If Three of Your Computers Burned Up In A Week…

I just got back into the office this morning roughly an hour ago.  I’m currently typing this up on a Linux box which is not my main development machine, because my main development machine just went up in a puff of acrid smoke.  It turns out that in the four days I was not in the office they lost 3 machines to exactly the same symptops (laptop reacts like a PC which just got unplugged, acrid smoke pours out the back, hard disk data fine but internal components BBQed).  Now, I don’t know, after losing $10,000 of hardware I personally would have, hmm, tried to isolate the cause of the problem before frying additional machines but, hey, thats why I’m an engineer and not management.  A bit of whining and “Hey, boss, I took an electrical engineering course in college.  Maybe the socket here is getting power spikes” (the first is technically not a lie, although the extent of my electrical engineering experience is designing half-adders and I was terrible at it) got someone to actually bust out a voltmeter and measure our outlets.  “Ha, ha, good thing nothing was plugged in here, otherwise your computers would be yakiniku.”  (Yakiniku = a delicious Japanese dish which involves taking raw meat, basting it in delectable herbs and spices, and then burning the heck out of it.)  “Well, actually, the reason we have no computers plugged in on this table is that they are all yakiniku.”  “You’re not serious.” boggles the electrical guy.

Well, to make a long story short, the odds of me meeting my day job’s next deadline are now about 10,000:1 against (100% of my team is now idled) and I get a day or two to catch up on blogging.

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Back Again

I had a lovely weekend hanging out with my brother, although it was a weeeee bit more expensive than I had expected it to be.  In general terms, a day trip to a major Japanese tourist destination like Kyoto means I budget about $100 for myself.  Two people, five days, lots of travelling, well, you do the math.  Luckily, the cost of the trip was somewhat defrayed by waking up every morning to a sale.  I really love that feeling: “Hey Tim, Suzie from Ohio just bought us lunch!” (ok, most of lunch).

I highly recommend having a web mail service so you can quickly bang out the customer contacts while you’re away.  I dealt with about 5 emails, mostly “Can your software do this?” (No, but working on it), questions about bingo in a large group (hey, I guess I am the de-facto expert now), and a refund.

August sales are now $300 and climbing, and I just sent Robosoft’s author his $99 as promised.  I also promised a post-card but wasn’t smart enough to scan it before mailing it, so imagine you see an Edo era painting of a really gigantic wave with the enscription “Thanks for the excellent piece of software.  Sincerely, Patrick McKenzie, Bingo Card Creator”.  Incidentally, if you’re reading this and not already using his service: what are you waiting for.  Seriously.  $99 might sound expensive but it paid for itself in about a week and thats not even counting the increase in organic search rankings that about 100 links will get me.

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Going Away For A Week

Hideho everybody.  My little brother is coming to Japan tomorrow afternoon for bit to hang around with me, and when he leaves I’ll have to take an annual business trip out for the day job to a small hotel which is approximately 20 miles from the nearest functioning computer.  As a consequence, expect blogging to be lighter than usual for the next 6 days or so.

Last update before I leave: crickey, business is picking up in a major way.  Literally every single time I have checked my email the last couple of days its been You’ve Got Money.  When I’ve got some time after I get back I’ll explain what has been going mostly right and what has been outperforming all of my expectations.

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To Limit, or Not To Limit

(Edit: Hello, Slashdotters. Thanks for coming. Please don’t mind the mud, the Diggers yesterday were a rowdy bunch. :) I kid, I kid.  The conversation I refer to in my first paragraph, which ranged over many topics in a monster-thread, began here.)

Recently I (foolishly) allowed myself to be drawn into a conversation about software piracy on Slashdot, where I said something to the effect of “My software has the least restrictive registration scheme I could devise, just enough to keep honest men honest”. This is not very popular at Slashdot, where the consensus is that you should put up a Paypal button and ask for donations and if you’re worthy you’ll make even more money.

This is, well, complete and utter rubbish. If you intend to make money by selling software, you need to limit your trial version. The only question is how. If you’ve got altruistic motives, if don’t like charging money, you can do whatever you want.

In the days of yore when shareware was a bright new idea on the scene and the ASP had an ironclad “no crippling” policy, Colin Messitt performed a brilliant experiment. He took a utility which had just written and had it secretly flip a coin on first installation: it would either function in unrestricted mode without being registered (and have two nag screens for donations) or it would be feature-limited (and have two nag screens offering the upgrade). When orders came in, Colin was able to track whether the order had been generated by the limited or unlimited version of his software. Keep in mind that this is a perfect experimental design: there is a control group which is guaranteed to be indistinguishable from the experimental group, and nobody but yourself knows whats going on.

Anyhow, to make a long story short, the limited version outsold the unlimited one. Five to one. Colin calculates that the experiment cost him $17,000 in sales versus having 100% of the installations be limited. Crickey.

Lets look at another example: Movable Type. Its a wonderful program and powers thousands of blogs across the Internet, including some of the biggest names out there. Movable Type was once donationware. Do you know how much the average donation was for? Note: average donation, not donation per user. Of all the people who thought Movable Type was worth paying real honest-to-God money for, the average donation was… 38 cents.

So if you’re going to limit your software, would you rather limit it based on features or based on elapsed time? I have a feeling this is highly specific to the actual software you have designed. For example, Bingo Card Creator gets used in many classroom once or twice a month. A full-features trial for 30-days is out of the question — “Oh, I only used that twice, why should I pay $25″? And I was worried that teachers would use Bingo Card Creator like they do many teaching supplies — fire it up, print up one master copy of all the included lessons (30 cards for each subject they need), and then just store those against need later in the year (and they can then just photocopy the cards and keep the master copy around for next time).

So here was my plan: I provide cards for free on my website and Bingo Card Creator will happily spit out cards for you, but there is no way to get enough cards to teach an entire classroom on anything. After you print out 15 copies for any particular word list you’re gently disallowed from printing more, told the reason, and if you attempt to circumvent the block you’ll find you keep getting the same 15 cards no matter what you do.

You can see, after Bingo Card Creator prints out 15 cards, that they will work for your classroom (or you can see that they won’t — I think its important that folks know exactly what they’re getting into). But you can’t teach class without 10 more cards, and those 10 cards cost you $24.95. And after you’ve made the leap saying “Well, I really want to play bingo on next Tuesday” you can justify it by saying “And hey, I can play bingo another 5 times this year and if I do this is really, really cheap”. (Making a set of bingo cards takes an hour, buying a set for class costs $10-15.)

The reason I can limit my software like this is because I know enough about my target market to know what feature I can disable which will keep the software attractive but render it very close to useless. For software which appeals to more people, this can be rather difficult. What feature would you knock out of Direct Access, for example? I’m at a loss — you could disable, say, autotext but many people don’t need autotext, and the folks who do need it would likely not use the rest of your program without it. So Direct Access is a timed trial — and, if you’ll pardon me tooting someone else’s horn, its absolutely brilliant at it. You see, if you’re the kind of person who really needs Direct Access, after you’ve used it for a week you can’t. Live. Without. It. If I didn’t have Direct Access installed on my computer it would hurt my productivity as much as losing my tab key. So when you run into that 30 day limit and the convinience you have been relying on for 3+ weeks just shuts down, you whip out the credit card. Plus there is an investment in using Direct Access, in that you’ve configured everything so its exactly to your liking, and if you had to investigate one of his competitors or Launchy (OSS with a similar feature set) you’d have to go through all the configuration again.

(P.S. Full disclosure: I bought Direct Access, at a discount to other Joel on Software readers he was offering, approximately 72 hours after installing it. The author doesn’t pay me to flog it and my opinions are totally my own. That being said, I love it love it love it.)

Edit: A few minor English improvements and more in-depth explanation of my “crippling” scheme. This got hit by a couple hundred people and I was embarassed about, e.g., spelling the man’s name “Colon” at one point.

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I Love My Job

I love both my jobs, actually.  I just got my brain picked for an hour and a half by an elementary school student who had a school project to find a foreigner and ask them about schools in their country.  So he and his mother went hunting among everyone they knew asking “Do you know any foreigners?” and they eventually came to the team leader of another group at my company, who threw the request laterally to my group, which lead to me getting to chat about school uniforms (“We didn’t really have those”) and guns (“We didn’t really have those, either”) and To Kill A Mockingbird for an hour.

And while I was away from my desk I got two thank-you letters (“I’m telling all my homeschooling friends!”), a support request (“So how’s that Mac version coming along?”), and a sale.  This whole “get a sale every day” thing is starting to get a little overwhelming (yep, last 5 weekdays I’ve gotten 1 or 2 sales a day).  If it hasn’t just been a fluke I might have to break down and seek professional advice.  $24x30x12 > $8,000 per annum, and thats enough for, e.g., the government to start wondering “Hey, where is that all coming from”.  I’ll have to get legal before legal gets me.

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Mid-month Stats Update

Its been two weeks since my last numbers update so I thought I’d briefly summarize things.

First a brief recap: My first two weeks in business (July 1st through 15th) I saw one sale.  My next two weeks I saw 2 sales (through July 31st).  These past two weeks, lets see, 6 sales?  I’m going to shoot waaaaaaay past my personal goal for August, which was originally 4 sales.

Expenses: I recently upgraded my GoDaddy account to their next higher level of Linux hosting ($7 a month, egads!) and Traffic Facts (their analytic software… which is garbage, incidentally.  The only feature I find useful is the fact that they let me actually have my raw log files, which I can extract the important information out of with gawk and grep.)  Plus $30 a month on Yahoo and ~$70 a month on Google (budgeted for $90 but search volume isn’t always high enough to make that), and $5 a month for e-junkie.  I’m going to cut my spending on Yahoo from next month, as it seems to have stopped generating results.

Anyhow, going forward, thats ~$110 a month in expenses, or 4.5 sales.  I now feel rather confident that I can make at least 10 sales a month, consistently, for about as long as I want with rather little additional work.  By my quick back-of-the-envelope math, thats about $1,500 a year, which won’t exactly have me sipping iced cocoa on the beach.  Actually, check that, that is enough for me to afford a quick jaunt out to Okinawa every year.  And I couldn’t go to the beach every day — I burn in minutes, its terrible.

Alright, daydreaming aside:

Sales sources are approximately 50% Google (no purchasers from organic search as of yet, oddly enough), 25% download sites (don’t know which — whoops!),  25% one single teacher message board which apparently loves me.  (Seth Godin, a marketing genius whose key insight is “make it easy for people to tell their friends about you”, would be proud.)

My ballpark estimate for download-to-purchase conversion is 3%.  So one of my Ad Groups (average CPA: $0.30) costs $10 per purchaser and another ($0.45) costs $15, leaving me comfortably profitable with either.

Some other statistics:

Total number of support requests: 0 (1 if you count the 1 refund I processed, which is not counted in the above sales)

Total customer contacts: hmm, call that 3.  3 teachers read about me on the aforementioned message board and asked where they could get a copy of my program.

Total downloads per week: I’ve written before about how this is difficult to estimate, especially with my software being available on 100 sites now.  Some of them cache the installer so the download doesn’t end up on my logs.  I estimate that there are approximately 200 downloads per week.  Of these, I get confirmation that at least 30 installed successfully through use of my check-for-updates feature.

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You Can Probably Stand To Charge More

Scott Meade, who by my calculations will be starting his crazy coding week any minute now (good luck!), recently wrote about the difficulties of convincing a customer to pay for something done in a week. As this is a subject near and dear to my heart, I thought I would give my thoughts.

First off, your customers can only hold the fact that your product was built in a week against you if they know it was built in a week. I would suggest, well, not advertising this. Conception To Launch In Seven Days — Get Yours Now! does not strike me as a winning formula for AdWords anyway. I’m all for openness with the customer in most things, and if they asked me I might even tell them — but there is no reason to volunteer the information. Your heart surgeon doesn’t tell you he’s billing you $50,000 for three hours’ labor to implant 32 cents worth of plastic and a $5 chip made in Taiwan. And you’re not likely to ask after he’s just saved your life.

Are you worried that your customers are going to implement your product in a week themselves? That is, perhaps, a realistic worry if your customers are primarily developers. If you have a 200 line shell script and want to sell it to a bunch of Linux mavens for $15, well, God be with you. Sometimes developers spend time on things which they really should just buy off the shelves, too — I’m as guilty as that as anybody. But the rest of the world doesn’t want to program your program. If they had the skills or desire to reinvent your wheel, they’d be programmers, but they’re not. They’re teachers or real-estate brokers or heart surgeons. Everything that happens inside of the computer is black magic to them and you are the shaman they rely on for magical amulets to keep the evil spirits at bay. So long as your amulets work, you can pretty much charge what you like for them.

One of the lovely things about producing software as a product, as opposed to consulting or otherwise turning one hour of your labor into one hour of revenue, is that the marginal costs of making an additional sale are, to a first approximation, nothing. High school microecon 101 says that when this is the case, you can pretty much pick your price point at any point on the demand curve (in the absence of competition, at any rate). The demand curve doesn’t magically shift up or shift down just because you spent 10 years or $3 million on the development effort — the demand curve is external to you. Its not totally beyond your power to affect, but it certainly isn’t reading your time cards to decide whether to slope or slide. Speaking of being a product company, since you’re operating under the assumption that you’re going to sell this same product dozens or hundreds or thousands of times, the price you’re charging any one customer is such a ridiculously small fraction of what it would take to re-implement that most people with an ounce of sense will buy to save themselves the trouble (assuming you meet their needs).
Let’s talk about that heart surgeon again. Do you think he paid $5.32 for that doohickey he just planted in you? No possible way. He probably paid $500 or $1000 for it. And, if it ever occurred to him to argue with the sales rep from HeartTech (“Technology with a Heart”), the conversation probably went something like this: “Thats an interesting perspective. I suppose you could try making it yourself for $5.32… or, alternately, you could make $49,500 tomorrow installing one and be on the golf course by 3:00.” And then the good doctor’s eyes lit up and the deal got closed. Thats essentially what your conversation with the customer should be: regardless of what it took to make my product, my price is a “fair” one because you’ll get oh so much more out of it. And, seen in that light, most of your customers will agree.

Speaking of which: I think a lot of uISVs, myself included when I was starting, undervalue their own software. Sometimes severely (I know of at least one product out there which would probably see higher sales if it were priced at triple what it is right now, but thats a post for another day). Part of this is from being involved with the software day by day and seeing all the warts, the imperfections, the bug reports, and the compromises. You started with such high hopes for the software and those got pared down by schedule presure and implementation concerns, and you value the software as compared to the image you had when you started. Stop. There is no competitor who released your ImaginationWare into the market — you’re competing only with what actually exists, not with what could exist, and when your customers find out that their needs get met if they only part with a trifling sum of money they’ll happily part with it no matter how the project looked from your perspective. Don’t fall for coder’s remorse.

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Ten Reasons Why Most Internet Writing Is Terrible

Forgive me for indulging in a bit of a rant here. I recently checked a particular RSS feed and, of the first ten articles, 7 of them were in the style of this post’s title. For the two people on the Internet who have not caught onto this trick yet, this is because list-style articles are widely considered to be good bait for digg et al and engage finicky Internet readers who don’t want to read so much as scan. And, I concede begrudgingly, there is a place for that and used in moderation 10 Actionable Tips For You To Increase Widget Sales has some value for people. As a writer, however, I would caution you against overly imbiding.

The reasons (of which there will not be ten, and they will not be numbered) boil down to the following: if you write for people with the attention span of an ADHD flea who is hopped up on methamphetamines, then this is who you’ll end up with for readers. Yes, you’ll get the odd link here and there, and the Internet is full of high PR/high traffic sites whose readers are there precisely because they want articles that they can absorb in 90 seconds or less. However, and this is rather important, this is not the sum toto of value on the Internet. For people who actually read what they “read”, the top ten lists are just so much dross: everyone does them, they rarely contain insights (especially after you’ve seen one on the given topic), and they go in one ear and out the other.

Now, you have to ask yourself, why do I write? If you’re a queer sort whose personal worth is measured by how many top ten lists you have produced in your life, well, do what makes you happy. If, on the other hand, you’re trying to build a base of loyal readers, for whatever reason (you hope to use your blog to get traffic, you intrinsically enjoy writing for an audience, whatever), Top Ten lists will not get you there. Say, for example, you have a blog to promote your widget management software. Ten Ways To Manage Widgets is a good way to get a lot of hits in a hurry, but the majority of them will be in and out in 90 seconds and if you asked them two minutes later they’d be unable to recall your name.

If, however, you over time build up a reputation for writing nuanced, in-depth analyses of the pleasures and perils of widget management, people will take notice. Other widget aficionados will begin writing articles about you and putting you on their blogroll (and saying “Wow , he can write, too!”) . This is what you want for a couple of reasons. The first is that it pleases your harsh mistress, Google. You see, blogs (and digg, and social bookmarking, and everything else Web 2.0 can come up with) exist in snippets of time. You never look at the same blog twice, in the same way you can never enter a river twice. Google, on the other hand, really wants to be able to enter the same 100 million rivers on a daily basis. And so there is a little tension here with links-which-will-soon-be-irrelevant: since Google reserves most of the link-juice for links which are on the front page, links which fall to the archives are worth rather less to you. Links which fall to the archive in the space of literally hours (helllllo, Digg) are worth, in SEO terms, practically nothing.

You know the one type of link which never falls to the archives? Blogrolling. Getting blogrolled requires someone to make a commitment to you. You don’t get blogrolled after the first visit any more than you get to meet the parents after the first date. You have to impress (some would say seduce) the prospect over time, and if you continue to provide value to them over weeks or months then you’ll end up on their blogroll. That is good for you — not only will you get SEO mana, but they’ll visit you more frequently, comment on what you have to say more frequently, and count you among their few trusted sources of information. And when they trust you, their readers will come to trust you. And so trust for you expands throughout your niche and eventually makes you money.

Another reason you’ll want to write to be read, not to be scanned, is the growth of RSS readers. RSS readers are a disruptive innovation in how people read blogs. They change the ballgame almost as much as the existence of Google changes the ballgame for web design. In the absence of an RSS reader, people congregate to a starting point (a portal, Slashdot, digg, a known-trusted blog) and begin getting their daily dose of news there. They might leave that site a dozen times over their news-cycle but they always come back to it. None of the dozen sites they visit “owns” (I’ve always thought this use of the word was vulgar) them — they keep coming back to the aggregator. RSS readers make every reader into their own aggregator. I cannot overemphasize how fundamental a change this is. Now, even though perhaps 1% of the blog reading public has ever blogrolled anyone, a huge percentage of your readers are trying to make a forward-looking decision about your blog: it’s good today, but will it be good tomorrow when I open its RSS feed? Quality writing is a great way to convince folks that yes, you will be there for them tomorrow.

Incidentally, articles which are well-written often tend to stand the test of time better than articles which are not. If you constantly keep cranking out the top 10 lists to an audience who thinks yesterday was ages ago, you’ll have to produce something new every day or the readers will stop coming. If, on the other hand, you write pieces which are both genuinely useful and written well, people will continue to find those and refer other people to them long after they have fallen off your front page and the radar screen of the Internet’s mayflies. My blog is pretty tiny in the grand scheme of things, and yet yesterday 60 people (yikes, two months ago I didn’t even know sixty people) decided to take some time out of their day to read something I wrote about customer service some two to three weeks ago.

Now, clearly it’s easier to write top-ten lists than it is to write well. Writing well, though, is a skill which can be taught and which can be learned. Imitate writers you admire. You’ll eventually end up with a voice of your own, but it will tend to bear a little resemblance to your favorite authors. Practice, practice, practice. Spellcheck and have a decent, but not slavish, respect for the formal rules of the English language. (Poor writers ignore the rules, good writers follow the rules, great writers break the rules, and the very best writers make the rules.) Finally, write in a way that shows off your own voice, personality, and ideas, the better to stand out against a sea of mediocrity.

[Edit: Fixed my English.]

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Update on Ad Experiments

So you might remember that about a week ago I tried to have some fun with two AdWords ads.  We’ll call them “white space” and “poetry” for short.
Dolch Sight Word Lists
Free lists.
No kidding.
www.BingoCardCreator.com 

Dolch Sight Word Bingo
Roses are red, violets are blue,
Bingo makes students love you.
www.BingoCardCreator.com 
White space is an experiment in two ways: it sends people to a landing page which does not flog bingo, but rather just provides a resource to teachers (Dolch sight word lists) and then asks if they’d like to get started playing bingo with the lists they just grabbed.  It also, obviously, sticks out against six other ads which use every one of the characters they are alloted.

Poetry was an experiment to see if AdWords rewards being clever.  So many of the ads are, well, blah.  Here’s my product, here’s 5 words of description, here’s my call to action.  Blah blah blah.  Marketing should be more fun than that.  So I went with some intentionally campy poetry.  And, hey, if it didn’t work I can always kill it in a week and not lose more than a cup of cocoa.

I’m not going to kill either of these ads, because the are actually pretty solid for being so new.

For comparison, here’s a fairly typical ad I have using the same keywords.  Its been through a solid month of optimization of everything: the landing page, the title, the text.  I was happy with this ad and wanted to make more of my ads like it:

Sight Words Bingo
Don’t prep for an hour. Be ready
in minutes with our software.
www.BingoCardCreator.com 

Lets call that control.  Control has about a 1.1% CTR for the same keywords as the other ads.  It has a 22% conversion rate, for a CPA of about 32 cents.  All in all, this ad is doing pretty well.  (Note: all of these ads are in the same AdGroup and use the same keywords).

Lets compare that to poetry.  Poetry uses the same landing page and the same keywords.   It has 2.13% CTR, and 19% conversion, for a CPA of about 31 cents.  So, essentially, it performs just as well as the control ad in terms of cost performance, but brings in twice the amount of clicks in the same time period.  This is great news for me, as it lets me get up to my target $3 a day advertising spend without shooting myself in the foot by investing money in non-performing keywords for the sake of investing money.

But I’m really pleasantly suprised with white space.  I expected white space’s conversion to be thirty-one flavors of terrible.  The hook in the ad isn’t bingo cards, its a free resource which is vastly more popular than using bingo to teach with.  And the landing page was an afterthought I cooked up in about 10 minutes one day to generate backlinks — surely it isn’t going to convert people that well?  Well, it does… 14%, which is neither fantastic nor terrible.  This leads to a CPA of 43 cents, which is well below my campaign average at the moment (although still above my target of 30 cents).

But whats the real nice pleasant suprise for white space?  The click through rate.  Something about the combination of “free stuff you can use” with the eyecatching nature of the ad draws in teachers like moths to the flame.  The CTR is about 5.8%, which is just jawdropping for an ad averaging in the 3rd position.  My best ad ever, which pitches my software to people who are searching for software with exactly my feature set, only has an 8% CTR.

And how much money did finding out these insights cost me?  At last count, $4.61.

Oh yeah, how much money did these ads make me over the week?  A little digging in Google analytics says… a hair under $48.

The next step is… improve the ads and experiment some more!  Ah, I love being a small businessman.  This is so much fun.

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Tweak Your Installer, Double Your Sales

Here’s yet another micro-tip, regarding your installer.  (You do have an installer, right?  If not, run over to NSIS and get started — scripting one up will take you less than an hour.  Trust me, it will work out much better for the majority of your customers than “Here’s a ZIP file, hope you know what to do”, at least if you’ve got non-technical users like me.)

1)  Drop a link on both their start menu and their desktop (asking permission is always nice).  I only did the start menu thing until version 1.03, when I decided to delve into the documentation and figure out how to put a link on the desktop.  This look me literally 45 seconds to accomplish.  It also literally doubled the percentage of my downloads which I can verify were executed (i.e. they accessed my website from within the application).

2)  Offer to run the program immediately after the installer is finished.  Have you ever seen the desktop of a non-technical user?  Its a rather cluttered place.  Don’t force them to hunt for your program, because there’s a large chance that they’ll get distracted away from the task at hand (getting hooked on your product) and will instead resume browsing the Internet, leave the computer and forget they downloaded anything, etc.  So take all the guesswork out of getting to your very best sales vehicle.  (I use a simply worded popup message: “Would you like to start making bingo cards right now?”.  A default-to-checked “Run now” box also works.)

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