Neil Patel

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In the bustling landscape of entrepreneurship, where dreams are forged amid the crucible of challenges, one man’s odyssey stands out—a tale of resilience, vision, and unwavering commitment to change the way we eat.

Meet Luke Saunders, the founder of Farmer’s Fridge, whose journey from humble beginnings to transforming the food industry is nothing short of inspiring. In this exclusive interview, Luke talks about scaling his company and the challenges he faced during the COVID to get the company back on track.

Farmer’s Fridge attracted funding from top-tier investors like Innovation Endeavors, THRIVE, Gigi Pritzker, and GreatPoint Ventures.

In this episode, you will learn:

  • Luke Saunders’ journey with Farmer’s Fridge underscores the importance of resilience in navigating challenges and setbacks.
  • From retrofitting vending machines to launching home delivery during COVID-19, Farmer’s Fridge epitomizes the power of innovation in revolutionizing the food industry.
  • Luke’s leadership shines through as he transforms a simple idea into a thriving business, driven by a vision of making healthy food as accessible as a candy bar.
  • Farmer’s Fridge’s success hinges on strategic capital raises and partnerships, emphasizing the importance of financial planning and resource allocation in entrepreneurship.
  • The COVID-19 pandemic posed unprecedented challenges, yet Farmer’s Fridge’s swift pivot to home delivery and catering showcased the importance of adaptability in times of crisis.
  • Building a strong organizational culture grounded in shared values and behaviors is pivotal for Farmer’s Fridge’s success, fostering unity and dedication among employees.
  • Luke Saunders’ entrepreneurial journey serves as an enduring source of inspiration, highlighting the transformative power of perseverance, innovation, and unwavering commitment to a vision.



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About Luke Saunders:

An entrepreneur at heart, Luke started Farmer’s Fridge while working as a traveling salesman after struggling to find fresh, healthy, and accessible food options on the road.

Since 2013, the rapidly expanding business has grown to more than 400 fridge locations across multiple regions of the country. It has also launched a home delivery service, serving chef-curated, restaurant-quality meals.

Based on their pioneering approach, the company was included as a TIME Top 100 Invention in 2019 and has been featured in The New York Times, Wall Street Journal, CNN, Good Morning America, Washington Post, The Atlantic, Entrepreneur, Fast Company, Inc., Chicago Tribune, Crain’s, USA Today, NBC Nightly News, Women’s Health, CBS, O! Magazine and many more.

As a leader on the rise, Luke was honored as a Forbes “30 under 30” in 2016, a Crain’s Chicago Business “40 under 40” in 2018, and one of Fast Company’s “100 Most Creative People in Business” in 2019. Luke graduated from Washington University in St. Louis.

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Connect with Luke Saunders:

Read the Full Transcription of the Interview:

Alejandro Cremades: All righty hello everyone and welcome to the deal maker show. So today. We have a very exciting story. We have an amazing founder. You know that he’s riding this rocket ship that we’re gonna be talking about in just a little bit I mean between obviously he contractors and full timers. You know there are about five hundred employees a hundred million plus raised. Incredible journey you know from ah dealing with covid stuff and losing 85% of the business to getting it back. You know all types of um ups and downs. But again part of that building scaling financing that we like to hear so without further. Do let’s welcome our guest today look sanders. Welcome to the show. So originally from New Jersey 1 of 7 siblings. My god a household full of action. How was life growing up, give us a walk through memory lane.

Luke Saunders: Um, thank you so much for having me today.

Luke Saunders: It was great I Actually um I I can’t really fall asleep unless there’s like lots of things happening around me. So I I Love that chaos and I think it’s a big part of being an entrepreneur and sort of embracing ambiguity and um. All the adventures and so some days you were hanging out with the older siblings and they were taking you places and doing crazy stuff and other times you were the older sibling and that was just it. It was a really special experience and and we had a pretty entrepreneurial family. So. We were always doing stuff like lemonade stands or um, trying to start businesses on the side.

Alejandro Cremades: So I guess say in your in your case, you ended up going to St Louis out of all places you know for university but it was like it took a little bit of time there you know because you ended up being kind of like. Getting a gap year then getting back I mean then getting into the whole thing of entrepreneurship with a bike rental I mean quite the ah ups and downs there in university too.

Luke Saunders: Yeah I mean university was was great I wanted to get out of the northeast and St Louis seemed like a good place to um to be the universities right in the city. So that’s really what I wanted. Um. And yeah I was I was interested in studying chinese and international studies and I thought when I moved to China and I did end up living there for about six to nine months during during college but ultimately had a bike rental company on the side and that was really where I was spending most of my time and and was my passion so I decided. To skip the job market after school and go to work with my dad in in a small grease luerant manufacturing business.

Alejandro Cremades: So then let’s talk about a you know that real quick because when you joined you know it was kind of like ah you know a different type of operation. I mean there was like no real monitoring on the numbers and you found quite the um. The scary you know part you know with only a couple of months of runway when you know the truth came to tell so how was that for you.

Luke Saunders: Um, ah it was it was an interesting experience on a lot of levels so it was ah a company that my dad had been running for about 30 years it was small like you know half a million in revenue. Ah, you know, maybe 2 people like 1 and 2 part time people working there. Um, and so. Really ended up in a difficult situation because of the um financial crisis at the time and some of their cost structure gotten out of hands but it was a classic example where you’re running the business based on how much cash is in the bank at the end of the month and not based on a detailed p and l um, so when I got there. Cash was going out of the bank pretty quickly and getting pretty low and I didn’t really understand where it was all going but I I had been under the impression that the business was profitable and um I had them redo the books and and take the chart of accounts and we rebuilt the whole p and l and what did we learn? we learned we were losing about 30% so and we had about two months of runway so I mean we were doing everything we could to cut costs we we changed the phones from you know this really expensive at and t thing to a voiceover ip system we got rid of the fax machine like we were down into the pennies. Um, we even we had like a postage mailer that somebody had signed up for that was like a thousand dollars a month and I just sent it back to the company and said you know call send it to collections I can’t afford this. Um and I was literally mixing the grease and answering the phone and putting the orders through so it was a great experience after getting through that period.

Luke Saunders: Um, but it was it was really challenging and it was surprisingly like a startup considering that it was like a 30 year old business with pretty long term customers.

Alejandro Cremades: So what was the yeah, what was that conversation like where all of a sudden you know you realize that there’s just a couple of months of runway and and kind of like people have been under a different impression. You know what? what was that conversation like.

Luke Saunders: Um, um, well I was having it with my dad which was a kind of an awkward experience because you know like hey dad I think this is going to be out of business in like two or three months and he’s like what do you mean? That’s not even possible because he’s been sort of operating it for 30 years without any issues and what had happened is a lot of their costs had gone up and then the revenue went down and so he hadn’t been in the same position before and but it was tough I mean it was really tough because I said we have to make some really big changes. We basically have we only have 2 employees. We can’t afford either of them. We need to move our manufacturing operations from New York to New Jersey and save a ton of money through that. Um, and then we have to like hold our breath and hope that our working capital doesn’t get so low that we can’t buy new inventory. Um, and let’s see how it goes. So but I think you know I just I remember him saying you know? are you sure and you know what happens if you’re wrong, all that surface and well the only thing I know for sure is this is not going to go in the right direction so we got to try something.

Alejandro Cremades: That’s amazing. So obviously you know working on a turnaround like that you know gave you you know some really nice jobs on really understanding. You know how to make a business profitable and in your case your wife ended up a pursuing law school went to Michigan you went with her and that was a really nice. A. You know switch you know of gears for you because then you went into sales. Ah, but obviously not the not the best you know type of fun. You know job that you had hoped for but it gave you some really nice time to listen to Stanford Classes so how was that for you.

Luke Saunders: Um.

Luke Saunders: So I mean I think Sales. It’s probably the best experience I got ah to be prepared to to be an entrepreneur if you can’t articulate the value proposition that your business has and you don’t get comfortable getting lots of nose. And you know having to do cold outreach and try to make relationships and and solve problems with people. You don’t know just learned so much through that job. Um, and that’s why I took it Ultimately I was like okay I can help out at the business on the side for the grease lubricat manufacturing. But I’m going to get somebody else to invest in me and learning this really valuable skill um and then you know I got to it but the downside was yeah I was driving a thousand miles a week. So I had a lot of time to listen to Podcasts. Um. Take courses online I listen to you know all the game of Thrones books and things like that that I would never have time to do in in my life today. Um, so it was really a silver lining was I I got to learn that skill I got to learn a lot of other things along the way and ultimately I was doing that I came up with the idea for Farmer’s fridge.

Alejandro Cremades: So then tell us about this. You know how did the idea of Farmer’s fridge a come knocking. What was that incuation process like and at what point you’re like okay, let’s go.

Luke Saunders: Yeah, um, so the first first part of it is if you’ve ever driven a thousand miles a week across the country. So I covered Michigan Ohio indian and Kentucky what you find is a lot of places that you’re visiting the only options for lunch are a fast food restaurant. And sometimes it’s like 1 fast food restaurant and a gas station and there’s a lot of conversation about you know should do people want to eat healthy food. Maybe they don’t even like it. Why are we talking so much about this and my reality was I like eating healthy food when it tastes good I don’t. Know where I can get it right now. It’s not even an option so there’s got to be a better way to do this and a lot of my clients were actually big cpg manufacturing companies making granola bars and cereal and cookies. So I was seeing inside these factories and how they do that and it was so interesting to see. You know you’d actually see like the whole grains or the whole chocolate chips coming in 1 end and leaving the other end in a box but you know employees were walking out the front with the box of granola bars under their arm. But the ones that were going on the truck weren’t going to get to the gas station down the street for like two months because it goes through this really long supply chain. That’s optimized around products that are shelf-stable. So and then on the other end you have restaurants and it’s really like there were restaurant models one of the only.

Luke Saunders: Oldest businesses in the world. There’s examples of restaurants from two thousand plus years ago it’s the same idea you walk in, you talk to the sales team in the front then the manufacturing team makes it to order in the back accounting shows up and. Takes your check and it’s just it’s it’s like everything a business does under 1 roof at every location. It’s very inefficient and so the idea was like if you could make restaurant quality food in a cpg manufacturing setting. It would be much cheaper and more consistent. The issue is just getting it to people quickly. So how do you do that and it kind of backed into the idea for the vending machine because the vending machine can go places restaurants can’t go It’s actually the number one form of food service. So 100000000 people today are going to go to a vending machine to buy something um and it would help us control inventory and understand customer relationships. So it just. It was it was sort of all those insights converging and me genuinely not knowing any better about how hard it would be to actually scale this up um to where we are today.

Alejandro Cremades: So what was that moment where you were like Wow I think it’s I gotta do this.

Luke Saunders: um um I I kind of came home one weekend I was talking to my wife about it and I’d always had these ideas wanted to be an entrepreneur so she’d always say okay that you know that 1 sometimes you like that sucks don’t work on that. That’s a waste of your time and okay and maybe I’d rethink it come back and but the next step was always to throw it into a financial model like just think through what would the economics look like how would the scale. Um I did that and I showed it your shit. This is not the worst idea I’ve ever seen you come up with. And so then I wrote a business plan. It’s probably only 7 or 8 pages but it was like this is why this should exist and how I’m going to execute and um, you know she was like oh that’s you know I started sharing with people. They’re like you’re going to never sleep. You’re going to work 24 hours a day seven days a week because we’re gonna make food overnight and drop it off in the morning it was. Crazy town. Um, but I had enough traction with people to to take the jump and what I started doing is like working it I actually went to a local cafe and I offered the woman because I liked their food a lot. They had some good grab and go options I offered her $15 an hour to let me work there. And ask a lot of questions I was like I’ll work but I want to be asking you a ton of questions. So for the inconvenience I’ll actually pay you and and I’m only I’m going to come when I feel like it because I have another job so it’s a pretty interesting experience and I’ll never forget her.

Luke Saunders: Her and her husband worked there and she was like I think this will work and he’s like I think it’s a terrible idea and um, you know here we are ten years later so

Alejandro Cremades: So then what happened next you know after you’re like going through these same initial stages your wife you know gives you the okay you know you’re like taking some insights you know from from other folks, you know, like what happened next.

Luke Saunders: Um, so the biggest challenge we had was what what does the vending machine look like like how does it actually work and because we knew I knew at the early stages. Um, it couldn’t just be like throw food in a vending machine for starters like most refrigerative ending machines are for. You know Coke and Pepsi products and don’t work well for what we do? Um, but it didn’t it. It would just didn’t seem like it would create the right impression with a consumer to spend because the premise is you’re going to spend. 8 or nine or ten dollars so it’ll be you know, cheaper than going to a fast casual restaurant where a salad might cost fifteen or twenty dollars but it’s going to be a lot more expensive than a dollar candy bar. So the machine has to feel different. It has to feel more like a restaurant than like a vending machine so I was I looked into building a machine I got a quote from an industrial designer for a half a million dollars to do prototype development. It wasn’t even a finished product. And I was like I don’t have that kind of money I think I had twenty five or $50000 in savings and credit card. So I went to the vending show in Las Vegas I found a machine um kind of retrofitted it in our garage.

Luke Saunders: And got that up and running and and then we found one location I thought everyone would be lining up to get you know fresh meals right in their lobby. Well it turns out most places wanted nothing to do with us like this is not I don’t know what this is I don’t need it so we got we were in the crappiest food court in Chicago. Um, but we got a location and it was really everything for those next six months it was like getting that machine ready getting the menu ready getting it I rented a shared kitchen so I was I could only afford to rent like 1 table for an hour kind of thing. Um. And that was it. We got the first fridge open in October of 2013 and everything changed from that moment forward because we actually had customers who were coming and liking our product and all that.

Alejandro Cremades: So then for the people that are listening. You know to really get to to to really get it. What ended up being the business model farmers fridge. How do you guys make money.

Luke Saunders: So um, we make money by selling you lunch or breakfast or you know a salad for dinner. Basically we put the fridge in and then the food that we sell from that fridge is our revenue. Um, so everything before that we we make the food in a centralized kitchen in Chicago then we do the last mile delivery to the individual locations and um, you show up and buy stuff but the the core model is like we’re an integrated manufacturing distribution and retail. So. It’s very expensive upfront. You’re basically 3 businesses in one with a high fixed cost but the variable cost on a salad is very low. So like if you go to the grocery store and you look at the price of lettuce per pound. It’s not high. This is one of the things that didn’t make any sense to me when I was looking at why there’s no healthy food. Fruits and vegetables are the cheapest things in the grocery store you know and so but you have to centralize the production to keep it safe to make it consistent to do all that um, but that’s really the key to making money in our businesses. Scale. So like at one fridge. We had a ah good unit economic model at the fridge level and we had really good traction with customers. But you need like 2000 locations to actually make money and so is everything between location number one and now we’re around 2000 just over 2000 between fridges and the retail business that we do.

Luke Saunders: Um, was a slog because you have to essentially add overhead and and and infrastructure to be able to support the future growth and you’re not. You don’t have enough pending machines online. So 1 of our board members I’ll never forget he said. You know it’s ah you have a blessing and a curse The blessing is the unit economics of a any machine are great. The curses you’re going to need like thousand of them to make this work. So.

Alejandro Cremades: So so as you’re supporting the growth and you know talking about being capital intensive. How did you guys go about the capital raise and and making sure that you were able to capitalize every lifecycle of the business because I know that you guys have raised you know about 121000000? ah today. So what were those cycles. You know that you guys went through and how were those expectations to that you were encountering from investors. Yes.

Luke Saunders: um yeah um I would say this is one of the biggest learning curves for me as an entrepreneur over the last ten years every time I meet as someone who’s just getting started I say to them listen you got to sit down and think through like what are those key milestones. What’s the exit look like kind of work backwards and plan your your capital needs and what that means for you in terms of dilution and returns and and just really make sure you understand that. Um. Because that’s ultimately in in a startup. It’s going to be a huge component of your success and how much money you make so but but I say that because I didn’t have that experience going in I was a small business entrepreneur as how I describe it so you know you had money in your bank account. You’re profitable or you didn’t if you went negative. You had a runway. And if you didn’t get positive again by the end of that runway you were dead like nobody would would have invested um venture capital into my grease business. So when I got started I thought this would be a great small business where I would kind of have the first location and. Use the money from the first location to buy the second location and and the vending machine is kind of bite size right? You could for 10 grand you could do the next one and the next one and the next one. The the issue is that um the infrastructure you need to support that is actually more than a restaurant up front.

Luke Saunders: So like our commissary kitchen is something that you have to cover. So once I realized that I was like oh shoot I’m gonna have to raise money and I read um the venture deals book and the you know number 1 bests sellingling book on Amazon for how to raise money. And somebody actually recommended it to me because they came and said I want to invest in your company but you have no idea what you’re doing about raising money. So read this book and then come back to me when you’re ready and I did and they actually gave me my first term sheet um and then from there kind of moving forward. It was very much. Um, you know. Each stage. How much capital do we need to get to the next big milestone and then we would go out and find partners to do that and the mix changed it went from venture to strategic over time just because you know the bigger. We got the more important it was to have people helping us.

Alejandro Cremades: That’s Amazing. So Obviously for investors too. I mean when they give you the money they’re expecting you know and they’re betting on a vision right? Just like you know your employees would do now I guess when it comes to the vision if you were to go to sleep tonight look and you wake up in a world. Where the vision for farmers fridge is fully realized what does that world look like.

Luke Saunders: Um, ah I think so we so you know we say it as we make fresh healthy food as accessible as a candy bar. So that means you’re operating in a scale equivalent to the biggest cpg products or qsr restaurants so something like. 40 or 50000000 people today in the us are going to go to a Mcdonald’s Restaurant and buy something and I would say if we can get to that kind of scale. It. It might take us another eighty years but that would to me would be success I mean it’s having something that is. Fresh and healthy and at the same scale as the biggest food products you know I think that’s what should happen I think that’s what will happen. The question is just how long is it going to take.

Alejandro Cremades: Now for you. Also you know you guys have been scaling as well. The employees I mean right now between contractors and fulltimers you have about 500 how has it to scaling that and then also making sure that culture doesn’t break.

Luke Saunders: Yeah, um, so first when I started one of the premises of the business was actually I’m going to have way less people because restaurants they need all these people but a vending machine. It just spits out food right. So you don’t need a lot of people. It’s going to be like all robots and very quickly you realize um, people are still really good at making food. Um I think there’ll be robotics and we we do a lot of automation now at scale but things like um. You know mix like cutting certain vegetables and assembling certain you know you’re not going to see a Michelin Star Restaurant go to a robot anytime soon. So we ended up in a position where that was very clear after the first couple weeks because I legitimately tried to do every job. Myself and I got talked out of it so we hired a couple people. Um, now as far as the culture you know. So once we knew we had to scale up with people. We started doing that. It’s mostly hourly so the culture of farmers fridge is very unique in that sense. We’re not a software company where it’s all engineers. We have a company where we have salespeople and engineering people and hourly employees and people that were hourly employees that are now salaried supervisors making over $100000 a year so the 2 things I’ve tried to do one is.

Luke Saunders: We did we we wrote down all the values at 1 point and what we thought the culture should be and after about six months everybody was pointing to that stuff and talking about it but not actually behaving in the ways that we wanted so I kind of ripped it up and threw it in the trash and said look culture is going to be how we behave we’re going to behave in a way that. Signals the right culture and that’s what we do. We just kind of like from me and my team like do the behavior that you accept and that you encourage is going to be the culture that you have and it doesn’t matter what you write down or yeah, what you put on the wall. That’s what’s going to happen. So that’s what we try really hard to do and. We go out of our way to blend the culture by making people do things like go on ride a logs work in the kitchen. You know if something’s running short at the facility we take volunteers from corporate to go down there and pack jars. Um, but trying to make sure people don’t lose sight of the fact that this is a business that. Despite my best efforts is very dependent on people and really high quality committed people that come in every day make the food and deliver the food and so that’s what makes our business work.

Alejandro Cremades: So Obviously you know the the way that you guys have been able to go through the ups and downs. You know is is really remarkable I mean in Covid you guys literally lost 85% you know of the revenue I mean that’s pretty amazing and and and the fact that you guys were able to push through that and and keep fighting and. And get back on Top. So How was that you know for you all and and I guess who do you think you needed to be as the leader of the company.

Luke Saunders: Samuel.

Luke Saunders: Um, yeah, um, the leadership changes and evolves quite a bit depending on what kind of situation you’re in at a company at the given time. So sometimes you’re trying to be hands off to give the team some room to grow and learn and make mistakes and other times you’re. Micromanaging because if you don’t you make 1 mistake, you’re dead. So I think trying to find that balance over the years is one of the biggest challenges of this job or any any entrepreneur’s journey but it does change and I think that’s really important to keep in mind as far as what. Changing covid that was one of those times where um, it’s sort of like all hands on deck like you just we were doing daily standups and doing all kinds of crazy things that normally we’d we’d spend a lot of time doing analysis or asking questions. And it’s actually one of the things I love about being a startup is you kind of live every day like it’s your last day when you’re a big mature company and you have a lot of money you get really comfortable in a startup you have to change your behavior. You have to question every assumption so we almost just went into super startup mode. Everything was like. Look we’re dead tomorrow if we don’t figure this out so we’re going to launch a home delivery program and I want it up and running by Monday and people were like what like how do you do that and I said well have you ever heard of shopify because like they you can set up a website like this afternoon and start selling stuff and.

Luke Saunders: The team was kind of skeptical at first and they got on there and they did it and by Monday we were in the delivery business. Um, and then the other thing you you want to? um, take a step back and look at like what are your actual assets like so in our case, we’re really good at making food. Really good at distributing food. The vending machine is cool, but it’s not actually like the thing that is you’re buying a salad right? so we’re the logistics company um so I said to the sales team like hey why don’t you guys call up the hospitals. Don’t try to sell them anything just ask if they need help. Like is there anything we can help you guys with and they did they called them and and they were like we need we need grava go we need fresh food but we also don’t want it. We don’t want it all in the cafeteria because we don’t want people to get sick. So if you can get a figure out a way to to set us up with. Food going into all you know 35 locations at some of these hospitals ah will start buying it tomorrow. So our sales team called me. They’re like we need to go buy 100 mini fridges and and we think we can get you know x millions of dollars in revenue if we do this and it’ll be guaranteed. And it’s kind of stuff for like you know, maybe you’d sit around and think about it for a little while you’re like okay tell them yes and get those bridges on a truck to New York like yesterday and that that’s what got us through it is that kind of decisiveness and creativity. That’s really, it’s in the startups Dna.

Alejandro Cremades: That’s amazing now you’ve been at it for quite a while with farmers fridge. You know about a decade you know that like in corporate world is like hundred years it’s amazing now. Let’s say I was to put you into a time machine. And I bring you back. You know perhaps to 2013 when you are you know, still doing sales. You know at the grease company and then you’re able to have a sit down without younger soul that younger self that maybe just got the approval from your wife you know to look farther into into this. And you’re able to have a sit down with with that younger look and give that younger look one piece of advice before launching a business. What would that be and why given what you know now. So.

Luke Saunders: Who I think that it would be the advice I give now like okay think through the capital structure and the key milestones and how are you really going to fund this capital intensive business because that was the one piece I didn’t really understand on first day and su. To be clear as soon as I started. Ah it was clear but it was it was something that you know was very dependent on well. How much salad are you really going to sell and how much space do you need a lot unknowns in that equation. Um, but I think it it would have been I would be able to give them all that information. I would say hey like because I’m assuming it’s me I’d be able to say you know here’s what the revenue is going to be per location here’s how much the box is going to cost here’s how much the routes are going to need to do to hit this cost target. So I’d be more helpful but that that’s the thing I would like try to lay this out as a 10 year plan and it would have saved me a lot of time and energy and I think the the company ultimately got there and it’s it’s been a lot of fun but that that would accelerate the most.

Alejandro Cremades: So for the people that are listening look I will love to reach out and say hi. What is the best way for them to do so.

Luke Saunders: Um, I’m very easy to find you can just email me. It’s my name at as pretty pretty easy. Um, and Linkedin I probably won’t see it. So don’t try to get in touch with me that way and please. If you’re trying to sell something don’t be offended if I don’t get back to you might just forward it to someone on my team who is more relevant but happy to to reply or give advice and pay it forward because yeah I can’t help my past self. Unfortunately I’m a time machine. But I do consider it part of my job to sort of pay it forward and and help other people think through their future.

Alejandro Cremades: Amazing! Well hey look thank you so much for being when the deal maker show to it has been an absolute honor to have you with us.

Luke Saunders: Um, thank you so much for having me. It’s been great.


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