more you empower others in your organization, and the better you communicate your vision, the more they will be with you at the top. You won’t be lonely when you feel the team is with you every step of the way. This will strengthen the business for all of you, as well as relieve your burden.

  9. Share your fears and challenges with selected insiders. Too many entrepreneurs like to pretend that they have it all together, all the time. It’s healthy and productive to be more transparent with trusted team members and advisors. This leads to sharing progress on struggles, and discussing ways of mitigating business problems.

  10. Join your board of advisors, rather than contend with them. Accept that a good board will tell you what you need to hear, rather than what you want to hear. They really are on your side, so there is no need to be defensive or isolate yourself. Join them in actively looking for ways to lighten your burden at every opportunity.

More focus on improving your personal motivation is also a clear antidote to the burden of leadership. Of course the best antidote is incremental success and seeing real results, giving you the positive feedback that we all need. Make your leadership role the source of pride and accomplishment that attracted you to the entrepreneur lifestyle in the first place.

Marty Zwilling

*** First published on Entrepreneur.com on 12/12/2014 ***


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Friday, December 19, 2014

7 Ways to Feed The Growth Beast In Every Business

business-growth “If you build it, they will come.” It's a line from an old movie "Field of Dreams" which is still leading to the demise of too many startups, led by entrepreneurs who really started their business to build an exciting new product or service. Most struggle with the idea and practice of marketing and sales, and see these as a necessary evil, if even required.

Of course, for a price, there are many marketing organizations and gurus willing to come to your aid. But marketing is not “rocket science,” so I’m a big proponent of self-help and practicing the pragmatics in-house first. A great resource for all is a recent book by Drew Williams and Jonathan Verney, “Feed the Startup Beast: A 7-Step Guide to Big, Hairy, Outrageous Sales Growth.”

This book correctly characterizes every startup as a beast that has to be well fed to grow. The ingredients for growth are well known: patience, persistence, and a plan. The first two p’s are up to you, but I agree with the authors that an effective plan and execution in this new Internet world needs to be built around a minimum of the following seven steps:

  1. Ask the single most important question. The only question you need to ask is “How likely are you to recommend my [product/service/company] to a colleague or business associate?” In every constituency, there are fans, fence-sitters, and critics. Fans contribute 2.6 times more revenue than “somewhat satisfied,” and critics kill revenue at twice the rate that fans increase it. Too many critics and not enough fans spell disaster.

  2. Listen to targeted prospects through real engagement. Engage first, sell later. The laws of engagement require targeting the best prospects first, offering a real value proposition, and making an offer which is valuable, timely, and relevant. Continue building the relationship to nurture them into paying customers.

  3. Focus your resources to convert prospects to customers. Build a plan with automation to manage the volume, but every customer has to feel like you are reaching out to them personally. Fine-tune the marketing and sales conversion engine to narrow the funnel, and build a sales team to close every sales-ready lead.

  4. Attract and get found by the right prospects. The planning is done, and now it’s time to execute. Make your startup valuable and visible, with great content that can not be missed by online search, influencers, and offline events. Use social media in concert with a web site and offline media. In all venues, 20% of the effort gets you 80% of the results.

  5. Pursue and intrigue prospects who respond. Put your best efforts into helping prospects break through the clutter, engage them, and intrigue them. Your goal is to get them to think different, like Apple, or be surprised and delighted with the experience. Be sure to track the engagement rate, and be quick to pivot if the breakthrough rate is low.

  6. Nurture customers and influencers into real fans. Turning your customers into real fans is the best leverage you have. Fans have a triple impact: they are more profitable, stay longer, and bring in others. Effective fan-nurture programs include an advisory panel, a “constant contact” program, referral program, and a one-question survey.

  7. Grow and measure the conversion rate. Here are four essential conversion rates you need to track: prospects to engaged prospects (target 38%), engaged prospects to sales-ready leads (20%), sales-ready prospects to customers (35%), and customers to fans (60%). This kind of conversion can easily result in 100% year-over-year revenue growth.

If you want success in selling your product, you need to put the same focus, intensity, and innovation into marketing and sales, as you have put into building the product. It won’t happen magically, but it doesn’t require an army of experts or a huge budget. Really, it’s all about having great information, great tools, and the determination to learn what customers really value.

Completing each of the above steps allows your startup beast to pick up momentum, fueling a breakthrough in growth, and ultimately making it unbeatable in the marketplace. The modern day field of dreams mantra has pivoted to “If you market it, they will come.” Are your customers coming fast enough?

Marty Zwilling


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Wednesday, December 17, 2014

6 Ways That Lack Of Focus Can Kill Your Business

Amazon-logo Many passionate entrepreneurs fight to add more features into their new products and services, assuming that more function will make the solution more appealing to more customers. In reality, more features will more likely make the product confusing and less usable to all. Focus is the art of limiting your scope to the key function that really matters for the majority of customers.

YouTube did it with videos, Instagram did it with photos, and Amazon did it with books. Many of the business plans I have seen as an investor, like trying to integrate all the social media features of Facebook, Twitter, and LinkedIn into a new platform, don’t do it. Of course, once you have a brand and more resources, it can pay to expand your book selling to a full e-commerce site.

In fact, there are a host of reasons why a non-focused startup business is more likely to struggle for survival, lose market and investor attention, and miss out on the opportunity to capitalize on their scope:

  1. Time to market is tied to the size of your offering. In many business domains today, the market seems to change about every ninety days. With the current low cost of entry, nimble competitors appear quickly and seize the high ground of your existing customers and potential. No startup can implement a broad strategy quickly enough to stay ahead.

  2. Broad product offerings require too much infrastructure. More money is hard to find, and building efficient multiple processes is even harder. Every aspect of every product requires development, testing, manufacturing, marketing, and distribution. The probability of failure goes up exponentially as the number of product features increase.

  3. It’s tough for an elephant to be agile. Every successful startup I know has pivoted a couple of times, as they learn what really works in the marketplace and in the sales process. Did you know that both YouTube and Facebook started out to be dating sites? Even IBM, with their personal computer, had trouble making their elephant dance.

  4. Ongoing market leadership requires continuous innovation. The initial larger cost in time and dollars is only the beginning. The first-to-market advantage doesn’t last long. You need continuous innovation in all elements of your product line to stay ahead, or your startup will be quickly left in the dust.

  5. Marketing a product with too many features is self-defeating. It’s almost impossible to craft a memorable message that has more than three bullets. The more you try to capitalize on the breadth and depth of your solution, the more people don’t get the message at all, and settle for a competitor that focuses on their personal hot-button.

  6. Your personal bandwidth is quickly exceeded. When your solution has too many elements, even you can’t keep the priorities straight, and your team gets frustrated, tired, loses motivation, and tends to not do anything well. As a new entrepreneur in a new startup, it’s better to walk before you try to run.

At the same time, focusing on the wrong things is equally destructive and unproductive. In some environments product focus is not the most important element. Perhaps the focus should be on a single distribution channel, better customer service, or a simplified pricing structure. In all cases, hiring the best people is likely more important than adding a few features to your solution.

Thus the first and top focus for every entrepreneur should be on strategy. The strategy needs to be simple, written down, and communicated regularly to the entire team. A simple test is to see if you can quickly name your top three priorities, and if every team member is able to respond quickly with the same three. Too many strategy elements generate lots of work, but few results.

The final focus should be on emphasizing strengths and measuring success, rather than on solving the crisis of the moment and eliminating weaknesses. Only by focusing on the right elements of market, product, business, and people, can you really hope to win. Bigger is not necessarily better. Be the best in your chosen niche and you can change the world.

Marty Zwilling


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Monday, December 15, 2014

10 Incentives For Entrepreneurs To Bootstrap Their Startup

startup-funding I’ve always wondered who started the urban myth that the best way to start a company is to come up with a great idea, and then find some professional investors to give you a pot of money to build a company. In my experience, that’s actually the worst way to start, for reasons I will outline here, and also the least common way, according to an authoritative survey of new startups.

Based on the Startup Environment Index from the Kauffman Foundation and LegalZoom a while back, personal money, or bootstrapping, continues to be the primary startup funding source. Eighty percent of new entrepreneurs use this approach, with only six percent using investor funding. The remaining entrepreneurs borrow from family and friends, or acquire a loan.

So before you become obsessed with landing investors to fund your idea and minimize your risk, consider the following:

  1. Finding investors takes work, time, and money you can ill afford. Entrepreneurs who plan to complete a business plan the first month, find an investor the second, and roll out a product the third month are just kidding themselves. Count on several months of effort and costly assistance to court investors, with less than a 10% success rate.

  2. Anyone who gives you money is likely to be a tough boss. If you chose the entrepreneur lifestyle to be your own boss, don’t accept money from anyone. Every person who gives you money will want to have “input,” if not formal approval on every move. Be prepared to live with communication, negotiation, and milestones every day.

  3. Don’t give up a chunk of your company and control before you start. Even a small investor in the early days will take a large equity percentage, due to that pesky valuation challenge. At least wait until later, when you ready to scale, and have some “leverage” based on a proven business model, some real customers, and real revenue.

  4. You will squeeze harder on your own dollars than investor dollars. It’s just human nature that we remember the pain of earning our own dollars, versus those “donated” by someone else. Focusing on the burn rate and prioritizing every possible expense will keep overhead down, help you stay lean, and achieve a higher profit earlier.

  5. Sometimes survival requires staying under the radar. People who give you money like to talk about their great investment, and competitors see you coming. Sometimes creative efforts need more time before launch, or your efforts to run the company need tuning. Investors like to replace Founders who don’t seem to be moving fast enough.

  6. Managing investors is a distraction from your core business. Fundraising and investor governance are never-ending tasks, which will take real focus away from building the right product and finding real customers. Having more money to spend, but spending it on the wrong things, certainly doesn’t pave the road to success.

  7. Entrepreneurs need to start small and pivot quickly. Start with a minimum viable product (MVP), as well as a minimum viable team. Investors like a well-rounded team, working in a highly parallel fashion. That takes more money and time to set up, and more people to re-train and re-educate when forced to redirect your strategy.

  8. The best partners are ones who share costs and risks. With no investors, you will work harder to find vendors who will absorb costs and associated risks for a potentially bigger return later. Since they now have real skin in the game, they will also work harder to show quality and value, which is a win-win-win for you, them, and your customers.

  9. You will be happier and under less pressure. You should choose to be an entrepreneur to be able to do what you love. Yet we all apply pressure to ourselves to do these things to our own satisfaction. Investor money brings so many additional pressures, that personal happiness and satisfaction can be completely jeopardized.

  10. Show you are committed to your startup, not just involved. When you put your own financing on the line, your partners, your team, and eventually your customers will know that you are committed to solving their problem. That increases their motivation and conviction, which are the keys to their success as well as yours.

Of course, some of you will say, I don’t have a dollar and my big idea can’t wait. Unfortunately, outside investors are not an answer to this problem. To investors, having no money indicates that you may not have the discipline to manage their money, and manage a tough business process as well.

In these cases, I would suggest you work in another similar startup for a while, to learn the business, save your pennies, and test your startup concept on the side. A startup idea executed hastily and poorly will be killed more completely than any timing delay. Are you sure the money you seek is really your key to changing the world?

Marty Zwilling


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Sunday, December 14, 2014

10 Tough Quandaries That Lead Entrepreneurs Astray

right-way-dilemma Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. People may jump into the lifestyle to be their own boss, achieve great wealth, start a new trend, or all the above. The dilemma is that these goals are usually mutually exclusive.

For example, is the person who starts a new trend likely to be the one who controls it through the growth phase? In a famous study of 212 new ventures a few years ago, Harvard professor Noam Wasserman found that half the Founders were no longer at the helm after three years, and over time 80% were forced out. That’s not an attractive statistic if you crave control and power.

Don’t wait for the harsh reality of the demanding business world to start thinking about these tradeoffs. The research from Wasserman and others outlines the following top ten dilemmas that every Founder needs to deal with sooner or later in their career as an entrepreneur:

  1. The make money or serve humanity dilemma. Your great idea for the next Facebook may make you wealthy, but it probably won’t help the hungry. The answer is to look hard inside yourself, to see what makes you happy and satisfied. If living on Raman noodles while you make the world a better place is fine, skip the investors and growth race.

  2. The right time to start dilemma. The right time to jump is a function of favorable career, personal, and market circumstances. While it’s unlikely that all three of these will ever be true at the same time, most experts don’t recommend jumping at the first opportunity, but first gaining some skill, financial, and business experience first.

  3. The founding team size dilemma. Should you start a company solo or find co-Founders to help you? With one or more co-Founders, you gain complementary skills, spread the workload and responsibilities, and reduce the risk. The downside is loss of control and financial dilution. In my view, two heads are always better than one.

  4. The co-Founder relationship dilemma. While long-time social friends and family may seem like the natural choice for co-Founders and team members, these relationships often get in the way of hard business decisions or necessary business adjustments. Old co-workers or new friends with complementary skills usually make the best partners.

  5. The Founder’s title and role dilemma. Usually co-Founders expect to get a C-level title associated with their area of interest, like CFO for the financial expert. Make sure these titles are handed out only to people who are willing and able to accept the responsibility and workload of the associated role. It’s tough to downgrade titles and roles later.

  6. The compensation model dilemma. Every founding member wants to be compensated richly for the risk and the unknown. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones.

  7. The right investors and right time dilemma. You don’t want to take money from friends and family, but it’s too early for Angel investors and VCs. No one wants to put in money until you have a product, and you need money to build the product. Bootstrap if you can, otherwise climb the pyramid of family, friends, Angels, and VCs.

  8. The right motivated employees dilemma. Very early, you need generalists who can cover multiple areas, but you can’t pay for experience. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. Later use LinkedIn and other job sources for professionals.

  9. The Founder succession dilemma. Startups are usually founded by product or service experts who don’t enjoy the various growth phases. Should the Founder keep the company small, try to adapt, or step aside in favor of a seasoned business executive? Transition to a specialist role, plan to exit, be prepared to be pushed out, or plan to fail.

  10. The control and growth dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. If you prefer a private company with organic growth, keep control within friends and family, and prepare for the long haul. Otherwise exit and startup with another idea.

Not facing these dilemmas squarely and honestly is one of the biggest pitfalls facing every entrepreneur. You can’t have it all, just like your startup can’t be all things to all customers. You have to focus on the things you can do and love to do, and do them better than anyone else. Turn these top ten dilemmas into your strengths, and you will have a competitive advantage, as well as the fun and satisfaction you sought to find in the entrepreneur lifestyle.

Marty Zwilling


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