AI, Organic Growth, and the Risks Facing Wholesale Distribution

[00:00:04] [SPEAKER_00] Welcome to Around the Horn in Wholesale Distribution Podcast with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies, Tom, Kevin, and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain.

[00:00:24] [SPEAKER_00] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

[00:00:36] [SPEAKER_01] What do you think of that? Can't hear you, Tom. Says it. Did your power go out again? How about now? Gotcha now. I thought maybe your power went out again.

[00:00:47] [SPEAKER_02] No, just the mic power, it seemed like it muted all of a sudden. So I need to send a tech guy over there to check things out for you? Yeah, it must be that PHP hack on my mic or something.

[00:00:57] [SPEAKER_01] Great. Yeah, you know, something about that. I met a company earlier this week at an event I was at and got them loaded into our system using my new Vibe-coded business card scanner. So you've yet to see work. It works flawlessly.

[00:01:19] [SPEAKER_01] Claude and I got together the other night and in about 30 minutes built a pretty cool little, through Claude Co-Work, built a pretty cool business card scanner that pushes those cards right into LeadSmart Channel Cloud. So it was pretty cool. But anyways, I went to the company's website from this gentleman that I met and there's a big old screen that says down for emergency security maintenance.

[00:01:41] [SPEAKER_02] So, yeah, you know, I don't know a lot of details on it. I haven't followed it too carefully, but it does sound like a mess. Yeah. It's not impacting any of our customers. So I have not put a lot of energy into it.

[00:01:57] [SPEAKER_01] Well, it just made me think a lot of, right, the reason it's not impacting our customers is, you know, knock on wood. You never know. Nothing's flawless. But this, for me, reinforces the value of and the importance of understanding who your technology providers are and what kind of security they have behind it.

[00:02:17] [SPEAKER_01] And, you know, I think about with our platform, with our Meridian 360 platform, we'll talk about in a couple of minutes, with, I think, 28 now international certifications and attestations for security. You know, that matters. And you were seeing it with things like this. And it just astounds me how few people in the procurement of technology ask that question.

[00:02:43] [SPEAKER_01] Even companies that have significant IT departments that really should be. And I laugh because the company we see out there once in a while in some deals here and there, I remember about 18 months ago their CEO making a video and doing a whole press release about them getting SOC 2, Type 2 compliance. And saying they were the only ones that serve distribution out there. And my phone started ringing from customers and friends in the industry. Like, that's a bold statement from somebody.

[00:03:13] [SPEAKER_01] They don't have any idea what you guys have. But that matters, right? And so the only reason they say that is that people should ask hard questions of their technology vendors about where are they at and how do they protect their data, right? How do they protect their systems?

[00:03:32] [SPEAKER_02] Yeah. And, you know, again, I haven't studied the PHP situation in a lot of detail. But PHP is a common set of software and code that runs on a lot of websites. Of course. WordPress and things like that. And it's kind of old school in a sense of how it's put together. You know, it was never designed from the world at the time. It was not designed in the era, if you want to say that, of AI and the sophistication of some of the things that can happen now.

[00:04:02] [SPEAKER_02] So I think that's the thing that you really have to keep an eye out for is, okay, as you move forward, how do you make sure that you're not using legacy applications that are going to be, you know, wide open and ripe for this type of situation to happen? Right. Because what we needed from a security perspective five years ago is different, very different than what we need now to be able to protect some of the things that are there. So.

[00:04:29] [SPEAKER_01] Well, and that PHP solution is used in routers and all kinds of other stuff out there as well. Right. And so, and I think you just brought up a really good point. Man, we're deep into the show right now related to some of these topics already. We haven't even introduced the show yet, but I think the point you just made, what triggered for me with that, Tom, was that know your tech stack, right?

[00:04:54] [SPEAKER_01] I was saying know much about, you know, who you see and who you're working with and who you're contemplating working with. And what you're saying is do that, but also really understand the depth of your tech stack where your vulnerabilities are as well. Right.

[00:05:08] [SPEAKER_02] Yeah. And that ties together, right? Because a lot of your tech stack comes from third parties. Correct. Yeah. So. Anyway, it's things that you have to be thinking about really where are what you have to be, unfortunately, what you have to be aware of and concerned about today is different than it was, you know, even a year or two ago.

[00:05:31] [SPEAKER_01] Agreed. Yeah, agreed. Well, you know, I guess maybe we should just hang on here for a moment and hit pause and just introduce ourselves now that we're. I think everybody knows who we are. Let's get on with the news. I don't think that's true. I do. I see people making comments that we've never heard from before. So how's that? Okay. Well, you're wrong. You're wrong. Dominique and Vaseem and.

[00:05:53] [SPEAKER_02] How's that?

[00:05:54] [SPEAKER_01] You're wrong. No, I've been here forever.

[00:05:58] [SPEAKER_02] Long time listener, first time commenter or something.

[00:06:01] [SPEAKER_01] Remember that from the old talk call in radio sports talk and stuff. Yeah. Tom, love the show. First time caller, long time listener. Yeah. Anyways, I'm Kevin Brown. It's Tom Burke. We get together every week and we talk about the news of the week in the economy, supply chain, M&A, manufacturing, distribution, sales, marketing, people and leadership and so forth.

[00:06:22] [SPEAKER_01] And as importantly, at all of that, we talk about things like artificial intelligence and cybersecurity and robotics and other technology issues. And we bring all of that together. We talk about what's happening throughout the US and the world and how that relates to wholesale distributors and manufacturers. So we're appreciative of those of you who come regularly.

[00:06:43] [SPEAKER_01] We are appreciative of those who might be listening for the first time this week, having been at a trade show or trade event myself with the folks that affiliated distributors ended up talking to quite a few people who very quickly grabbed their phones and opened Apple podcasts and went and subscribed right away to be able to listen soon as well. And we're getting new listeners each week. I think last week was seven countries that had people downloading the podcast to it.

[00:07:09] [SPEAKER_01] And, you know, right now we're kind of around a thousand plus people a week that log in pretty consistently. So we're appreciative of that. We don't serve a monster audience. We serve an important audience. And that important audience is that group of people that's one third of US GDP, which is distribution and another huge chunk of the GDP, which is manufacturing. And that's the market that we look to. And we have a bring a great group of executives together. We oftentimes have great guests that come with us.

[00:07:38] [SPEAKER_01] We have a few coming up very soon. So we're very appreciative of that. We talk about the newsletter that we publish each week, though. And that newsletter is called around the horn and wholesale distribution and manufacturing. If you'd like to get a copy of that and you don't get it right now, you could certainly reach out to us in three simple ways. If you're active on LinkedIn, just look up around the horn and wholesale distribution and manufacturing. And you can follow the page there and subscribe to the newsletter.

[00:08:03] [SPEAKER_01] You could send us an email at hello at lead smart tech dot com last week before that email changes. But we'll always honor that. Hello at leadsmarttech.com. And then we have a website for the podcast, which is www dot around the horn pod dot com. You can see past episodes there. You can subscribe to the newsletter as well. So that's all there for you as well. So we would love it if you would do us a favor if you like what we do each week.

[00:08:31] [SPEAKER_01] And that favor would be to hit the subscribe button and leave a review, most particularly if you're using YouTube and or Apple podcasts. Those bring great value to us because the more subscribers we have, the more relevant we become and the more people this puts this in front of throughout the world. So we're grateful for all of that. And for those of you who are with us live on LinkedIn, live YouTube, live or Facebook live today, feel free to make any comments as you do so.

[00:09:01] [SPEAKER_01] And we'll look forward to sharing your thoughts along with our thoughts as we go through the news. Lastly, we couldn't do this without the help and the sponsorship of the company that Tom and I actually work for, which is lead smart technologies. And lead smart is a company that has developed what we describe as a enterprise growth platform. So companies have ERP systems, companies have marketing automation systems, other connected tools, but those continue to be siloed even in an AI age.

[00:09:30] [SPEAKER_01] So with Meridian 360, we help disconnected data. We turn that into actionable insights and we get rid of the blind spots in your business. So those things like the accounts that are at risk that maybe have stopped buying and their AR balance is high or a company that's buying a series of products but not a series of related products that they should be. Missed revenue opportunities across the board. Who's not engaging with us anymore? Are they shifting in what they're buying?

[00:09:59] [SPEAKER_01] So we bring all of that data together and get a full view across your ERP, your marketing automation, e-commerce, other connected data sources across your business, even other CRM systems out there. We can bring that data in to give you a full definitive view of your business. We use the term system of record and system of action. Your ERP system is a wonderful system of record for your financial transactions, but it does not give you a view across your business.

[00:10:28] [SPEAKER_01] And that's what we do at Lead Smart Technologies with our Meridian 360 platform. So if your company is looking to understand your customers better, your business better, your teams better, have coaching tools to work with your teams on to grow your business and see organic growth within your business, we would love to talk to you. So you can reach out anytime to us as well. So, Tom, that's the little blurb for our sponsor. Should we dive into the news?

[00:10:54] [SPEAKER_02] Well, it sounds like there may be some issues of us being pixelated and freezing. I see you fine. I hear you fine. If everything is coming through, let me know. Or if Bob had said.

[00:11:07] [SPEAKER_01] Yeah, I hear you great. See you fine. I would rather hear you.

[00:11:12] [SPEAKER_02] I think people just didn't want to know you were all about us and it all pixelated. Pixelated? Yeah. All right. Now we're getting to the news so we can stop the pixelation.

[00:11:20] [SPEAKER_01] Yeah. So a lot going on out there. Where do you want to start? We always start in our economy discussion. Jobless claims near the lowest since the 1960s. Yeah, I guess AI is not taking everybody's job. A couple articles about that a little bit later. We can dive into that a little bit further as well. But yeah, that is kind of an interesting thought, right? Yeah.

[00:11:43] [SPEAKER_02] I mean, and again, what is one of the Fed mandates is to keep unemployment low and jobs, you know, jobs moving, right? Mm-hmm. People in work. So that seems promising. I guess there'll be another job report out here in another week or so, week and a half.

[00:12:00] [SPEAKER_01] Yeah. You know, they use the term in this low hire, low fire environment where there's little job growth, but where employers are reluctant to cut workers. So it's, you know, this, it's just, it kind of goes back to so much we discuss regularly is, you know, first off, right? This is probably, this jobs report will probably be revised as they just seem to constantly be revised. But I think right now-

[00:12:25] [SPEAKER_02] This is different than the one that's released every day.

[00:12:28] [SPEAKER_01] Yeah. Yeah. So- But the, I think that it's, back to your comment though, about the folks not, AI not replacing jobs. I think right now people are very much looking extremely closely at, you know, their business as a whole and almost like not wanting to disrupt everything. It's sometimes it's, you know, everything's fine. So why disrupt anything right now while the economy is so unstable for us?

[00:12:59] [SPEAKER_01] When you say so unstable, meaning- Well, I mean, we, there's, there's, money's expensive, right? Right now. We've got a midterm coming up in a couple of weeks. We've got interest rates that are just ridiculous right now. We've got all of these things that are going on right now that it puts that pressure on. So let's, let's not make any big changes while we have this disruption.

[00:13:22] [SPEAKER_02] Yeah. Yeah. I mean, you're bringing up an interesting point that I'm, I don't disagree with, but I don't a hundred percent agree with. Okay. And it kind of touches on some of the other articles we have here, right? Well, I'll kind of, we can glance through these and maybe we can kind of talk about these together. Sure. Right. Because the articles talk about the deficit, the, you know, budget deficit, which we'll talk about a minute, the cost of that.

[00:13:49] [SPEAKER_02] And then of course we have a Fed meeting coming up, I think next week, next week. I'm pretty sure it's. Did you have your poly market up? I do. It is October 28th. So it is next week. So by the way, no show, no show next week. Got to. Yeah. We'll be on an airplane, I guess.

[00:14:08] [SPEAKER_01] So we're heading to the airport. Yep.

[00:14:10] [SPEAKER_02] But, but anyway, 92% of chance of no change next week on the piece that's there. But I want to go back to your, your point about, and I don't want to put words in your mouth, but it sounds like you're saying the economy is a mess. And I don't know that I would characterize it that way. I think we've got what is showing here is we have, you know, strong job market.

[00:14:38] [SPEAKER_02] We have good, strong growth. We have a lot of productivity moving in about there. What we do have though, is a very high deficit, which we should talk more about here. And, but if you even look at the bond market, right, the bond market has dropped significantly over the last couple of weeks since we've talked about it before.

[00:15:04] [SPEAKER_02] So I, I don't, I don't know that even because of where we sit from an, from an inflation perspective or even an interest rate and even the situation with the conflict, the Iran collect, I don't, I don't know how we consider the economy as a mess. I think there's just a lot of things that are happening that are all very positive that maybe are not, have not been counterbalanced with the way everybody would like them to be. Mm-hmm. Right.

[00:15:31] [SPEAKER_02] I would say if we were in a recession and people were out of work and all that stuff, then to me that's definition of economy of it is a mess.

[00:15:38] [SPEAKER_01] Okay. So would you be right now, would you be, well, I mean, let's just forget about whether you're a distributor or not, right? Are you interested right now in going on and taking a lot of extra debt and making massive bets on just even say certain stock market bets right now, right? Are you, are you, are you, are you bullish that you would put a lot of things at risk

[00:16:07] [SPEAKER_02] right now? Absolutely. Well, capital expense and stock market investments are two different things. Yeah. Okay. Well, so right. You're, you're, you're supposed to buy a new car next week. Right. You know, and I have, I have, would have no problem making capital investments. Okay. I think obviously you want to be intelligent and, you know, the types of financing that you're doing and stuff like that. But I think now is a time to be making capital investments and leaning into a lot of things that are coming.

[00:16:35] [SPEAKER_02] The stock market is very, it's, it's hard to say the stock market because there's so many sectors that are so different, right? The AI trade is very different than.

[00:16:45] [SPEAKER_01] Well, let me just, then let me ask, let me ask you the question differently. Would you, if you were a five location wholesale distributor, right? Would you be wanting to rush out right now and open two new brand, a new branch this year and another brand new branch early next year and hire 50 to 75 new people and push a million dollars of inventory into those two locations?

[00:17:15] [SPEAKER_01] Well, of course I would focus on organic growth.

[00:17:17] [SPEAKER_02] No, no, no. That's, that's, that's parallel. Yeah. But yes. But the answer is yes. I would lean into it. Again, if that was part of, if my strategy, right? If my growth strategy, and that made sense to my growth strategy, my expansion strategy. Yes. I would not let the current economic environment or climate slow that down. Because I think we have a lot of tailwind of growth and productivity, right?

[00:17:43] [SPEAKER_02] And you want to be able to lean into that, even though you may have some headwinds of cost. The ROI should outweigh the cost that you're having to employ on those things.

[00:17:55] [SPEAKER_01] I don't think you would. Okay. I just think it's, there's, I think what we're seeing now is people trying to do more with less. I had a conversation with a regular listener earlier this week that's describing as, you know, the coming year is the big focus is organic growth, right? Which ties to using technology to do that in that way. But my point, Tom, was, I don't think you were putting words in my mouth per se, but I do, I do see what you're saying is, you know, somebody made a comment here about mixed signals, right?

[00:18:25] [SPEAKER_01] The, you can, you can look at what's been going on stock market. Stock market is for the last few years through some of these ups and downs has stayed pretty darn bullish. Now we've got some mixed signals between stock market and, you know, but this other side of that, right, is that the, I guess the stock market has really thrived. I just can't remember the statistic I heard, but we would not have seen anywhere near the growth of the stock market.

[00:18:53] [SPEAKER_01] It wasn't for the AI trade in the last 18 to 24 months, right? And so now we were seeing this pressure coming on what is really going to happen. And look, the midterms could have a major impact on the ability to build data centers, moratoriums in probably lots of states, if not blocking of many of them in many states potentially, right? So now what about those two new branches you were going to open if you were a building

[00:19:21] [SPEAKER_01] material distributor, electrical distributor, an HVAC distributor, and so forth? That was more of my point is there is instability and mixed signals and ups and downs and recasting of things and so forth. And I think my point was that that's what is tying to this particular article that we talked about is, you know, no hire, no fire. Right. Unless we have to.

[00:19:43] [SPEAKER_02] All right. Yeah. I think the real issue we have, which is two of the articles we had here, were the deficit, right? The deficit, the budget deficit is getting larger and larger because we, as in the current administration, has not been able to reduce spending. Mm-hmm. So spending has continued to go higher and higher and higher. And then you could argue, well, you could outrun it through productivity gains and through GDP gains.

[00:20:11] [SPEAKER_02] But a lot of those GDP gains are speculated based around AI and the use of AI in the business. And then you, to your point, you have the headwinds of the, oh, we don't want a data center. We don't want to have all these things in the, which, anyway, don't get me started on that. So- On what?

[00:20:31] [SPEAKER_01] I'm sorry?

[00:20:32] [SPEAKER_02] Oh, the whole data center thing. The whole data center.

[00:20:34] [SPEAKER_01] Whether you mean, well, let's maybe get you started on it.

[00:20:39] [SPEAKER_02] Tell me what you're thinking. But the point being is the budget deficit is probably the largest risk that we have, right, economically, because the deficit is not getting smaller and the cost of that debt and those things is getting higher. Right? And there's a lot- Well, we can go into that article.

[00:20:57] [SPEAKER_01] Yeah, I think that would be good. Go ahead. I'm sorry.

[00:21:00] [SPEAKER_02] So, anyway, I think that is a issue, certainly, that, you know, we've, even from our economists that we've had on the show, that's come up over, I can't remember who it was that said in 2030, it's all going to blow up.

[00:21:14] [SPEAKER_01] Well, that's ITR economics viewpoint of the Below Brothers there. Bellio Brothers. Yeah, that's, I mean, a whole interesting thing, right? Right about the time that I'm going to start working part-time is I'm going to need to continue to work full-time because the economy is going to blow up. It's interesting. That was Taylor St. Germain that you're referencing with us. That's where Taylor works.

[00:21:41] [SPEAKER_01] You know what, it's, when you listen to them have that discussion, the folks from ITR economics are great speakers, great to have around. It's the folks that founded that organization. And by the way, it's interesting as you bring that up, they are for, I can't remember, I want to say it's like 30 years, they have like 94% accuracy on their predictions.

[00:22:09] [SPEAKER_02] Okay.

[00:22:10] [SPEAKER_01] So I'd like to think that that 2030 bust is part of the 6%.

[00:22:17] [SPEAKER_02] Yeah.

[00:22:19] [SPEAKER_01] Well, we should get them back on. I don't know what their latest update is. I don't think there's, well, I mean, it's only, it's been, yeah, I mean, Taylor would be happy to come back on with us. Right. There's no problem there. Anyways, continue where you were going down a path.

[00:22:32] [SPEAKER_02] No, anyway, I just said, I think our risk, right, is the budget deficit. That's what the article, it's getting more and more expensive. We're not cutting spending. I don't see any changes in the midterm elections of who would be elected that the spending is going to reduce.

[00:22:48] [SPEAKER_01] No, the greater risk is that spending is going to increase, I would think. Right. Yeah. Right. Right. If you shift control of the House and or the Senate, you know, spending is likely to increase in that setting. Yeah.

[00:23:00] [SPEAKER_02] So that, to me, is the risk. The question is, when does the music stop? And I think that's part of their 2030 prediction is, you know, at some point that music stops and it catches up with us. And we have a real, real situation. But when you say the music stops, what do you mean by that? Can't make the debt payment? Yeah. Can't make the debt payment. Basically, you bankrupt the country, right? Okay.

[00:23:27] [SPEAKER_02] That's basically what is the risk, right, of all of this. And a lot of this debt has to be refinanced. We're paying lower rates on it. It gets refinanced. It becomes due. I mean, there is strategies for dealing with this. But, you know, I've heard turning the 30-year note into a 100-year note and doing things like that to refinance the structure of the treasury. So I'm sure there's a lot of smart people looking into this.

[00:23:54] [SPEAKER_02] But it is the risk that, you know, we're seeing, in my opinion, the largest risk.

[00:24:01] [SPEAKER_01] Okay. Well, do you want to talk any further about the interest costs? I just was looking in this particular article, which was from Axios from earlier in the week. It was showing a pretty interesting chart about the net interest costs as a share of GDP. And interest cost is 3.3%. Interest on the debt is 3.3% of GDP.

[00:24:29] [SPEAKER_02] Yeah.

[00:24:30] [SPEAKER_01] Is that nuts? It's nuts. Yeah.

[00:24:34] [SPEAKER_02] Reaching $2 trillion this fiscal year.

[00:24:36] [SPEAKER_01] Yeah. So there's a, I have a little AI prompt that I put into Gemini as I look at these articles for giving me a little bit of a recap to let you look behind the scenes for a second here. But it's a great comment here. It says, The hidden conflict, political apathy versus bond market pressure. Washington politicians across both parties currently show almost zero political appetite

[00:25:01] [SPEAKER_01] for enacting painful bipartisan deficit reduction packages such as tax hikes or sweeping spending cuts reminiscent of the 90s. However, the underlying tension lies with bond vigilantes in private markets who may soon force the government's hand by demanding higher yields and triggering a physical reckoning. So you know more about the bond market than I do, but basically it's, you've got to be able to sell a bond, right?

[00:25:28] [SPEAKER_01] To have any of the pricing of those bonds matter. And the market gets to dictate what they're willing to pay for it at some level. Well, what their confidence is, right? Yeah. Absolutely. Well, look at what, was it, was it CoreWeave? Is that right? Last week that, you know, had some major bonds out there and their market, let me try to say, the market penetration, their technology. I think there was a handful of things that came into question and they're so tied to,

[00:25:58] [SPEAKER_01] as well tied to data center build out and so forth, that all of a sudden their bonds were, you know, huge hit of the bonds that they had out there because the market was just saying, we're not paying that anymore, right? So now if you look at this, taking this back to the federal-backed bond, right? And this article here calls them the bond vigilantes in these private markets. And it's interesting to see an impact.

[00:26:28] [SPEAKER_01] And, you know, this is one of those things that you get to go spend time and research on if you're retired, but I don't have time for. But I would love to be able to look back through history about really, because right now it feels like we're in a place where the private markets and the government's issue with the deficit,

[00:26:56] [SPEAKER_01] interest rates, the Fed, the things the Fed's doing. It almost, it feels like the private markets, I don't want to say they've historically been lockstep because that's certainly not the case, but there's been a cadence between the two that's much, seems much more reasonable than where we're at with that right now. It seems very much that the private markets and the equity markets are less concerned about what the Fed's doing.

[00:27:25] [SPEAKER_02] Yeah.

[00:27:27] [SPEAKER_01] Do you agree?

[00:27:29] [SPEAKER_02] Agree. Yeah, I would agree. I don't think it's completely insignificant, but it doesn't have quite-

[00:27:36] [SPEAKER_01] The correlation of the two going lockstep is, to me, I just don't remember it as much in the past as right now the equity markets and so forth seem to have a little different take and different flair on things with that. So anyways, let's see, where do you want to jump from there, Tom?

[00:27:55] [SPEAKER_02] Well, should we move out of the economy? Are we good?

[00:27:58] [SPEAKER_01] Yeah, I just, there's a couple things here, just real quick. There's an article, Industrial Distribution posted a good article earlier this week about a New Jersey food importer filing a lawsuit challenging the 50% tariffs on Canadian goods. So this whole, I was with a bunch of Canadians this week. I was at Affiliated Distributors, the large buying groups, national event for their electrical markets.

[00:28:25] [SPEAKER_01] And boy, those Canadian guys can stay up late and do some damage. I got punished last Monday night and I snuck out before they got serious. Talking to a few of our customers and friends the next day from that event. But it's such an interesting thing right now.

[00:28:49] [SPEAKER_01] I would love it if we have any Canadian business people that are live with us this morning that cared to comment. But, you know, this, we've got this wonderful trading partner to the north of us here in the U.S. that's, there's just always been such a great ally. And it was really interesting. And we talked, I think you were on a call, Tom, we were on together about, oh, three,

[00:29:17] [SPEAKER_01] four months ago talking about some upcoming U.S. events. And we had somebody that was questioning whether they were going to come to the event I was at in San Diego this week because of their frustration with the U.S. And it's, there is, and I literally was talking to another exhibitor who's one of our partners at Lead Smart that was a couple of booths over from us. And he was pointing out a company that was there and their president and their executive

[00:29:46] [SPEAKER_01] VP were walking together. And we'd just been talking about the push and the rub with Canada in that setting. And he pointed to those two guys and he said, they are diametrically opposed to each other in how they feel about Canada and the U.S. and their relationships. One was like, doesn't even want to come here, super frustrated, you Americans.

[00:30:15] [SPEAKER_01] And the other one was, hey, we'll get through this, right? Yeah. So it was quite interesting. But you put the discrepancy between the U.S. dollar and Canadian dollar for doing business anyways, which is hard on a Canadian. And then you put the added tariff components on it.

[00:30:43] [SPEAKER_01] The impact that it has is much larger on the Canadian market than it is here.

[00:30:50] [SPEAKER_02] Yeah. Well, this article, right, is talking what about importers suing over those? Yeah. Exactly right. Yeah.

[00:30:58] [SPEAKER_01] Exactly right. So anyways, there is another follow-up article, if we jumped into supply chain, that's related to that. This one was actually posted by the American Enterprise Institute. This is from earlier in the month. I just had waited to publish it. But it was interesting. They talk about the impact of tariffs on the cost of capital.

[00:31:19] [SPEAKER_02] Well, that kind of relates to what we just talked about. It does. Exactly right. Yep. Go ahead. No, I mean, you were talking about interest rates, right? This is talking about tariffs as adding additional cost to the things that I'm having to purchase, right? Let's say you open a new branch, to your point, and I obviously have to purchase a lot of equipment and everything else to open that new branch.

[00:31:47] [SPEAKER_02] The cost of those things are higher because of the tariffs that are there. Right. So therefore, the cost of my return on investment has to be, or my return has to be higher in order to offset those costs that are there. And I don't disagree that the interest rates or even the tariffs are adding additional costs of capital. That wasn't, I don't, I would not, I'm not saying that at all.

[00:32:12] [SPEAKER_02] But what I was saying earlier is that I think the opportunity to achieve or exceed the return on investment with the cost of capital, as long as it's a strategic part of your business plan is very, very good. Now, of course, obviously there's never a guarantee. And, you know, there's a lot of things that course measures that can happen and super El Nino could flood us all. I mean, there's a lot of things that could happen, right?

[00:32:37] [SPEAKER_02] But if I just look at all of the things that we can look at today and know about today, I would still move ahead because I think the ROI could far exceed the extra costs of that capital.

[00:32:48] [SPEAKER_01] You just brought up something really interesting with that, Tom. So, you know, and we don't talk about this stuff a lot because of where we live in Southern California. But you just mentioned super El Niño, right? We've had a lot of rain this week already here. We've got our coastline and shorelines being, having a huge damage to it, which is going to potentially impact tourism here in Southern California.

[00:33:15] [SPEAKER_01] And we don't even have the, I mean, right now this super El Nino is just flirting with us with what's coming later in November. And it's interesting, I just, the reason I mentioned that is I tie it back to your bullishness to say, hey, I could go out and spend money and open new branches and stock the inventory and hire the people and buy the trucks and commit to the leases and blah, blah, blah.

[00:33:41] [SPEAKER_01] That goes with all of that because my return, as you describe it, if I understood you correctly is, hey, maybe I've got X amount of dollars that are going out for that, but I've got Y amount of return. So if... Potential. Potential. Right. The potential is there. So this is something that I guess, you know, would you still do that knowing that you could have, you could lose the roof off of one of your existing branches here in Southern California

[00:34:08] [SPEAKER_01] and have major flooding and have people that maybe aren't coming into work? Would you still do that based upon what could be coming this year?

[00:34:17] [SPEAKER_02] I think so, yes. Because you can sit here and what if this thing till the cows come home? But why not wait till spring? Okay. Well, then there's going to be something else, right? I don't know.

[00:34:27] [SPEAKER_01] Not here. Not, not that. I mean, that's just a major factor. I hadn't actually, I'm just saying I hadn't been thinking about it, but...

[00:34:33] [SPEAKER_02] I mean, I just wouldn't, I wouldn't worry about it. That's all. I just, it's like, if you're constantly worrying about what could be in which, you know, obviously you want to look and observe. I'm not saying that. But we don't know how El Nino is going to play out.

[00:34:47] [SPEAKER_01] You remember, don't you? So you remember that I'm your business partner and I do see how you operate every day.

[00:34:53] [SPEAKER_02] Yeah. Okay. But I operate from a, I don't, I try not to operate recklessly, but I look at it strategically.

[00:35:01] [SPEAKER_01] We agreed that you're pragmatic is I think the conversation we had a few weeks ago, right? Right. I said, I said you're, you're could be a pessimist and you says you're an optimist. And I said, let's agree on pragmatic.

[00:35:12] [SPEAKER_02] Right. But I wouldn't go if you, again, pragmatic is based on observation, right? And so you observe the situation that we have here. You know, again, obviously there's, there's certainly impacts and headwinds and so forth, but there's also a lot of tailwinds that are here. Yeah. And so if you just look at the picture to me waiting, I do agree, you know, I would look at everything I could do to increase organic growth because I think that's the cheapest

[00:35:41] [SPEAKER_02] growth you can get right now, right? Is organic growth through the use of technology and other things. It's probably the least expensive and highest ROI potential you can have is organic growth. But that doesn't mean I would ignore the inner granite growth. And how would I put that into the roadmap and whether that starts tomorrow or the next day or whatever happens to fall within the strategic planning of the company. You know, we're going to visit a customer next week, right? And we just got an email from them saying, Hey, we just got done with our strategic planning.

[00:36:10] [SPEAKER_02] We want to go over some of that with you. That's here. Right. So all these companies I'm sure are planning for what is 2027? What's our plan? Why are we going to do these things? All that kind of stuff. And I'm sure there's an organic and an inorganic element to both of those things. Yeah.

[00:36:27] [SPEAKER_01] I just got a, he's got another text message from our friend, Joe Solheid. And he said that we're pixelated and both of us and breaking up oftentimes. So I'm, I just asked Joe to do me a favor and go log into YouTube and see if it's different because I'm seeing you great. Yeah.

[00:36:48] [SPEAKER_02] Bob or Dominique or anybody out there on the LinkedIn front, has it gotten any better?

[00:36:53] [SPEAKER_01] Yeah. Yeah. So I, I'm wondering if it's a LinkedIn thing. Um, yeah, I don't know. I, I, but I, well, it could be because I, when it's you or it's me, we notice that with each other right through the, the, the, uh, simulcasting tool that we're using. So I'm grateful for Joe's going to go check that out for us. So, um, so let me, let me go back. There's a pretty funny, um, this pretty funny dialogue going on in the chat here about, uh,

[00:37:21] [SPEAKER_01] restaurants as a sign of recession and recessions come when the McDonald's bringing back the McRibs. So that's one of my favorite things about doing the live show. People ask me all the time. Yeah. So it's LinkedIn. Joe just said, YouTube is super clear. So those of you that are struggling through with us, um, right now, if you, um, choose to, you could jump off of LinkedIn and we're live on YouTube. And I don't want to send people to Facebook cause then they'll just start scrolling and

[00:37:49] [SPEAKER_01] looking at their grandkids or what their cousin had for lunch. Um, so Joe, thanks for that. Appreciate, uh, Dominic says it's gotten better for the team. Both say it's gotten better. So that's great. Great. Appreciate everybody with that. Um, so that anyways, the comment about the, the, the, uh, McDonald's being a bellwether on the economy as well.

[00:38:10] [SPEAKER_01] So, um, so Tom, let's go back to your bullishness on opening the two new branches with all this money that you have. Um, let's see. Good. Thanks, Ron. We got in a bunch of comments that said we're doing okay there. So appreciate that. Um, and so anyways, you want to spend a couple minutes talking about what, what does it mean to have organic growth?

[00:38:40] [SPEAKER_01] You've mentioned organic growth a couple of times today. Why don't we unpack that for a little bit and then we'll, that'll roll us right into our next segments.

[00:38:47] [SPEAKER_02] Well, organic growth is basically how are you getting more growth out of the things you're already doing, right? And you're already have in place. So how do you get more out of your sales teams and your, you know, marketing and your, how do I get more out of existing customers, increased wallet share, capitalize on, capitalize on white space. All of these things are things that align to getting more out of the things you're already doing. Mm-hmm.

[00:39:14] [SPEAKER_02] And the branches you already have and the, you know, inventory you already have and all of that versus or inorganic growth is going and expanding, you know, M&A or through adding new branches or getting new territories or so forth. And both of them are legitimate growth that we just see in the world of technology and AI in particular, a lot of opportunity for that organic growth. And I know you've had some pretty good conversations with some major, major size distributors that

[00:39:42] [SPEAKER_02] this is the year of organic growth, right? That's coming up.

[00:39:46] [SPEAKER_01] Well, they're gearing up for that for really next year, right? Right. Right. Because they think more like I do, that's, there's, there's hiccups in the economy right now and challenges. And I can, I know I can completely control, right? I can completely control organic growth. Yeah. You know, I've said this forever, right? I've been...

[00:40:08] [SPEAKER_02] I mean, it's a hedge though. I mean, even if, even if you don't, even if you're determined to go and do the other things, now you can hedge that with the organic growth as well.

[00:40:16] [SPEAKER_01] Well, you know, look, it's, it's, it's, it's like throwing away a good pair of shoes, right? Is why would, why would I not want to take absolute advantage of something that I've already invested in? I've got, I have a customer, right? That customer buys from me consistently already, but he buys these four items or these four categories and my company sells 20 categories.

[00:40:45] [SPEAKER_01] I have an issue there, right? I've got a problem that goes with that. And, you know, I, I have this discussion day in and day out with distributors is that, you know, and this is me having had the same problem myself when I worked in distribution, as well as the teams that I ran is that most people walk by more business than they have at a customer.

[00:41:10] [SPEAKER_01] And it's not because they are bad, bad salespeople or don't want to do well. They spend, and unfortunately a lot of people end up having to spend their life as logisticians versus salespeople. Or I'm running this part over to this job site because this is an important customer. No one would ever argue whether that's an important customer or not.

[00:41:37] [SPEAKER_01] And that taking something to the job site might be important, but it's taking that thing over to that job site. The most important thing you could be doing today. And by the way, that is that same customer that you're dropping off, lack of a better example, right? You're dropping off, you know, three boxes of connectors, but they're not buying the wire that goes with the connectors from you. But you don't stop and think about that, right?

[00:42:06] [SPEAKER_01] And fortunately, you and your team have developed a tool called Revenue Expander using our Genius Feed AI tool that reminds people by push notifications to their phone that says, by the way, this customer isn't buying these things and they need to. But if we think about that, it's not that that, you know, doesn't make Joe or Judy bad because they're throwing some stuff in their vehicle and dropping off a job site.

[00:42:30] [SPEAKER_01] But when we have that opportunity to do a business review with a customer and we miss that opportunity because we're not using, we don't have an enterprise growth platform or even a smart CRM that can say, hey, here's my customer health. These are the things that they're not buying from me. That's where, you know, and this is things where people can find. We've got, I think, two really good potential case studies that we're working on right now

[00:42:57] [SPEAKER_01] with some customers who are completely focused on that revenue growth through existing customers right now. But, I mean, we've got one that I can think of right now. So, I'm guessing we're going to uncover $30 to $50 million of missed revenue in the second half of 2026, working with them, but really going into 2027 based upon their size.

[00:43:25] [SPEAKER_01] If we didn't uncover $30 to $50 million, that's the key. So, I'm just kind of getting this pixelated thing again. So, friends, if you're... It seems to only happen when you're talking. So, maybe I should talk more. You talk all you want. I'll go down the hall and grab a snack and come back when you're done. Take a nap. Yeah. No problem.

[00:43:46] [SPEAKER_02] No, I mean, but going back to the organic growth, there's all kinds of books that are out there around how to be a consultative salesperson, how to be a strategic salesperson, all of that. That's very difficult. I mean, the fact of the matter is that's very difficult in this industry when you're dealing with potentially hundreds of customers and tens of thousands of product SKUs and categories and all the different things that go with that and managing everything that we have to do

[00:44:16] [SPEAKER_02] from dealing with physical assets that we're moving around, right? So, it's hard to be... Much harder to be that strategic consultative salesperson in our world. But that's where the technology can really enable you, right, to be able to provide that level of strategic selling and consultative selling so that you can actually provide that value, letting the technology help you actually get that done, right?

[00:44:44] [SPEAKER_02] And then that all leads to that organic growth that we've been talking about.

[00:44:49] [SPEAKER_01] Good. I know you're working on it with a lot of our customers right now. We're kind of hitting on a couple of things there in our supply chain news and views section already. Why don't we kind of scroll... I think we can scroll past our manufacturing distribution segment there. There's just some interesting growth opportunities.

[00:45:07] [SPEAKER_02] Bob says that if this keeps up this pixelation, he's going to go get a McRib. I take McRibs for all of us. I'm kind of hungry myself.

[00:45:15] [SPEAKER_01] Just nothing about that sounds good. I'm starving right now, actually, but not for a McRib. So, for me, McDonald's is if you are just starving and that's the only thing you have time for at the airport. Although, although I just got an email a moment ago, I saw pop up from the gentleman that is taking us to a Michelin-starred barbecue place in Austin, Texas on Tuesday night. That I'm excited for.

[00:45:44] [SPEAKER_01] Does that exist? It's a Michelin-starred barbecue? I think it's probably... My guess is it's probably... Remember they were telling us about it when they came out for a visit recently, that there's two of those places in Austin, but one in particular. My guess is there's a... I don't know how we survive and still have a show that continues to grow because we went from talking about organic growth and the cost of the deficit on capital to McRibs and now barbecue in Austin, Texas.

[00:46:14] [SPEAKER_02] That's for our own organic growth.

[00:46:16] [SPEAKER_01] That's right. My waistline organic growth, right? There is a place in San Juan Capistrano, which is just below where I live here in South Orange County. It's where the swallows come home each year and right by the mission there called Heritage Barbecue. And they have what's referred to as a Michelin mention.

[00:46:39] [SPEAKER_01] So in the Michelin guide, there's mentions for particular types of cuisine, I guess I will call it. But that place is fantastic. So we'll know. On the next show, it will be two weeks from today. We'll talk about whether it was Michelin starred or Michelin.

[00:46:59] [SPEAKER_02] When I think of Michelin, I think of like little portions and kind of like foodie stuff, like a little rib coming out. I don't think of like the big barbecue thing where you've got this big massive plate of food.

[00:47:11] [SPEAKER_01] A big tray with four meats and a piece of Wonder Bread. That's right. Right. I agree. I agree.

[00:47:18] [SPEAKER_02] Yeah. The Wonder Bread must really be good.

[00:47:20] [SPEAKER_01] Yeah. The anyways, I am looking forward to that. So we will be well fed next week while we're in Austin, Texas, because we're going to a technology executive roundtable for there'll be like 20 or 25 of us there. And at that event, they always feed us quite well also. So you get to go to those things and you've got the investment bankers and the folks that sponsor, the accounting firms and so forth that sponsor those and they feed you well.

[00:47:50] [SPEAKER_01] So I need to eat less this weekend going into next week. So, all right, let's roll into our next section, Tom, which will be our AI latest news updates and tools in our newsletter, which would be a good time for me to mention again that if you're listening to the recorded podcast, I'm going to be very confident you are not going to have any issues with your audio. Like many people that are on LinkedIn today have been struggling with, with that is, and

[00:48:19] [SPEAKER_01] the good news was that we heard that everything was really smooth on YouTube. So I have to assume that that's a LinkedIn thing that's happening this morning. But if you're listening on Spotify, I'm using PHP.

[00:48:34] [SPEAKER_02] Must be. Anyway, go ahead. Interesting.

[00:48:38] [SPEAKER_01] I think you should, I think you should research that while I'm talking here. Yeah. I want to put a plug in for the newsletter. All right. I'm going to go do that. You let me know when you're done. All right. Thanks again for joining us this week on one of the top rated podcasts globally for wholesale distribution and manufacturing. I'm Kevin Brown. This is my, I'm sorry, that's not part of the show. All this is about is if you don't get our newsletter and you're listening on Apple, Spotify, Odyssey, wherever that might be, and you'd like to get that newsletter,

[00:49:04] [SPEAKER_01] simple way to do that is reach out to us at hello at leadsmarttech.com or jump into our website for the podcast, which is www.aroundthehornpod.com. And you can sign up for that newsletter. It goes out every Friday morning at O dark 30, California time. And we get that out. I don't know. I think we're at 11, 12,000 people. Can't remember right now.

[00:49:31] [SPEAKER_01] Next week, that email for it is going to change, but we'll always continue to see the email at hello at leadsmarttech.com. And there's also some exciting news coming about some adjustments we're going to make to the newsletter for 2027. It's frequency is likely to be increasing as well. So it's kind of fun stuff happening around here at the work that we do for the podcast here. So let's see.

[00:50:00] [SPEAKER_01] Here's Tom is saying, I'm listening on YouTube, but watching LinkedIn on mute. A little out of sync. So there's like Kung Fu theater. That's good. So Tom, let's talk about this article here from Gartner. Gartner's latest AI hype cycle prioritizes control over capability. Can we spend a couple minutes talking about maybe just, there's a lot, right? We have quite a few articles here.

[00:50:29] [SPEAKER_01] Another one is about before you put AI agents to work, redesign the work. Let's just kind of talk about the state of AI. We've got a call later this morning. It's actually in an hour and a half to talk about, we're going to do this podcast live in December at the Hardy national event, the HVAC and refrigeration distributors group at their national event in San Diego. It's great this year for me.

[00:50:58] [SPEAKER_01] I have so few airplanes because four events that I would have been to having to fly to this year are in San Diego. Keep them coming in San Diego. Oh man, it's 70 miles away where Hardy is going to be from where I live. So, and 175 or whatever from you. But we're going to do our podcast recording from their event.

[00:51:28] [SPEAKER_01] And this is going to be a little bit of what we're going to be talking about there is, you know, here we are, it was 2023, about November, was it of 2023 when ChatGPT launched? 22. 22? Okay. So we're four years into this and people are trying to figure out still what to do. And we're getting to that time where it's okay.

[00:51:54] [SPEAKER_01] We've been tiptoeing around, tap dancing a few toes in the pool, trying some things. And now is the time to really put this into the enterprise to make some things happen. I was actually talking to, on the phone this morning, on my way into the office, I was talking to Steve Levy, who's been on the phone, on the show with us multiple times. And he's a dear friend and Steve's with Infor. And he had just been at a Gartner event that was really talking about, okay, it's time to stop goofing around.

[00:52:23] [SPEAKER_01] He was in Orlando getting ready to fly back to Ohio. And so he was talking about that whole event was about really moving things past testing and into the enterprise. So should we talk about this a little bit? This kind of the hype cycle side of things and then what we're really seeing in the marketplace?

[00:52:44] [SPEAKER_02] Well, what this article is saying is that the hype cycle, remember the, if you just go through the Gartner hype cycle, everything gets hyped up. And then there's this trough of disillusionment, as they call it, where the hype doesn't meet all the expectations that are there. Well, the hype cycle, the Gartner hype cycle has been up until recently based around capabilities of AI. So, oh, look, I can write code. Oh, look, I can build a document. Oh, I can, you know, whatever, right?

[00:53:13] [SPEAKER_02] All these capabilities, the hype builds as related to the capabilities. And then the trough of disillusionment is, well, maybe these capabilities are not quite as great as I thought they were. There's hallucinations, you know, all the things that go with that. That has been the traditional, when I say traditional, the last few years, the hype cycle that Gartner has been talking about.

[00:53:38] [SPEAKER_02] What they're now saying is that shift, it's kind of shifted into a different hype cycle, is now is the hype cycle of how do we actually manage, control, and utilize all of this in our business in a way that we can, you know, get a return on investment, right? And get a result. So all the hype is, oh my God, these are going to, you know, well, think about the hype.

[00:54:07] [SPEAKER_02] We're not going to need employees anymore. We don't need people anymore. AI is just going to do everything for us. You know, businesses are going to run at a fraction of the cost. All of this kind of rhetoric that has been going on, hype, right? And now we're getting into the reality of the situation that probably that's not the case, is that we're not going to be replacing everybody with AI, at least not tomorrow, right? Or anytime soon, what's going on.

[00:54:32] [SPEAKER_02] So the hype cycle has changed from being around capability to application. And application meaning, how does this actually apply and be utilized and get some form of a return on investment? Yeah.

[00:54:47] [SPEAKER_01] So this is the, I'll just kind of tie this back into the distribution world that we see, right? With this is that, right, we, we, we got excited, everybody got excited about it. And I remember two and a half, probably, probably just two years ago, I think it was two years ago this month or next month that we traveled and visited a distributor that has regularly listened, a regular podcast listener who had invited us to come down and, and talk with

[00:55:17] [SPEAKER_01] their team and their staff about the, about AI and its uses in the future and the opportunities. It was to their, their executive leadership team and so forth. So, and that company had gone out and they had bought, I think 200 licenses. So that was, I guess two years ago. So there were two years in at that point to chat GPT and they had gone out and bought about

[00:55:43] [SPEAKER_01] 200 licenses for their team in, of, of chat GPT, chat GPT with no real guardrails, just, hey, see if you can use this. How might this help your job a little bit? We've seen a lot of that. Then we've seen some people building some agents that are helping them with some things. But then what we've seen now is this rush of, it's a term Tom, AI, AI washing of companies

[00:56:13] [SPEAKER_01] that have been really focused on putting into, oh great, you brought this, I appreciate you bringing that chart up like that. With companies who have been jumping into the marketplace, you know, saying, hey, we're, we're the right perfect AI tool for wholesale distribution goes back to that security conversation we were having earlier. Is that, you know, you don't necessarily know about these people that are coming, dropping right into the market with a brand new technology that sounds great.

[00:56:42] [SPEAKER_01] And, and as I describe it is that they are, so often, oftentimes, not all of them, but oftentimes there are companies who started off in Silicon Valley and maybe they have a sexy story that goes with it, but really we're looking for a business and a place to go put that business and distribution looked or manufacturing looked unique for them. So they jumped into that arena and said, look, look at the things we can do. But we had the media companies out there, right?

[00:57:09] [SPEAKER_01] That are, do events and podcasts and websites and webinars and so forth. Multiple events have been started up for AI. Absolutely great. Great intentions, great opportunity for people to learn. But really where most people are right now is that they've yet to see these investments. And it's, look, there, there are companies like ours.

[00:57:35] [SPEAKER_01] I could name off four or five others that I saw earlier this week that are really good companies that are bringing, using AI and bringing advancements to and revenue growth to these companies. But some of that could have been done with something other than AI and, right, some great workflows and some things like that. I think the point where we're at right now is that this has not been, maybe the term, Tom,

[00:58:03] [SPEAKER_01] maybe you have something better, is I'll say institutionalized, right? There are few and far between the companies that you meet that have teams that are really putting guardrails in place. They have a process for what they are in and a long-term roadmap and so forth. And those people are probably never going to hit that trough of disillusionment. Those people will probably just continue a growth and execute against AI.

[00:58:32] [SPEAKER_01] But I think we're already seeing people that are saying, this is too much, too hard for me to do in my business. I'm, you know, $75 million a year distributor of XYZ type of widget. I have an IT manager and I've bought some software, but none of this has played out the way I thought it would be.

[00:58:55] [SPEAKER_02] Yeah. So I'm going to tie this back to, I think, the comment Bob made a couple minutes ago here. AI being used to increase efficiency but not effectiveness. Mm-hmm. So I agree that the companies that have gotten, at least they believe, ROI is they've done something like, how do I automate orders?

[00:59:18] [SPEAKER_02] Or how do I automate quoting or, you know, things along those lines that were tedious and cumbersome before and I wanted to be more efficient in getting those things done. Mm-hmm. And that's going to continue. But if you look at a lot of the AI hype that has existed over the years or the last couple years and whatever, right, is how do you use AI to do things that were never going to be possible without it? Mm-hmm. Right?

[00:59:48] [SPEAKER_02] Manually or otherwise. Right? I mean, you would never have attempted to build a business card scanner on your own. Oh, my goodness.

[01:00:00] [SPEAKER_01] Yeah, absolutely.

[01:00:01] [SPEAKER_02] Right. Mm-hmm. I would have asked you. Right. And I wouldn't have attempted it either.

[01:00:06] [SPEAKER_03] Mm-hmm.

[01:00:07] [SPEAKER_02] Right. So then you'd probably go try and find one or whatever. And I'm not even saying that's a very good example. But really the opportunity and the hype has been around, how do you use AI to do things? And we talked about organic growth a minute ago, right? To do things that would not really have been possible, practically possible without it.

[01:00:56] [SPEAKER_02] Right. When you start doing that, yes, you have to then look at that from the perspective of being the controls and the governance and the security and all the other things that we touched about before. So in my opinion, right? And this is why I love working with people that are going, okay, how do I...

[01:01:18] [SPEAKER_01] So you're going to say love working with me.

[01:01:19] [SPEAKER_02] Yeah. Because of, yeah, their business card building scanner capabilities is quite remarkable. Mm-hmm. But the companies that are saying, okay, how do I increase this? How do I increase organic growth by doing things that with our team or enabling our team to do things that never would have been realistically or practically possible before? But at the same time, yes, balancing that with the controls, the structure, the security, all

[01:01:49] [SPEAKER_02] of those things that are going to keep it from blowing up a week after you get it rolled out or whatever because somebody lost data or data got hacked or whatever the case may be. So I think that's it. And that's almost, to me, the overlay of the two hype cycles that Gartner has been talking about here.

[01:02:09] [SPEAKER_01] It's well said. But I think your analogy of the business card scanner that I vibe-coded the other night is a good analogy because when I have Cloud Cowork connected to our LeadSmart Channel Cloud CRM org, right, which is our CRM is part of our enterprise growth platform, Meridian 360, and it's one of the tools we have there.

[01:02:40] [SPEAKER_01] And so Claude was able to see, Tom, that I had two other business card readers already connected to our org. And it asked me, why do you want to build this? You already have to. And it was because they both suck and they're expensive. And that's literally what I said to Claude Cowork as I was building it. It was like, all right, let's take this on, right? And you know what?

[01:03:05] [SPEAKER_01] Is it as sexy looking as those other ones that are $175 a year or whatever there? Nope. But so far, it's been flawless because I came back from an event. But what did I want it for? It is not efficient for me or my marketing assistant. It's, you know, because in the past, I've taken a screen or a picture at shows of five or six cards and sent them off to somebody and said, put this in the system, right?

[01:03:33] [SPEAKER_01] Or if I forgot to do that, I'm on an airplane flying back from somewhere and I'm putting them in because I was too cheap to pay for the business card scanners that can connect to our system because they're not always that accurate. And so I went and solved the problem for myself. And now I can very easily deploy that across our organization if other people need it. But so I don't, I think it was actually a pretty good example. It was minuscule of the, you know, the reason behind it in comparison, but it's important.

[01:04:03] [SPEAKER_01] But you never would have thought of doing that.

[01:04:05] [SPEAKER_02] Correct. Yeah. But even if you would have thought of it, you're like, I'm out of my mind, right? I'm not going to go build a business card scanner.

[01:04:12] [SPEAKER_01] Well, I think the important part to add to that is you might've, because you studied computer science in college. You wouldn't have done it, but you probably could have thought of how to go do it. I, I would have to, I think this just makes your, um, Bob says, Kevin just admitted to being a vibe coder. It's true. I've vibe coded a handful of things. Um, and, uh, and, and it's not something that, how would I put this?

[01:04:41] [SPEAKER_01] Some people are out doing these things that don't have, I'm a business person. I studied business in college. I would never know in a million years what to type after a C prompt to code something. It just, it's just never something to be capable, but because of the natural language capability, that's what, what came of this. Um, so, but I saw the issue with solving a business problem, right?

[01:05:04] [SPEAKER_01] So Tom, I think that the, the differentiator here is you, and I think this ties into customers as well, right? Is they might have an IT department that could go do something, uh, but they had never would have never done it because it's not a good use of time or whatever. Right.

[01:05:23] [SPEAKER_02] So, yeah, well, I, without AI back in the old school days, three or four years ago, back in the day, yeah. And we had, we had to stand up to turn the channel of the TV. No, our dads, our dads had us to stand up to go do that. Right. Son, go change the channel. Right. But, um, even coding, I don't know how we could look at the code that was generated from

[01:05:49] [SPEAKER_02] your business card scanner, my guess is a couple thousand lines of code anyway, maybe more. Right. That would have probably taken somebody a week or two or more to build, test and do and put into place. Right. So you'd never do it. Even if you had an IT department, you're like, I don't have a person that's going to spend two weeks, three weeks on this. And it's just for that, so I'll pay the 175 bucks and buy it. Sure. Here, it was like, I don't know what it took you, a half hour or something like that to do it.

[01:06:19] [SPEAKER_01] When all was said and done, it was, it was probably an hour when all was said and done. Yeah.

[01:06:22] [SPEAKER_02] Yeah. So that's very reasonable and, and, and confrontable. Right. So it's just, um, those are things that when we look at what's possible, right. That's what I, a lot of times I tell our customer, let's dream a little bit. Even if it's craziness, it may not be possible now, but it might be possible in six months or a year.

[01:06:42] [SPEAKER_01] So, yeah, no, the things that are coming are interesting. So that ties, um, let's just tie, kind of tie this back to why we're here and talking about these impacts.

[01:06:52] [SPEAKER_02] Bob, if you can still code in COBOL, you can go make a million dollars a year. There are companies that are looking for COBOL programmers that are spending big dollars. Anyway, sorry.

[01:07:01] [SPEAKER_01] Bob's a boiler maker. Look at that. Uh, interesting. Um, yeah, that's, you know, so you're talking about legacy systems that people have and they need people to know how to work on them, right?

[01:07:13] [SPEAKER_02] Yeah. There's still a lot of COBOL applications. I'm sure there's AI stuff that's been built now.

[01:07:18] [SPEAKER_01] I was just going to say, why would you just have AI wrote the code?

[01:07:21] [SPEAKER_02] Yeah, I'm sure IBM has got, well, IBM is, they're all old IBM mainframe machines that are running COBOL, but I'm sure IBM has written some sort of extension for managing and dealing with COBOL stuff. Right. If they happen, they will.

[01:07:32] [SPEAKER_01] Yep. So back to the important part of what we, what we do and why we do this and how we talk about things here is, um, you know, if you're a wholesale distributor or manufacturer and you're looking into these things, right, you're never going to escape this. It's the future of where we're going. But the important part of it is, and I think Tom, if we jump ahead to, there's a smart brief article that we have there before you put AI agents to work, redesign the work.

[01:08:02] [SPEAKER_01] Is it's now is the time to really be looking deep into your business and really understanding what, what could we do ourselves that makes sense? That might be small tasks and things like that. Right. And then what do we need to do with partners that are enterprise level? It's, there's no, no question that there is a better, uh, business card scanner out there than the one I built.

[01:08:31] [SPEAKER_01] So when you start thinking about bringing enterprise level things in place, it's probably when you want to do that with a partner. And then what is the, what are the parameters? What are my expectations of the partner and who am I bringing into the business? I was talking to a distributor recently and they were really trying to build their digital, we were phrased that their technical roadmap, technology roadmap, their digital roadmap. And we're looking at wanting to go buy fewer and fewer things.

[01:09:01] [SPEAKER_01] And we're meeting with me to talk about, because they have their large organizations, been very successful with all of our products. What else could we do with you? Because we believe in the platform concept, right? And we believe in the security that you have in place and so forth. So they're thinking ahead of what is it that we need to be doing next? And how is it that we're going to grow our organization through technology and through AI, but they're working on a roadmap that goes with it.

[01:09:28] [SPEAKER_01] This next article we're talking about, it says, uh, that's just got a handful of things that talks about, you know, building that roadmap, right? Is the first one they talk about was what outcome are we trying to improve? And it, that just seems to me, Tom, to be so, such a rudimentary thought. Uh, that's productivity, right? That's efficiency. But so few people do that. They buy a shiny object or try and solve something that's maybe not broken fully. So first one is what outcomes are we trying to improve?

[01:09:57] [SPEAKER_01] Second is where does the work really flow, right? Most companies know their org chart, but fewer understand how work flows. And it just makes me think about all the work that you and your customer success team and, and the other folks behind what, what you work on and Noah and Stephanie and some of the others there that, you know, we talk about really understanding workflows. And it makes me laugh because I think back to a conversation we had a number of years ago

[01:10:23] [SPEAKER_01] with, um, an international vice president of sales and a domestic VP of sales, the thought that they were, they were, had become customers of ours and they thought they were fully on the same page. And they put the implementation of our software on hold for about 10 days while those guys went and put their heads together on the workflows because they thought they had the same workflows for their teams internationally versus domestically. And they absolutely didn't. But, uh, understanding how the work flows.

[01:10:49] [SPEAKER_01] And then the other thing it talks about was what should agents decide, right? Recommend or do. Uh, can it do things on its own? Can it recommend must it approve? You know, we've got all this stuff now that's going on with, uh, chat GPT dots. I think they're calling it now. And then, um, Claude is launching right now their duet and all of those I think are in response

[01:11:14] [SPEAKER_01] to Grokbot and, uh, Meta's muse, which will go out and physically do things for you. And I gotta tell you, my, my youngest son is, uh, Austin is just doing some phenomenal stuff in, he works as a project manager for an, uh, HVAC electrical and plumbing, uh, uh, contractor. And he's automating all kinds of stuff for him date himself day to day with muse.

[01:11:39] [SPEAKER_01] His wife has a, uh, fitness studio and she's now automated all of her social scheduling and her, her, uh, posts and stuff. She's using muse for, which is really cool to see them because neither one of them are technical people. So I'm really great to see Austin and Marie doing all of that. But so what should agents do? Because agents are now being able to do more and more. Are they recommendation tools? Are they execution tools? Um, this is the fourth one that really, I think has become as critical.

[01:12:07] [SPEAKER_01] It says, where should humans rise above the loop, right? Uh, how much capability do they have? I still have accountability, right? I mean, whose fault is it? If we go back, whose fault is it? If something that I did with building an agent to help me scan business cards, if all of a sudden that did some damage to the system of record for our entire business that I connected it to, right? There's a whole component of that. I'll hit these really quickly.

[01:12:37] [SPEAKER_01] Um, and then will employees learn, trust, and challenge the system? What new value could this unlock? How could it help our business in other ways? So I really liked that article from smart brief. It's again, called before you put AI agents to work, redesign the work. And I would say the important part to go with that, Tom is I'm sorry to talk so long here, but you would expect nothing less is understanding what you want to achieve is the most important part of that.

[01:13:06] [SPEAKER_02] Well, and again, that ties to what I'm saying is when you think about that, don't just think about things that you're achieving right now. Think about things that you would like to achieve that you couldn't otherwise, right? Or you never would think were possible. Yep. Yep.

[01:13:21] [SPEAKER_01] Good. Okay. We just got a few minutes left today. Where do you want to go next? Let's pick one or two more. Um, you want to talk there? We've got some, uh, articles later on. When I think about, uh, uh, AI hasn't, there's a Harvard business school article about AI hasn't spurred widespread layoffs yet. Why not? Want to hit that one for a minute? Um, sure.

[01:13:46] [SPEAKER_02] Do you have any key points from that? I don't, I didn't get through that one article.

[01:13:49] [SPEAKER_01] No, I just, it's, I don't know that there's, it's, you even need to worry about the critical key points with it. I think it's just so interesting to see, right? When we talked about, we started the show today, literally talking about the, um, uh, the job market. And we've got, I think what, I can't remember what did they call it at the beginning there, but they called it a no hire, no fire mentality or mode right now. And I think that's a little bit of what we're seeing with people right now is I think too,

[01:14:19] [SPEAKER_01] if we looked at this from a wholesale distribution standpoint, my gut tells me, Tom, if we did a big survey, what people have really done is, and I just, in you, you know, it's funny is I talk to our customers when they're prospects and pre customer and then fully, and you're less involved. And then, uh, your team takes kind of over from the sales side of our company, uh, post sale.

[01:14:47] [SPEAKER_01] And so, but I'm involved, whether I'm doing the deal or not, I'm involved at some level with everybody still. And, um, but I would suggest if we did a survey of, uh, our listeners as well as our customers, they're, they're finding the efficiency with some of the tools that are doing things like using AI to capture, uh, an order out of an email or a screenshot of something, things

[01:15:17] [SPEAKER_01] like that, that all that's doing is allowing you to use some people in another place. And I have, I have yet to talk to anybody in wholesale distribution or manufacturing who has said anything about wanting to get rid of people. What they are talking about wanting to do is deploy those people to better places within the organization. And then if you look at, you know, the technology that we have in the AI tools that we have, they're really tied to making people better and efficient. And it's less about getting rid of anybody and more about not needing to hire as many

[01:15:45] [SPEAKER_01] people because you got the growth from the people that you already have. So this article just kind of looks at, um, well, and I think that as this becomes more

[01:15:57] [SPEAKER_02] widespread and ubiquitous within the organization, right? You'll want to hire more because you'll be able to get more out of them, right? You'll be able to, it's less risk. It's even if somebody who doesn't have years and years of experience, remember I, I offered at that one company you brought up to go to basically use the system in a week, I could go out and be a salesperson for their, for their products.

[01:16:23] [SPEAKER_01] And maybe that's why we never heard from him again.

[01:16:24] [SPEAKER_02] Yeah, maybe that's very likely. Yeah.

[01:16:27] [SPEAKER_01] I was, I was talking to him a couple of weeks ago.

[01:16:29] [SPEAKER_02] Um, but, uh, I think that, you know, there's an opportunity to even see that change is go, wait a minute, why not hire four or five more people? Right. And not have to hire, oh my God, I got to go find a guy that's been doing this for 20 years and all this kind of stuff, because all of that tribal knowledge and all of those things are there and available to enable a newer person to come on that's hungry and wants to do a good job. I'm just talking about sales, but this could apply to other areas of the organization as

[01:16:59] [SPEAKER_02] well.

[01:16:59] [SPEAKER_01] Mm-hmm.

[01:17:00] [SPEAKER_02] Yep.

[01:17:01] [SPEAKER_01] Well, some of the sound bites from this had even talked a little bit about the tribal knowledge thing that we talk about regularly and that there, there's, there's not really a, a roadmap for how to, in most organizations of how to take and, uh, push the technology. My watch is trying to talk to me. Um, it's funny. Um, that tribal knowledge piece is, is huge, right?

[01:17:30] [SPEAKER_01] Because we have all of this data that's stuck in fragmented and siloed systems across the business. And then we have it, you know, I, I use the phrase, you know, um, uh, Ralph or Rhonda, you know, that's been there for 25 years and so forth. So there's, there's so much knowledge stuck in there. So I think part of it is people haven't been seeing the results. Um, the, in fact, sorry, I just saw a quote from this.

[01:17:56] [SPEAKER_01] It says what we've seen so far in the labor market from artificial intelligence has very little predictive power for what we're going to see in the labor market because an AI, AI in five years or 10 years or 15 years. So I think we will see an impact on it in the labor market, but I think where we're going to, what we're going to see in this, what this article is also leaning towards as well. Is that in the distribution world and the manufacturing world, I just haven't met anybody,

[01:18:22] [SPEAKER_01] even PE owned companies that are saying we're going to get rid of, rid of people. It is doing more with less, right? The organic growth component that we've talked about at length today and so forth. So I think really what ties to this well is that it goes back to our entire AI and technologies discussion today that's tied around understanding and having a plan, having some roadmaps and some guardrails into how we want to achieve that over a period of time.

[01:18:49] [SPEAKER_01] And then from that standpoint, say, where do we make our people more efficient? Where do we make our people deploy them in better ways? And it might be that we have four order entry people in our organization versus 14, but those other 10 are now overseeing customer service and being retrained to maybe manage agents and doing different things and better quality work.

[01:19:17] [SPEAKER_01] I mean, imagine somebody that, and this is just so common, specifically in distribution because of the sheer volume of orders that they go through. I mean, literally our technology has millions and millions of invoices per customer that we have. And so think about somebody that had to manually enter a good portion of those because they weren't coming in by EDI. They weren't coming in across their e-commerce system.

[01:19:45] [SPEAKER_01] They weren't coming in in a way that could be captured by AI. And so a lot can be accomplished in that setting.

[01:19:52] [SPEAKER_02] Yeah.

[01:19:52] Great.

[01:19:53] [SPEAKER_01] Yeah.

[01:19:54] [SPEAKER_02] All right. Let's wrap it.

[01:19:56] [SPEAKER_01] You don't want to keep talking?

[01:19:58] [SPEAKER_02] Nope.

[01:19:58] [SPEAKER_01] Had enough? Had enough. You want to eat before your 11 o'clock call?

[01:20:02] [SPEAKER_02] I'm going to go get a McRib. Yeah. I'm going to go get a McRib.

[01:20:04] [SPEAKER_01] It just does not sound good to me. Maybe that should be a survey.

[01:20:08] [SPEAKER_02] I honestly don't know if I've ever had a McRib.

[01:20:10] [SPEAKER_01] I can tell you I haven't had one in probably 30 years. Okay. All I can think about is processed, processed, processed. And Michelin star barbecue on Tuesday. All right. I'll save up for that then. I'll save up for that then. Good. All right. Well, we're going to wrap. Sure. Appreciate everybody being with us today. You know, Tom, this was one of the great things that I love about this is the dialogue

[01:20:37] [SPEAKER_01] without us that sees people chatting amongst themselves in the chat. They're not listening to us. They're like, God, I need to listen to that. I got something better to talk about here. For those of you that were on LinkedIn today that had some hiccups with the transmission that was coming through there, evidently it was just fine throughout the day in YouTube. So it should be great for the recorded podcast as that hits things this afternoon. So appreciate that.

[01:21:03] [SPEAKER_01] We've got our team that will take over on this shortly, John and his group, and get this out there on Apple, Spotify, Odyssey, all of those. I think we're on 26 different podcast platforms around the world now. It's something, I think that's the number, sub 30. Plenty of them out there. So again, I'm Kevin Brown. I'm here with Tom Burton. We're here every week. We're very appreciative of you joining us. Today is number 209.

[01:21:30] [SPEAKER_01] So after our next show, it will be 90 shows till the 300th. That's how I have to look at it, right? And we'll just continue to do this. If you have suggestions, ideas, guests that we might want to have, please let us know. Reach out to us anytime. Thankful again for the sponsor that we have for our show, the company that Tom and I both work for, Lead Smart Technologies. If your company is looking to grow organically, as we've been talking about today, understand

[01:21:57] [SPEAKER_01] your customers better, your teams better, your overall business better, understand how to forecast better, and drive growth throughout your organization by using technology. We would love to share more with you. We'll look forward to that type of conversation. But until we meet again here on the show, which will be two weeks from today, as Tom mentioned earlier, I think we'll be on the way to the airport, coming home from Austin, Texas, both of us together.

[01:22:24] [SPEAKER_01] One of the rare times that we travel together, probably not more than three, four times a year. So I look forward to spending some time with you. And we'll wish everybody a wonderful weekend, a wonderful day ahead. Be kind, be safe, do good things.

[01:22:44] [SPEAKER_00] We hope you enjoyed today's episode and our guests. Each week, we try our best to dig into the topics that are impacting your business. So please reach out to us and let us know how you think we can make the show better or topics you'd like for us to tackle or talk about more often, and even guests you'd like to see join us. We're looking forward to bringing you next week's session and hope that until then, you stay safe, stay focused and do great things.

[01:23:10] [SPEAKER_00] If you haven't already, please subscribe to the podcast and leave a review to help others in wholesale distribution get access to the conversation. And finally, please check out our sponsor Lead Smart Technologies and their manufacturing and wholesale distribution industry CRM, customer intelligence and channel collaboration platform. That's Lead Smart Technologies at leadsmarttech.com. Thank you.