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This is a tiny omission that caused momentary panic at least in my case. If the text is followed to the letter, it appears that the command can be run outside the new project's folder. However, doing so makes the gem system grunt at you with a wonderfully descriptive "Could not locate Gemfile". Of course, little did I know that the solution was very simple: cd into the new project's folder, in this case "my_awesome_app".