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I was pretty surprised to find the following article in the Wall Street Journal. Kiplinger's Personal Finance? Sure. But the Journal? Wow. It's a pretty dark day for B-schools when the Journal starts publishing stories about how they're a waste of money.

Quote:
If you want a business education, the odds aren't with you, unfortunately, in business school. Professors are rewarded for publishing journal articles, not for being good teachers. The other students are trying to get ahead of you. The development office is already assessing you for future donations. Administrators care about the metrics that will improve your school's national ranking. None of these things actually helps you learn about business.

The article goes on to point out that the education you receive in B-school can be found for free on YouTube, and that the real value of B-school is in the network you develop. So is there a more cost effective way to develop your network than throwing $175,000 at a school? The author seems to think so.

Some of the advice the author gives is pretty much unassailable. Like find the area of the country where your passion lies (Silicon Valley for tech, Hollywood for movies, Nashville for music, etc.) and then move there and live cheaply while building your network. The author also points out that any B-school which isn't in the Top 10 is no longer worth attending on a cost/benefit basis. You can hit Dev Bootcamp for $12,000 and almost double* the starting salary of a freshly-minted MBA after just nine weeks (*2012 statistics).

Quote:
If you aren't accepted to Harvard, the argument against going to business school becomes even stronger. At least with their Harvard M.B.A.s, less than 5% of the class of 2012 was unemployed three months after graduating. But at the University of Southern California, 23% of 2012 M.B.A. grads were still unemployed three months after graduation. And that's at USC, a fairly well-known school. The return on investment of going to Harvard or another top-10 business school has remained relatively high, but the return on going to lesser schools is very questionable.

I realize this is blasphemy for many on this site. But figures don't lie and liars don't figure. The opportunity cost of B-school is staggering, and when you factor in the actual cost of B-school you probably have to stretch your ROI out over decades to break even.

Or is this way off base? Is the author wrong about Top 10 or Go Home? Do you think this only applies to those fresh out of undergrad, or is it becoming more universal? I realize the MBA is still de rigeuer for the upper echelons of banking, but at some point do you sit down and calculate the odds of reaching those upper echelons? I'm just curious to hear what you guys think.

Comments (69)

  • BigSwingingDave's picture

    I'm trying to decide if an MBA will be right for me, it may not be. But I don't think any top 25 MBA's will be taking salary's as low as $46,000 which they list as the figure in the article. There is a real debate over getting a good MBA or going a different route, but this article isn't it.

  • Kenny Powers's picture

    Makes me happy to see this kind of thing, you know why? Because I'm graduating undergrad with no debt and the thought of throwing 150k at grad school is sickening. I don't even need to say what kinds of things you can do with 150k.

    Sure there will always be the Bradys of the world who would burn down an orphanage to go to HBS, but for those of us who couldn't care less about prestige, this is good news.

    Besides, who wants to go to more school, hell I almost dropped out of ugrad until the project I was working on broke a patent and I had to flush it.

    My drinkin' problem left today, she packed up all her bags and walked away.

  • In reply to Edmundo Braverman
    Whgm45's picture

    Edmundo Braverman wrote:
    ke18sb wrote:
    I'm pretty sure this article was already posted this week and ripped to shreds on the board when it was pointed out that it was written by a 20 year old.

    Wow, my bad. Didn't realize someone already posted it.

    That said, this kid is the founder of UnCollege and a Thiel Fellowship recipient. So he got paid $100,000 not to attend college, which puts him about $200,000 ahead of his peers. I wouldn't dismiss him out of hand.

    Suggests a little bias on his part, no? The kid has his points, but he has zero experience himself.

  • In reply to Whgm45
    Kenny Powers's picture

    Whgm45 wrote:
    Edmundo Braverman wrote:
    ke18sb wrote:
    I'm pretty sure this article was already posted this week and ripped to shreds on the board when it was pointed out that it was written by a 20 year old.

    Wow, my bad. Didn't realize someone already posted it.

    That said, this kid is the founder of UnCollege and a Thiel Fellowship recipient. So he got paid $100,000 not to attend college, which puts him about $200,000 ahead of his peers. I wouldn't dismiss him out of hand.

    Suggests a little bias on his part, no? The kid has his points, but he has zero experience himself.

    Who cares if he has experience or not if he's just analyzing data.

    My drinkin' problem left today, she packed up all her bags and walked away.

  • Hooked on LEAPS's picture

    I agree with the top 10 or bust logic unless you can go to an in-state school and still work full time.

    Competition is a sin.

    -John D. Rockefeller

  • In reply to Kenny Powers
    SenhorFinance's picture

    Kenny Powers wrote:
    Whgm45 wrote:
    Edmundo Braverman wrote:
    ke18sb wrote:
    I'm pretty sure this article was already posted this week and ripped to shreds on the board when it was pointed out that it was written by a 20 year old.

    Wow, my bad. Didn't realize someone already posted it.

    That said, this kid is the founder of UnCollege and a Thiel Fellowship recipient. So he got paid $100,000 not to attend college, which puts him about $200,000 ahead of his peers. I wouldn't dismiss him out of hand.

    Suggests a little bias on his part, no? The kid has his points, but he has zero experience himself.

    Who cares if he has experience or not if he's just analyzing data.

    Which he's not.

  • In reply to Kenny Powers
    UFOinsider's picture

    SenhorFinance wrote:
    Kenny Powers wrote:
    Whgm45 wrote:
    Edmundo Braverman wrote:
    ke18sb wrote:
    I'm pretty sure this article was already posted this week and ripped to shreds on the board when it was pointed out that it was written by a 20 year old.

    Wow, my bad. Didn't realize someone already posted it.

    That said, this kid is the founder of UnCollege and a Thiel Fellowship recipient. So he got paid $100,000 not to attend college, which puts him about $200,000 ahead of his peers. I wouldn't dismiss him out of hand.

    Suggests a little bias on his part, no? The kid has his points, but he has zero experience himself.

    Who cares if he has experience or not if he's just analyzing data.

    Which he's not.


    Agreed. If we're going by that criterion, then he's dead wrong. He neglects that as you move down the spectrum from top ten, to top 50, to top 100, etc, the cost of the schools decreases commesurate to the average starting salary. So on a cost/benefit basis they're worth it. He saw people making an argument against law school and jumped on the bandwagon, but even if American companies aren't hiring lately, the overseas appeal of a top 50 American MBA is huge...the same cannot be said of lawy school.

    The primary variable is percent of people employed, and on that I'll agree that if you can't get into a top 100 school don't bother at all, in 100% of cases, and I stand by that. For finance, top 20, preferrably top 5, or you're just taking a crapshoot. If your company is paying for you to get an MBA from bumfuck U and you just need it to get the bump up to the next paygrade bracket then there's that.

    The recruiting power of a good MBA is the only draw, and the actual value of the degree is worthless after a few years of work. It's NOT a credential or license like the CPA or Bar, so I see no point in going to bschool if the end goal isn't a better job or a promotion.

    Get busy living

  • TNA's picture

    I agree in concept to what the author is talking about. The MBA has been so diluted that it really only makes on a FT basis if you go to a T10 or T15 university. Outside that do it PT if your work place reimburses you.

    This is causing the increase in specialized masters. People just don't want to spend 2 years and $100K or more for a degree. T15-30 schools are rolling out these degrees to offset declines in MBA applicants.

  • idragmazda's picture

    I don't think this is ground breaking, although I would probably set the cap at top 15-top 20, instead of top 10.

    Most people (who are serious about going to top bschools) know that you attend a top MBA program to have a shot at opening up doors that would have otherwise been closed. At this point in human history, most smart people know that they could learn most business subject matter through independent study.

    If you pay 100k+ and attend a "non-target" MBA program, and don't land a great gig, that's on you. Sames goes for undergrad - I know plenty of people who attended these no name, expensive private schools (i'm talking 45K+ tuition), and they're working as bartenders now with no foreseeable exit opportunities.

    The amount of money you drop on education does not necessarily translate into the amount of incremental money you'll earn in your career; however, the name (just as anything in this life) of the school you attend, does have a major impact.

    Just my personal opinion.

    Super Nintendo, Sega Genesis - when I was dead broke man I couldn't picture this

  • Strix's picture

    I see this as Mr. Stephens taking the extreme case of the potential negatives of an MBA. His examples are hardly typical. Quoting one of the most expensive MBA costs out there and tying that to a low rung MBA program churning out $42,000/year salaries is a bit extreme. I think most people know that for some people it makes all the sense in the world to get that MBA from that particular school due to your particular career goals, while others career goals don't align well with pursuing an MBA. When people take an extreme example on either side it delegitimizes their argument in my opinion.

  • Scott Irish's picture

    All I know is I would like someone to drive a stake into the heart of these fly-by-night MBAs (online or advertised on public transportation) that take vulnerable, hungry people who don't always have great potential and load them with false hopes and debt. It's just a variation of the Nigerian Prince scam, and it's sad.

  • In reply to Scott Irish
    UFOinsider's picture

    Scott Irish wrote:
    All I know is I would like someone to drive a stake into the heart of these fly-by-night MBAs (online or advertised on public transportation) that take vulnerable, hungry people who don't always have great potential and load them with false hopes and debt. It's just a variation of the Nigerian Prince scam, and it's sad.

    Agree, those and the for profit schools. I went to one for personal interest, and wasn't looking at getting a job (massage therapy). But a surprising amount of the kids I was in class with really thought that there was recruiting and a steady paycheck at the end of the program...they were bitterly disappointed.

    Get busy living

  • FinancialNoviceII's picture

    Generally, the guy makes some valid points. Its no secret that everyone knows H/W/S are the business schools most want to attend and offer the best return on investment. Further, the point about the avg salary was made on the basis of students enrolling with 1 year w/e. Frankly, not sure how many schools worth going to admits such students but worse is the idiot choosing to spend $100k on the back of very little experience.

  • jtbbdxbnycmad's picture

    At some level this isn't too far off from what's being said about all forms of paid tuition at the tertiary-and-beyond levels. Plenty of folks saying that college isn't for everyone and a poor investment, especially if you're not a STEM major or otherwise at a prestigious university. People have been shitting on law school aplenty, far more than business school. To say that MBAs, as a whole, aren't that useful unless you go to a prestigious one isn't that far off from the general trend, which leads to worrisome conclusions: does education just suck now?

    The key thing to realize with this trend is that the asset side of the education question remains the same; it is the liability side that has changed over the years, with tuition far outpacing inflation and real-wage growth over DECADES. The role played by government subsidies to student loans in this rampant inflation issue has already been discussed.

    In this context, the value erosion of business school has very little to do with what business school offers - if anything, business schools today are BETTER than they were when they became 'the hot thing'. The problem is the cost-side, and the business schools (and insert here most parts of the American university system) are just being market participants in a government-intervened market.

    I don't know where the cut-off is exactly for where an MBA - or a JD, or a BA, or a BS, or any other form of paid tuition - is no longer worth it. My disclaimer is that I lived frugally for years and am responsibly financing my education (I choose this word deliberately) at a very highly-ranked business school with excellent career stats, and I'm a very happy customer. I can't speak to what the experience would be like outside the top 10 (and even within, where it seems like 'education' isn't as important at some peer schools), but I can say that I was willing to attend schools outside this range, though not much further out.

  • skylinegtr94's picture

    I used to work with a guy that was 7 years out from a top 10 MBA and he essentially regretted going. I think the real value of an MBA can be most appreciated by people changing careers that might not have a business background to begin with.

  • In reply to guyfromct
    CountryUnderdog's picture

    futurectdoc wrote:
    Either go to a top B-School however you define it, whether it be H/S/W, M7, A8, T-10, T-15, T-20 or T-25; or go to a cheap state school. Going to a UConn, Mizzou type program instate likely will get you a decent F500 role.

    I really find all of these abbreviations to be utter bullshit. Why can't it just be I went to X school because I thought it would get me Y job, and I [succeeded/failed]. The A8 is utter bs imo btw

    "They are all former investment bankers that were laid off in the economic collapse that Nancy Pelosi caused. They have no marketable skills, but by God they work hard."

  • labanker's picture

    I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

    Even in the case of H/S/W, I think you need to seriously consider what and who you want to be down the road. MBAs (from a top school) make sense if you want to be a professional manager, corporate executive, or a senior finance professional (which is most of the people on this site). However, if you want to actually build things, start a company, or work in a role with a more specific (perhaps maybe technical) purpose (i.e. not a generic "manager"), then I think an MBA is a waste of time.

    And as for not actually learning anything, I don't think that's a surprise, and I don't know of really anyone that's come out of b-school singing the praises of their classroom instruction. Most see the classroom aspect as a necessary minor diversion from the real purpose - networking, job hunting, and partying.

  • In reply to FinancialNoviceII
    Kenny Powers's picture

    FinancialNoviceII wrote:
    Kenny Powers wrote:
    Sure there will always be the Bradys of the world who would burn down an orphanage to go to HBS, but for those of us who couldn't care less about prestige, this is good news.

    Speaking of Brady, check out this guy on the grad forums I was checking out the other day. 2 guesses who Revolution is.

    http://forum.thegradcafe.com/topic/38174-harvard-k...

    Dear lord the kid needs help

    My drinkin' problem left today, she packed up all her bags and walked away.

  • mbavsmfin's picture

    This article is not that well-written and uses the most extreme examples.

    B-school, unlike law or med school, is not required per se to practice a certain field. And you certainly don't need an MBA to become wealthy. The question of whether an MBA is "worth it" hinges upon the school itself, the person's career goals, his professional development up to that point, and other personal variables.

    From a purely monetary standpoint, I don't "need" an MBA, and some of my friends are questioning my decision to apply. But for me, i think a top MBA will provide me with a fungible and trasnferable skillset that will never go out of fashion or get automated away. It will also allow me to much more easily transition into a different industry if I decide to do so in the futre, and the network itself can be immensely valuable. One can definitely have a good network by say going to professional mixers and going out and meeting people. However, due to the unique nature of the mba experience, the network from b-school seems more cohesive and more responsive when you need help.

  • PuppyBackedSecurities's picture

    labanker wrote:
    I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

    You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

  • In reply to PuppyBackedSecurities
    UFOinsider's picture

    OH IT'S ON!!!!

    PuppyBackedSecurities wrote:
    labanker wrote:
    I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

    You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.


    IT'S ON LIKE DONKEY KONG!!!!

    Get busy living

  • In reply to PuppyBackedSecurities
    holla_back's picture

    PuppyBackedSecurities wrote:
    labanker wrote:
    I think extending the "worth it" cutoff to the top 10 is generous. If it's not H/S/W I place very little value on the MBA. In the case you are from a prestigious undergrad, I would say it actually hurts your resume.

    You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

    While he may have said it sort of douche-ily, I think he does sort of have a point. People might find it strange that someone who went to Harvard undergrad decided to sort of "step down" a notch in the prestige game. I'm not saying it's fair, but I could certainly see an interviewer asking "so why the hell did you go to CBS/Booth/MIT/etc?" or something similar. People often assume that since you're not at HSW that you didn't get into HSW, and thus there might be something "wrong" with you that they just haven't sussed out yet.

  • CompBanker's picture

    I read this article in the WSJ and I honestly was pretty frustrated with the author. My thoughts on the value of an MBA are pretty well known as I outlined them in another thread. He seems to be just another individual that has taken a polarizing stance on the entire degree.

    My primary issue with the article is that the author fails to understand the types of people at HBS and similar schools. He recommends reading books and taking online courses to fill the "education" component of school. But HBS grads aren't looking for software development jobs, they are looking for PE/HF/Consulting/Managerial jobs that can not be obtained through online coursework. He then recommends "building trust" through networking. Sure, if you network for many years and remain in close contact, you might build trust with key relationships. However, when a business owner goes to sell his business, he rarely hires the guy he trusts; he hires an army of b-school grads that he thinks will get him the highest price. I've seen it dozens of times -- at best the business owner retains his friend in a side role in order to throw him a bone, but he still picks up the phone and calls Goldman.

    The reality is that whether or not the degree is useful depends on each individual's circumstances. A military professional may have no other way of breaking into certain private sector jobs (for example, value investing) without obtaining an MBA. For him, going to Columbia would be a dream come true and worth its weight in gold. For others such as myself, the decision to obtain an MBA is not an ROI calculation but based on the intangible factors. When a person is comparing job offers, they don't simply take the one that offers the highest pay. They consider all other factors: lifestyle, career development, promotion potential, etc. These same factors come into play when evaluating MBA vs. no MBA.

    P.S.: One of the five employees of the author's Uncollege company has an MBA and runs his marketing.

    Regarding the Brady post on that other forum: if you notice he attempted to make a contraction out of "who" and "are" and ended up writing "who're." Kinda comical...

    CompBanker

  • IlliniProgrammer's picture

    Frankly I don't place much value on an MBA. The tech firms and startups look down on them, they're not helpful for trading, and you get little out of them besides what is increasingly looking like a network of unemployed people.

    One of my friends runs a startup, and his cofounder just turned down HBS.

  • ecuaman's picture

    I have to agree that an MBA is a much less attractive proposition on a NPV basis because tuition has skyrocketed while wages have largely stagnated. I went to a top 3 MBA program just five years ago and in consulting, starting salaries have only increased by 5 percent while tuition has increased by 40 percent in the same period. I have a difficult time ethically advocating MBA programs to prospective students while the programs have no sense of cost management and just stick the bill to the students. Beyond top 10, it's a complete waste of time.
    The only way it's worth it if the student can get significant discounts (ie. scholarships).

  • In reply to IlliniProgrammer
    bengigi's picture

    IlliniProgrammer wrote:
    Frankly I don't place much value on an MBA. The tech firms and startups look down on them, they're not helpful for trading, and you get little out of them besides what is increasingly looking like a network of unemployed people.

    One of my friends runs a startup, and his cofounder just turned down HBS.

    Why did he go through the pain of applying in the first place?

  • In reply to ecuaman
    bengigi's picture

    ecuaman wrote:
    I have to agree that an MBA is a much less attractive proposition on a NPV basis because tuition has skyrocketed while wages have largely stagnated. I went to a top 3 MBA program just five years ago and in consulting, starting salaries have only increased by 5 percent while tuition has increased by 40 percent in the same period. I have a difficult time ethically advocating MBA programs to prospective students while the programs have no sense of cost management and just stick the bill to the students. Beyond top 10, it's a complete waste of time.
    The only way it's worth it if the student can get significant discounts (ie. scholarships).

    I take it you went to Wharton.

  • In reply to Edmundo Braverman
    sofib09's picture

    Edmundo Braverman wrote:
    sofib09 wrote:
    Edmundo Braverman wrote:
    IlliniProgrammer wrote:
    One of my friends runs a startup, and his cofounder just turned down HBS.

    Holy shit, that's a ballsy move. I'd give anything to see the look on the HBS AdCom's face.

    Nowhere near as priceless as the look on Brady's face.

    HAHAHAHAHA! Didn't even think about that. He may have just shot himself.

    I hope not- too much risk of bad publicity for WSO, lol.

  • sandsurfngbomber's picture

    I have nothing to say about B-schools since I am only a naive undergrad student.
    I do however want to comment on these Thiel fellows. I haven't seen the last thread on this so I apologize if my post is redundant/uncalled for:

    Fuck these kids. I don't care what you have accomplished to obtain a six-figure sum from Peter Thiel himself - that does not give you some higher-perspective on guiding the millions of college students with unique experiences and goals. No, I cannot just absorb the knowledge on planet earth through some sort of osmosis and then just walk my happy ass to the company of my choice and be like "Bro, I know this shit" Do I wish I could compete on a knowledge basis rather than academic prestige/cost basis? Fuck yes! Do I wish I owned a unicorn? Fuck yes even more! As an idealist pursuing finance I learned quickly that no matter how much bullshit I find in the industry, as a financially independent adult I don't have the luxury to sit there and bitch about it. Time to wear that suit I hate and get my ass to an interview for Legion Of Doom- I mean Goldman Sachs. The day my parents are good for retirement and I have a cash blanket to fall on, I can work on some Earth-rattling projects like the elite Theil fellows.

    Unfortunately, these kids get on some kind of a high horse because the messiah himself has handpicked them, making them greater than education itself. I came across one of his original disciples who was on track to obtain a doctorate at the tender age of 18-19. Did that kid needed college to get somewhere? No. Did he have to work 40 hrs per week in high school that side-tracked his whole academic career? His experience says otherwise. I have no doubt these are some incredibly intelligent students, one day I may even apply for a job in their multi-trillion-paypal-currency conglomerates. Will their experience change my view on getting an irrelevant degree? Not in the least bit.

    If Peter Thiel came up to me and say "Bro, 100K or college. Pick one" I would pick the 100K too - I have to somehow make rent month.
    /Rant

  • FinancialNoviceII's picture

    I PM'ed Brady on that other forum and he said he's applying to a bunch of business schools and HKS, even though in his words 'HKS students get no respect at all' compared to the HBS students who are 'king of the hill'. I mean, what the fuck?

  • GW-WSO's picture

    The author needs to qualify what MBA segments he is talking about. You cant put USC and HBS in the same bucket - your analysis will be worthless. I graduate this semester from a (barely) top 20 US MBA (full time) program and I am considered a "top of the bell curve" candidate in comparison to my peers at my program (GMAT, GPA, prior work experience, success in the program, all top of the bell curve). I got rejected from AT LEAST 20 opportunities (after having interviews) in the consulting, corp finc, and IB arenas. Walked out with 4 full time offers, two at consulting firms and 2 at IB (one boutique and one BB). All of my peers at my program who have jobs (likely 70% at this point with another wave of companies coming through right now for more) are making 100K+.

    That said: if youre making 75+ now, working for a good company, and you already have a business undergrad, MBA programs arent a total slam dunk oppty anymore. They are still worth it ONLY if you can get into a top 20 AND you have rock-solid goals. Top 50? I say dont go - huge risks if you want to get into competitive industries.

    Say you're looking to make a career change? MBAs are still worth it IMO.

  • In reply to PuppyBackedSecurities
    labanker's picture

    PuppyBackedSecurities wrote:

    You're kidding right? So if you go to HYP,Stanford, MIT then going to CBS or Booth hurts you (I could understand it not helping)? I'm sorry, but I am considering saying F U.

    Dead serious. Harvard is a top tier undergrad. Booth is a second tier (albeit still viewed as a good) b school. Thus if you went to Harvard for undergrad and then Booth for b school, you are on a downward trajectory. PE shops, hedge funds, and other prestige whores will certainly notice this and ding you accordingly. Places that wouldn't notice this probably wouldn't care about an MBA in the first place, so the MBA from a lower tier school is a waste of time.

    IlliniProgrammer wrote:

    Frankly I don't place much value on an MBA. The tech firms and startups look down on them, they're not helpful for trading, and you get little out of them besides what is increasingly looking like a network of unemployed people.

    One of my friends runs a startup, and his cofounder just turned down HBS.

    You don't place much value on an MBA because of your industry and vocational focus. MBAs are important for jobs where "seeming" is more important than doing. Most of being a corporate executive or senior PE professional is sounding good and looking polished. MBA programs, directly and indirectly, train you to sound good and add some polish to both your resume and your presentation skills. In tech industries or in the case of starting a business, you actually have to know what you are talking about and how to do things, and polish is less important. Thus an MBA is not as useful.

  • In reply to labanker
    FrankD'anconia's picture

    labanker wrote:

    You don't place much value on an MBA because of your industry and vocational focus. MBAs are important for jobs where "seeming" is more important than doing. Most of being a corporate executive or senior PE professional is sounding good and looking polished. MBA programs, directly and indirectly, train you to sound good and add some polish to both your resume and your presentation skills. In tech industries or in the case of starting a business, you actually have to know what you are talking about and how to do things, and polish is less important. Thus an MBA is not as useful.

    I liked this. "MBAs are important for jobs where "seeming" is more important than doing".... perfection

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