Your Customers Don’t Value What You Think They Do

March 11, 2014

oscarOne week after starting my speaking business a dozen years ago, I met with the owner of a speaker’s bureau in London to discuss representation. In the meeting he expressed serious interest. So much so that a few days later he called me about a potential gig.

The call came to my mobile phone as I waited for a train. It was difficult to hear him due to the noise on the platform.  However, through the ruckus I could hear  “What is your speaking fee?” I was ill prepared. I honestly had never thought about it. I did some quick calculations and pulled a number out of the air. “Thirty Five Hundred” was my response. He thanked me and hung up.

Later that day he called back. I quickly realized that he too must have had a hard time hearing me during our previous conversation, because he asked me, “Was that Thirty Five THOUSAND dollars or Thirty Five THOUSAND pounds (at the time about $60,000)?”

I stumbled for a moment, debating how to answer. I then sheepishly responded, “Thirty Five HUNDRED DOLLARS.” Again, he thanked me and hung up.

I spoke with him a few weeks later and learned I did not get the gig. I asked him why. He told me that when I said my fee was $3,500, I was not the caliber of speaker he thought I was. The person that was hired received $35,000!

I learned a powerful lesson that day. Your price often determines the PERCEPTION of your credibility. Underpricing can often imply low value.

We see this in all areas of life.

For one study, subjects were given a number of wines for tasting and were told their price. Some of the wines were given to tasters more than once, with a different price tag each time.

What did they find?

The same wine, when given a higher price tag, tasted better.

Surprisingly, according to fMRI scans, the pleasure centers of their brains lit up more when a wine was more expensive, even though the “taste” centers did not. The body knows the wine tastes the same, but it is enjoyed more when it is more expensive.

Just as price drives the perception of value, perception can also drive price as well.

Many times, the cost of something is driven by what we paid in the past – even when the rules have changed.

When “bricks and mortar” video chains were in existence (like Blockbuster), the cost to rent a movie was $3. Interestingly, this is the same price you pay to rent a movie from iTunes. Although production costs are significantly less for downloadable/streaming videos (there are no manufacturing/duplication and distribution costs), the price remains the same – and often higher.

What we’ve paid in the past often drives what we are willing to pay in the future.

A hardcover book might cost $25. The cost of eBooks are often the same (the Kindle version of my latest book is $14.39; to get the hardcover version on is only $1.50 more). Although it happens on occasion, it would be difficult to charge a couple hundred dollars for a book. But if I took the content from my book, reformatted it, put it in a 3-ring binder, and maybe added an audio CD, people would now be willing to pay $200 for this “system.” A book, regardless of the content and the value it can deliver, is only worth so much in the eyes of buyers.

The point is, price is often determined by what we paid in the past for similar products/services, not by value it creates. “Form” can drive perceived worth.

So, what do people actually value? I did an experiment a few years back to find out. I called it PW3 – “Pay What We’re Worth.”

In determining the fees paid to a professional speaker, traditionally the speaker sets the rate before the work is done.

With PW3, as an experiment, I turned this model upside down. Instead of quoting a standard rate, the client would determine my fee after the work was done.

The plan was to send the client a blank invoice after I gave a speech, and they would pay “what they thought I was worth.”

The only stipulation was that we would have a conversation about value up front. I wanted to learn the value they got from previous speakers. How were the concepts reinforced after the presentation? How were ideas implemented? How was value measured?

Companies were unable to define value, at least in terms of tangible results. In fact, in nearly every situation, when I asked them how they would determine what to pay me after an event, they said, “Um, I guess we’ll pay you what we paid the last speaker.” In fact, with 90 percent of my speeches, the client asked me for my standard fee and just paid that.

How do you determine what you are willing to pay for goods and services? Is it based on what you paid in the past? Is it determined by how much money you have in your bank account? Or is it determined by the “real” value you receive?

As Red Adair, the oil well firefighter, once said, “If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

In the past, if I hired freelancers based primarily on price, the quality suffered. I paid dearly in terms of iterations and rework. Something that could have been completed in a week, might take 2 or 3. Instead of the work being done with limited involvement on my part, these amateurs required a lot of handholding.

I now value my time more than anything else. Hiring talent requires less support from me. Each hour I spend helping someone figure something out, is one less hour I have to invest in something that can substantially grow my business.

In my world, I see so many mediocre speakers. Event planners with financial constraints sometimes hire based on fee rather than quality. But the cost of the speaker is quite small compared to the time invested by the attendees. 100 people sitting in a room for an hour is a big payroll burn. But the bigger cost is the opportunity cost. Each hour they spend listening to a presentation that does not provide real value, is an hour they can’t invest in growing their business.

Or, if you hire a consultant, the real cost is not their fee. The real cost is the impact of their advice on your business. Most consultants who give you their two cents are overcharging. If you implement their recommendations, you could waste time and money. Or worse, you could negatively impact your business.

As Oscar Wilde once said, “a cynic knows the cost of everything and the value of nothing.” Using this definition, most buyers are cynics. When you recognize this, you can be both a better buyer and a better seller of goods and services.

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The Danger Of Being Too Controlling

December 18, 2013
If you want to grow your company, you’ve got to learn to let go of any task that doesn’t set you apart from the competition.
 Give-up-controlI recently spoke at an event where attendees were mainly small-business owners and solopreneurs. One of the points of my talk addressed the need to “innovate where you differentiate.” In other words, any activity that doesn’t set you apart from the competition is something you should consider delegating or outsourcing.

Unfortunately, for a small-business owner, this means giving up some level of control.

At the conclusion of the event, an attendee approached me and asked, “So how do you get small-business owners to give up control when this is something they typically don’t want to do?”

Who’s In Charge?

This was an understandable concern. After all, the reasons to maintain control and avoid delegation are plentiful: There’s not enough time. To do it right, you must do it yourself. You enjoy the task.

To a large extent, the desire for control is driven by ego. Let’s face it; you need a bit of an ego to start your own business–it’s certainly not for the faint of heart.

However, there’s another important issue at play here: the “pain/gain” equation. The concept is simple: People first want to eliminate a pain or prevent a loss before they will be interested in generating any kind of gain.

To illustrate, here’s a simple consumer example:

Think about the last mattress commercial you heard. Most say the same thing: “Buy our XYZ bed, and you’ll get your best night’s sleep ever.” Yawn. Boring. Chances are, the commercial will put you to sleep long before you run out to buy the bed.

Now consider this actual radio advertisement. “If your mattress is 10 years old, it weighs twice its original weight due to the dust mites that accumulate over the years.” Ouch! This simple statement creates a pain, and it makes me want to replace my mattress immediately. Let’s face it, pains, whether real or created, drive action.

Pain Vs. Gain

In business, when we focus on overcoming a challenge that’s perceived as a threat, such as unfavorable regulatory changes or unexpected competition, the pain motivates us to eradicate the problem immediately. Conversely, when we focus on overcoming a challenge that’s perceived as an opportunity, we’re less inclined to take action. If you apply this same concept to control, it makes sense why most business owners struggle with relinquishing it.

Most people think about the opportunity or gain associated with giving up control: increased free time, the flexibility to engage in more meaningful activities and the ability to sleep in. It sounds logical. It sounds desirable. Yet this isn’t enough to motivate them give up control.

Why? Because, on the flip side, there’s the pain or threat associated with giving up control: increased errors, reduced quality and upset clients. If people are wired to minimize pain, it makes sense why entrepreneurs are convinced they’re best served by doing everything themselves.

Learning To Let Go

So how can you address this dilemma? One way is to rethink the situation: Don’t think of giving up control as having the opportunity for more free time. Reframe it to focus on the downside or threat of not giving up control. Answer these three questions when you’re considering the pros and cons of giving up control:

  • What is the cost associated with not giving up control?
  • What will you lose by not giving up control?
  • What is the pain that will be created if you don’t give up control?

These questions will help refocus your attention on where it needs to be to create action—on the pain associated with doing everything yourself.

And this technique can be applied to any behavior you may wish to change. By focusing on the cost of not changing it, you’re more likely to take action.

To reframe your view, write down all the costs associated with not giving up control. Create a long list—be creative, but be honest. You have to truly believe in those pains. Keep those pains front and center, and look at them every day. Talk about them with your team. Also discuss how you can minimize the risks associated with delegating work to others.

Only when the perceived pain associated with not giving up control is greater than the pain associated with giving up control will you be able to make a shift.

This article originally appeared on the American Express OPEN Forum - please comment there

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Don’t Confuse Popularity with Value

October 22, 2013

popularA technology expert friend of mine just started blogging. We discussed which topics should be the focus of his articles. He told me that he recently read about another technology blogger whose most popular blog entries (as measured by tweets, comments, and Facebook likes) were in fact the least technical topics.

My friend wondered if he should also write less technical blog entries.

My response: Don’t confuse popularity with value.

Why did my friend want to write? Because he wants to sell more of his technology consulting services. Which articles are more likely to do that? Articles on technology. Although rants about philosophy and life may appeal to a broader base of readers, it may be less likely to entice them to buy.

When I write about Goal-Free Living, a topic that is about having a more enjoyable and successful life, everyone can relate. As a result these get read and shared a lot. But my less popular innovation articles are the ones that get me hired for speeches and consulting. Of course I continue to write (to a lesser extent) blog entries that I think will be popular as it attracts more readers to my work – some of whom may be interested in hiring me someday. But I focus on demonstrating the expertise I want to be hired for rather than shooting for something with mass market appeal.

Look at your business. Do you focus on what is popular/cater to the masses? If so, you may be spreading yourself too thin and doing yourself (and your customers) a disservice.

Instead, look for opportunities to focus on what sets you apart from everyone else and  is in the sweet spot of why people buy from you.

Being popular does not mean you will have a successful career. Business is not a popularity contest.


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What to Ditch to Improve Your Life and Business

October 7, 2013
You’ve heard it before: To get more done, work smarter, not harder. One business innovator reveals what 3 things you can eliminate to help you do just that…

For the past year, I’ve been experimenting with the concept of working less by telling myself that I only have one hour a day to get things done. This has helped me reduce the number of hours I work from 100 a week to just 20 per month. (If you want more details on how I’ve accomplished this, read my last article, “How To Work One Hour A Day And Have A Thriving Business.”)

If you’re looking for ways to effectively cut back, think about this: Sometimes the key to getting more done is simply to do less. Think about ditching these three things in order to free up more time:

Ditch Your Worst Customers

Admit it: You’ve got customers who generate less income than others, yet take up more of your time than they should. Maybe instead of trying to get more customers, it’s time to ask, “Which customers should I eliminate?”

For me, the customers who are price-sensitive tend to be the most difficult to work with. Oscar Wilde once said, “A cynic knows the price of everything and the value of nothing.” I no longer work with cynics. Instead, I give time to my value-oriented customers who prefer to focus on results rather than fees.

One strategy to consider: Ditch the 20 percent of your customers who are sucking up your time but not producing commensurate returns. This not only frees up some hours in your day; it also frees up your mental energy. I realize that when money is tight, cutting customers loose can seem like a risky proposition. But you intuitively know that attempting to keep 100 percent of your customers happy 100 percent of the time will keep you working 100 hours a week, limiting your true growth potential.

Ditch Your Lowest Return Activities

Look at the amount of work you do. Look at your to-do list. You will never get 100 percent of the work done, even if you had 200 hours in a week. And we know that, yet we still strive to get 100 percent of the work done….

Read the rest of this article on the American Express OPEN Forum site

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How To Work One Hour A Day And Have A Thriving Business

September 3, 2013
Do you run a small business? Or does your small business run you?

As entrepreneurs, there are countless things we could do to grow or improve our businesses. It’s easy to keep busy 100 hours a week. I know—I’ve done so countless times throughout my career. Unfortunately, I’m not the only one who has convinced himself that working long, crazy hours is a must if you want to find success.

The reality is, however, that there is a point of diminishing returns. Although more work might produce greater results, the return on the additional effort decreases significantly. 

We Work Too Hard

There are many reasons why people work so hard.

Although it’s sometimes because there is simply too much on our plates, more often than not, we work around the clock for other reasons. Do any of these sound familiar?

  • You feel like you’re a slacker if you don’t work all of the time.
  • You worry that if you don’t complete every task, you may lose business opportunities.
  • You work nonstop because it allows you to avoid dealing with difficult issues in your life.

Or maybe there’s some other reason. Regardless of the reason, most business owners work too much.

What if you were only allowed to work one hour a day?

I’ve been experimenting with this concept for nearly a year and have been relatively successful at keeping my time invested in my current business to about 20 hours a month.

Why am I doing this? There are two main reasons:

1. It forces me to focus on what’s really important. Each morning I ask myself, what’s the one thing I need to do today? What is the one thing that will create the most value? What is the one thing that only I can do? And that is the activity I engage in for the day. I delete, defer or delegate everything else.

Instead of keeping myself busy and climbing to the top of the “S” curve, I stop at the point of diminishing returns (the star on the chart below). The Pareto principle might state that 20 percent of the effort provides 80 percent of the results, but whether it’s 20 percent or 40 percent is not important. The key is that you find the point in your business where more effort starts producing fewer results—that’s your “star” point—and only you can decide that.

Will you extract 100 percent of the potential value? Probably not. But is squeezing out an extra 20 percent of value really worth 4 or 5 times the effort? That’s your choice. I could work 10 times harder and only increase my income 50 percent.

The key is to focus on activities that maximize results.


2. It frees up time to create new business. If you spent only 20 percent of your time extracting 80 percent of the revenue from your existing business model, this gives you 80 percent of your time to do something different.

You could, of course, spend your free time taking a vacation or spending more time with family. You could engage in work that you believe is more meaningful. You could volunteer and give back to society.

Or you could create a new S-curve.

Instead of squeezing out those few extra drops from your current business model, build a new business or new business model that leverages your past success and creates entirely new revenue opportunities.

With the extra time created, I’ve been working on a new book that targets a completely different market for me. I’m working on a TV show concept. And I’m creating new products that leverage my intellectual property.

These items take upfront effort. But when they’re done and have built up momentum, I will spend less time on those businesses, freeing me to create new revenue streams.

Encourage Creativity and Freedom

The purpose of working one hour a day isn’t to encourage laziness. And I’m certainly not suggesting you do a mediocre job, as this will kill your business in the long run. The purpose is actually to encourage creativity. This philosophy creates time/space for you to create—to create new opportunities, to create new revenue streams, and to create a better life.

Even if you don’t believe working only 60 minutes a day is possible, give the thought process a try. Use the “hour a day” mantra as a mental exercise. Determine what you might do if you only had an hour. Even if it ends up taking you four hours, it’s still better than the 10 you were previously investing. Now, what are you going to do with all that extra free time?

This article originally appeared on the American Express OPEN Forum

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Launching a Business? Don’t Leap Before You Leverage

August 14, 2013

jumpI’ve had a recurring conversation with quite a few friends and colleagues lately. They’re unhappy in their current jobs and want to do something different. For many, this means becoming an entrepreneur and launching their own business. Conventional wisdom suggests they will follow one of two distinct paths:

  1. They’ll leave their current jobs and make the leap, the philosophy being that if you stay where you are, you will never make a change.
  2. They’ll stay where they are until they have enough “security.” The reality is, that no one ever feels secure enough to make the change.

However, there is a third option that isn’t often discussed.

The question isn’t when to leap, but rather how to leap. Ask yourself a simple question: How can I leverage the assets of my current employer in a way that will help me with my future endeavor?

Use the Access You Have

If you want to become an entrepreneur, having a great product or service isn’t enough. Small businesses fail not because of a lack of talent or ideas; they fail because the can’t—or don’t—sell. You need contacts and relationships. These are often hard to establish when you are on your own. But if you are working for a major corporation, you can leverage your employer’s brand to help better position your future business for success.

Large companies have access to a lot of people, including some very influential people. Just saying that you work for a major company can open doors that would otherwise remain closed. Even if your new business venture is in an unrelated field, you can still leverage your current situation.

When considering opportunities for leverage, consider the following:

  • What are you doing within your current role?
  • What do you wish to do in the future?
  • How can you leverage the contacts, connections, resources and people within your current company to help you build your future business?

Build Your Future Brand

In addition to leveraging employer opportunites, there’s no time like right now for creating buzz for your future business. Start by building your personal brand. Take, for example, what these three people are doing.

One person I know who wants to launch his own business is looking for opportunities to get his content published on his employer’s website. This is a benefit to him since his employer’s site has significantly more visitors than his current blog.

Another person I know is interested in becoming a consultant. She is leveraging her current employer’s credibility to obtain speaking opportunities at major conferences. This will increase her exposure, and personal brand, exponentially.

Someone else is forming business connections now that would be extremely difficult to establish after leaving his position in a large corporation.

Respect Current Employers

To be clear, all these individuals are interested in adding as much value as possible to their current employers. In fact, the people who look to step out on their own often produce higher levels of results, in part because the result is often mutually beneficial.

I know firsthand what this is like. Back in 1995, I was ready to leave my position at Accenture. I wanted a change. But as it turns out, the change did not have to take place outside the company. With the help of others, we launched a 20,000-person process-and-innovation practice. I not only added more value to the organization, but I was reenergized and significantly more satisfied in my new role.

On the back of that work, I was able to leverage the firm’s connections to get a publishing deal with McGraw-Hill. It was at this point, in 2001, that I left Accenture.

Knowing when to leap is a difficult decision to make, and if you leap too quickly, you may be missing great opportunities for leveraging your current position. Instead of leaping across the chasm, find ways of building a bridge from where you are today to where you want to be in the future. When you do this, the transition is a lot easier and more likely to be successful.

This article originally appeared on the American Express OPEN Forum

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Attributes of All Successful People

June 17, 2013

During a recent speech in Copenhagen, I tried an experiment.

With the help of 5 individuals, we explored the 5 traits of all successful people.

I think you will agree that we identified some traits that ALL successful people share.

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I Was Humbled by Curious George

April 16, 2013

Back in 2006, my Goal-Free Living book was published by Wiley, and I was feeling quite proud. Later that same year, after giving a speech in Los Angeles, I drove up to Santa Barbara to attend a conference, arriving just in time for lunch.

While standing in the line for the buffet, I turned around and said hi to the guy next to me.

He told me his name was George. He then asked me what I did.

Given my new book and the success of my speech earlier that day, I said with a bit of swagger, “I’m an author and professional speaker.” I was feeling very good about myself.

I asked George, “What do you do?”

He replied nonchalantly, “Oh, I’ve done a bit of television.”

He said it so matter-of-factly, that I assumed he had a small role in television. Maybe he had done a couple of commercials. Or possibly he did some voiceover work; he certainly had the voice for it. Or maybe he once had a “bit” part in a minor show.

He then proceeded to ask me about my book and the work I do, and I gladly shared my life story.

When I sat down at my table to eat, not with George, I looked at the agenda of speakers for the conference.

I was humbled when I realized that the person I was standing next to in the buffet line was speaking later that day. He was none other than George Takei.

At that moment, I realized that truly confident, successful, and impressive individuals do not need to boast. They don’t need to be the center of attention. Instead, they make others feel good about themselves. They ask good questions and are interested in others.

After that embarrassing moment, I have done my best to do what George did with me. Instead of attempting to convince the world of how great I am, I try to bring out the greatness in others. When I am at a conference, I do my best to make others the centers of conversation.

The next time you are with a group, spend more asking questions and listening than talking. Spend more time promoting others than promoting yourself.

As I learned from George, the most powerful people make others feel like a super star.

P.S. I ended up spending about 90 minutes with George. He truly is one of the nicest people I have ever met. He even asked for a copy of my Goal-Free Living book, which I gladly signed and sent. The picture below is what he sent me, to thank me for my book. He is a class act!

George Takei

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Stop Being a Know-it-All (transcription)

March 5, 2013

Here’s the transcription of my Monday Morning Movie

Today, I want to talk about the power of, and importance of, being open to new ideas and feedback.

I just spent a weekend at a conference. It was a bunch of people learning about the speaking profession. I’ve been speaking for 20 years, and I’ve had my own business for over a dozen years. So I’ve heard a lot of advice over time.

We had breakout sessions where we got advice from the instructor and from others in the group about how we can improve our business. It was fascinating to listen and observe the way some people in the group solicited advice, and how they accepted that advice.

For example, there was one person in the group, her response to anything that was said was, “We thought about that before. We’ve tried that before and it didn’t work. We’re doing that right now.” In some cases, she’d say, “I knew you’d say that.”  I found it really interesting because I wondered if in the time that this individual was receiving feedback, whether or not she received any value at all. Basically, every response to every idea was, “We’ve done it. We’ve thought about it. We’ve tried it; didn’t work. We’re doing it. Knew you’d say that.” Interestingly, this was a person who’s relatively new to the profession.

There was another person who took their time and talked the entire time. When the timer went off, everybody just looked at each other and thought, “That was interesting.” There was no opportunity, no opening for feedback; no opening or opportunity for input.

Then, it was my turn.

I asked my question and then listened to everything as though it was the very first time I heard any of the advice before.  Even if I’ve tried it before and it didn’t work.  Even if I’ve thought about it before and decided not to do it.  Even if I’ve never tried it. It doesn’t matter, whatever was said, I was acting as though, and thinking as though, it was the first time I ever heard it.

I have to say, for me, it was a magical experience. Instead of my “being right” all the time, instead of having to be the expert who knows all the answers (which is what I tend to do in my profession), I acted as though I was the novice. I was the person who’s never thought of these things before. I gave up the need to have the answers. I gave up the need to look good in the eyes of others as the person who knows everything. Instead I just responded, “Wow. That’s a great idea. I have not thought about that before. Let me explore that.” This made it a very powerful experience for me.

Think about yourself. When you are engaging customers, colleagues, friends, or experts; how do you naturally respond? Are you the person who has the answers? Are you protecting what you look like by trying to always act as though you knew the answer already? Or, are you willing to be vulnerable? Are you able to put yourself out there and say, “I don’t know the answer; I really want advice”?  If you’ve heard something before, really listen to it as though it was the first time you’re hearing it.

Are you a great listener or are you a great talker? Do you try to impress everybody with what you know, or do you sort of state your challenge, which is your vulnerability, and just sit back and say, “Please help me”?

I’m absolutely convinced that successful business owners get so wrapped up in what that know – their identity of being the expert, the person who solved the problems before – that they don’t allow themselves to open up to the input of others.

If you were to get a bad review on Yelp, is your natural inclination to say, “Man, that person’s an idiot. If we tried to fix every single problem like that, we’d be out of business”? Or, do you say, “That’s really interesting. Thank you for the feedback”? It doesn’t mean you have to do anything with it. You can’t solve every single problem; that’s the reality of business. But if you are appreciative of all input – good, bad, and ugly – that has to put you in a better position. It has to open you up to new insights. It has to allow you to see things that you would not see if you were closed and thought that it was your way or the highway.

Think about your business. Think about the way you run it. Think about your interactions with people. Are you open? Do you allow yourself to be vulnerable? Are you gracious when people provide input to you? Or, is your response, “I’ve done that, I know that, I’m the expert”?

When you’re engaging people, do you have to be the one who talks, or can you be the one who listens? Can you be the one who throws out one of your concerns and just wait for people to make a contribution?

When you’re in a social group, are you always making yourself look good, or are you making others look good? Although it’s a slightly different conversation, I think it’s all related. Get into the habit of making others be the heroes – our clients, customers, colleagues, and friends. Make them feel great. Make the people who give you advice, feedback, or criticism feel great. This opens you up to a whole new set of ideas. And it makes you much more attractive to be around, which means you will attract more people into your life.

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Stop Being a Know-it-All

March 4, 2013

Today’s Monday Morning Movie

As an expert, or someone who is highly experienced in a particular field, it can be difficult to get advice from others. We have the bad habit of positioning ourselves as the individual who has seen it and done it all.

But this can limit our ability to receive valuable input.

Instead of having all of the answers, have better questions. Instead of talking all of the time, be a great listener. Instead of having to “look good” in the eyes of others, make others look good. Instead of having to be the expert, be the novice.

When you are open to any and all input, you will become even more masterful at your craft.

P.S. This video is a tad longer than most, coming in at 6 minutes. In the future, they will be between 2 and 4 minutes. You can read the transcription here.

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