AI Spend, Tariff Tensions, and the Data Center Economy

[00:00:04] Welcome to Around the Horn in Wholesale Distribution 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] 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. I'm dancing. Just don't hurt yourself. Drumming, dancing, piano, I got it all. Me and Vince Guaraldi. All right. Very good. What's happening? Good morning. You having a good morning so far?

[00:00:50] Other than some technical problems here, yes. But I apologize in advance if I start looking, moving weird places or whatever because my camera is not working properly and all of a sudden the last minute decided to break. That's right. You have a face for radio. Isn't that the old thing? That's right. So you broke all of your equipment when you came down here to our office for the 200th Celebration Show, huh? Things have never worked the same since then.

[00:01:20] Okay. Maybe it's giving me an omen. It just came to my mind, not that anybody cares about this, but you do need a new camera. And I've got an Amazon order going in for some other office stuff so I can just get you a camera. Okay. Let's have it arrive tomorrow. Okay. Just make sure it ships here and out there. No, that's how we're going to get you to come into the office. Okay. Okay. Yep.

[00:01:45] Your Chipotle gift card and your new camera will be at your desk on the other side of the wall from me. So 204. Crazy, huh? Yeah. Wow. Time flies. People still showing up. It's wild. That's right. Yeah. So before we kind of get into the news and our normal discussions, I'm going to really quickly hit who we are, but, and why we're here. But I want to talk about maybe something a little more important before we dive into all

[00:02:15] of that. But I'm Kevin Brown's Tom Burton. We get together every Friday morning. Well, someone's in the hospital on an airplane or on a planned vacation like Tom was last Friday. We decided that Tom took a few days off and well-deserved, well-needed. But we do this every week around the Hornet Wholesale distribution and manufacturing. We get together and we talk about what's going on in the world, what's going on in the U.S.,

[00:02:41] North America with the economy, supply chain, manufacturing, distribution, AI, technology, robotics, what's going on out there related to that and how it, those things plus the mergers and acquisitions world and people and leadership topics and how those things impact wholesale distributors and manufacturers who we work with every day. We published that newsletter that we're going to be talking about here shortly. Again, that's the same title as our show Around the Horn in Wholesale Distribution and manufacturing.

[00:03:09] That goes out to 12,000, 13,000 people every week in many different countries. And if you're listening on the recorded podcast, which the vast majority of our audiences these days, you won't be seeing that newsletter. So if you'd like to get that newsletter, please just send us a note and we'd be happy to do that. You can do that simply by going to the website for the podcast, www.aroundthehornpod.com. See past episodes. You can subscribe to the show there as well as subscribe to the newsletter.

[00:03:38] You can find the newsletter on LinkedIn as well. Just look up around the Hornet Wholesale distribution and a podcast and newsletter and you'll see that there. Or certainly send us a note. You can reach us at hello at leadsmarttech.com. Although all that's going to be changing in the next couple of weeks. We'll have a new email address for that shortly. But for right now, send that to hello at leadsmarttech.com and we'll get you added to that list. We would love to do that so you'll know what we're talking about as we get into the news.

[00:04:06] We couldn't do this show without the sponsorship of the company that Tom and I work for, leadsmart Technologies. Leadsmart has developed what is the wholesale distribution and manufacturing world's first enterprise growth platform. What's an enterprise growth platform? Well, wholesale distributors are all looking to grow and expand and understand their businesses and understand their customers better and understand their teams. But they're doing that with what we like to refer to as siloed data.

[00:04:32] So we've got lots of disparate systems running through across our businesses. We might have our ERP system, marketing automation, e-commerce, other structured, unstructured data and other parts of our business. And at Leadsmart with our enterprise growth platform, we bring all of that data together into one place by connecting that data into our unified platform, which allows us to then get a full view of the business, your customers, your teams and the overall business and help make decisions.

[00:05:02] We have tools that identify risks and opportunities and uncover revenue sources that probably have been untapped so far in the business. And we do that through four different categories of products. We have our sales compass tools. We have our smart CRM solution. We have some marketing IQ solutions that help build better audiences and understand customers better through that data, as well as some wonderful quoting tools that go with that and soon to be some e-commerce tools as well.

[00:05:27] So if you're in the wholesale distribution or manufacturing space, you're looking to understand your customer better, understand your teams better, coach, guide and direct your teams better and understand your overall business better to grow and help all involved. We would love to support you in that discussion so you can reach out to that same hello at leadsmarttech.com address as well. But Tom, that's the kind of behind the scenes stuff. But I wanted to dive in. We do this, I think, every year a little bit.

[00:05:56] But I was thinking about a little more this morning, not emotionally per se, but just thinking back to some memories. But today's September 11th. 25 years ago this morning, the world had a huge change to it. I saw a post by our friend and colleague that joins us regularly for the show, Dirk Beveridge, this morning about his experience of flying from Milan, Italy, back to the U.S.

[00:06:22] Four hours into his flight, it got turned around and he didn't know for four hours what was going on. They just had a brief announcement about there had been terrorist activity in the northeast of the U.S. And I think that's a great question. Everybody, you know, that has a memory, right, other than people that are, say, under 30, probably have a memory of where they were and what was going on. But I don't know anybody that has a memory like you have.

[00:06:48] You want to tell us a little bit about your story and I'll throw a little color into that as we go? Yeah, I'll try and be quick. Yeah, it is amazing that it's 25 years ago. I was... It's worth taking a few minutes on this. Okay, okay. Well, so we, at the time, I had a consulting company.

[00:07:10] We worked with a lot of Fortune 500 companies at the time and we had arrived in New York on September 9th, which was Sunday, to start a new project at Bank of New York. Bank of New York, very large bank in New York City, one of the... I think it is the oldest bank, one of the oldest banks in the country. And their headquarters is next door to the World Trade Center was then. They were to the north.

[00:07:37] So they were right to the north of the North Tower, probably, I don't know, a couple hundred yards, I would guess, from their headquarters to the North Tower there. And we were staying, myself and one of my colleagues from my company at that time, we're staying and we checked in and we were staying at the World Trade Center. I'm sorry, the Marriott at the World Trade Center.

[00:08:00] So, if you remember back in the day, right, their Marriott was between the two buildings there, the two north and south buildings that were there. So, we checked in on the 9th. We went over to Bank of New York and started, got everything set up on the 10th. We had a... they had set us up in an interior office. We didn't have any windows, but we had a nice big office. We were eventually going to have eight or 10 people there working on the project.

[00:08:31] And so, I remember we went to Staples and bought all this like a, you know, office equipment and a printer and a whiteboard and all kinds of stuff. And so, we had our office set up really well on the... on that Monday.

[00:08:47] And Steve, who I was with, we... when we came back Monday night, we talked about before we went up to our room, we said, hey, let's get up early and go have breakfast on the top floor of the north tower. Which is the 101st floor or whatever of the north tower. I mean, we knew it was a nice day. We had heard it was going to be a nice day. And we thought, hey, why don't we go have breakfast up there before we went over to the Bank of New York the next day on Tuesday, the 11th.

[00:09:17] So, anyway, we get up on Tuesday, the 11th. Beautiful day. I just... I still, to this day, remember looking out my window and just noticing how clear everything was. People were already starting to come into work or turn to the thing there. And I don't believe we had text messages then. I don't... I don't think so. So, I think I called Steve and we said, hey, do we want to go up to breakfast? This is probably, I don't know, 7 in the morning, I guess, something like that. And Steve's on that and we're talking about it.

[00:09:47] It's like, you know, we got some meetings this morning. That why don't we get over to the office early, get prepped for those meetings, and then we'll go to happy hour tonight up at the... Or have a drink tonight up on the 100th floor. Probably our best decision, my best decision of my life at that point to move over there and do that. So, we did that. We... I think we got over there about 7.20 if I remember.

[00:10:15] And we were just starting to set up in our office and getting things set up. And then around 7.45 a.m., that was when the first plane flew literally right over the top of our building and into the north top. So, it came from that thing. We didn't... again, we weren't by a window. So, all we heard was the big explosion. And we didn't know what had happened at that point, but that was kind of how everything started.

[00:10:43] I'll stop there if you want to jump in on anything. No, I just... I mean, there's a lot more, but... No, I want you to talk about it a little bit more. You know, I had thought there was something about Steve having said he wanted to be able to get out of town on Thursday of that week or something like that, too. Wasn't there something about getting more done or something, too, to go with that? No, I mean, that's why we didn't go to breakfast, right? We didn't...

[00:11:13] We wanted to get over and get ourselves, get more done, prepared. We had gotten there for the first, but our first really meetings with the Bank of New York team was on that Tuesday morning or was scheduled for that Tuesday morning. So, we were like, hey, let's get over there. Let's get prepared. Let's, you know, get all these things together. I just saw Bob said he had his wife at dinner up there two weeks before.

[00:11:36] Yeah, it's obviously a beautiful spot or was a beautiful spot and would have been a beautiful day to go up there, but would not have been the right day to go up there. So, you know, our work ethics and everything literally saved our life. I think it was your desire to go to happy hour rather than breakfast. I like happy hour better than breakfast anyways. Yeah, agreed.

[00:11:59] Anyways, I'll just throw a little into this as a lot of people here know, and certainly we have quite a few of our customers from Lead Smart that listen to the show regularly know as well. We've been friends since kindergarten, which is way too long ago to think about. There was in fact color film back then, but not too recent. Not often. Yeah.

[00:12:24] And anyways, the so we've had a lifelong friendship and we've always been in touch some level from when we were in graduated from high school. I was relegated to community college for two years to get my grades up to get to university. You went off to University of Santa Barbara. We still saw each other regularly because there's a great surf break right outside your dorm. And some other another good buddy of ours was up there with you. And so we've always been in touch through all of that.

[00:12:54] And and I remember we were kind of talking about maybe a project together when this was all going on. And I was running a manufacturer's rep agency. So I my team covered California, Arizona, Nevada and Hawaii and the industrial industrial safety markets. And that was the day where we did so much with faxes. Right. So we had two fax machines at our office in Irvine. And one of them was that we could get incoming faxes on throughout the day.

[00:13:22] The other one was just 24 seven pushing out faxes to our customers and the distributors we work with about this special or that promotion or whatever it was. And I also ran those at home at night from my laptop. And I was still single then and living down in Newport Beach, just a couple of houses off the beach. And so I would every night I would have a 20 foot phone cord plugged into my, you know, monster sized laptop that would run this faxing software.

[00:13:51] So we would get more out each night. And my first you were spamming your spamming. I was early days of spamming. No, my customers loved hearing from us. I'm sure. Because those all those things had the specials and the promotions and the way they could make more money. But, but I first thing in the morning get up and look at the error messages on that. But I'll never forget. I woke up that morning. It was, I don't know what was 630, something like that.

[00:14:19] And I went out, flipped the TV on, saw what was going on on the news, kind of flipped out for a minute. And, um, I had the leather day planner, right? The portfolio day planner with our Franklin planner or whatever it was. And right there, if you remember those old, while you are out notes, right? The little, your assistant or receptionist or secretary would hand you a stack of those when you got back from lunch or came in in the morning.

[00:14:48] And, and I had one of those and it said, call Tom Burton, world trade center, Marriott room, blah, blah, blah. And the phone number to the hotel. And I looked down at that. I looked back at the TV. He's dead. He's gotta be dead. And then what went through my head was, do I call Lauren, your wife? Do I not call Lauren, your wife?

[00:15:18] Do I wait? And, uh, I decided to wait for a bit. I waited for probably close to an hour. I don't know. However long it was before you, how long was it before you got ahold of Lauren? Um, I got, I was able to get ahold of her early, um, right after the first, first, um, plane hit. And, but then we got cut off. So she knew I was quote unquote, okay at that point.

[00:15:43] But then, yeah, we were never, it was six or eight hours before we were connected again. So I, I called her right after she had just talked to you and I'm glad I waited that window of time because she had just talked to you and she was relieved at least that you were alive. We had a nice short little chat and I was able to get ahold of her, but wow, what a day. And so, you know, that my experience with that is just tiny minuscule fraction of what you went through.

[00:16:11] Tom, before we dive into the rest of the show, just kind of tell us about the next few days. Cause it's pretty, pretty astounding what went on and how long did it take you to get back? And I know there were some good things that came out of it as well. Yeah. I mean, we, you know, long story short, right. We were still in the bank of New York building. We didn't really know what happened. Everyone thought it was a bomb at first, but then we did see the second plane come around and hit from a window up there.

[00:16:39] They were telling us not to go outside, do not leave, do not evacuate. It was dangerous stuff falling. And yes, that was true. But then the first tower collapsed. Um, I'll tell this because this was my second, uh, nine live story in this, in this piece. And when the first tower, the first tower, remember the collapse was the South tower.

[00:17:00] So all this debris from that came like a, literally like a tidal wave and hit the side of the bank of New York building where we were all standing and watching what was going on. And fortunately, because it was a South tower, it didn't, the building shook and, you know, it was scary, but there was no damage to the building. No windows broken, nothing like that. But at that point they said we needed to evacuate, which I guess made sense. Mm-hmm .

[00:17:27] Um, but when the North tower collapsed later on, we were all out of the building at that point where we were standing, it literally ripped off the entire side of the building there. So that like a little can opener, like a, you know, if you had a can of sardines or something that kind of like, it just literally took the side of the building off where we were there. Um, just from stuff falling.

[00:17:49] So we were very fortunate again, that the North tower collapse, at least from our perspective, collapse second, because by then we were already out of the building. That was, that was there. Um, yeah, whole different story about, you know, what happened next. We, um, obviously we just had the clothes on our back and the, and I remember just having my backpack with my computer and stuff that we had taken from the pieces there.

[00:18:17] But the, the one thing I remember, and, and I think this is, you know, something to be thinking about even on the 25th, you know, anniversary here. You think of New York, right? And you think of everybody, you know, doing their own thing, right? Everybody's off to their thing and it's all about me and where I get and, you know, um, not people, not necessarily helpful and friendly and so forth. Yeah.

[00:18:42] It was amazing to watch the transformation of the city and the people. I remember walking probably cause we ended up walking from world trade center all the way up to 96, which is about six mile walk, give or take. Um, and I remember walking probably a mile or so with a, uh, Puerto Rican construction worker and a wall street guy. And we were all the best of friends, right?

[00:19:11] We didn't care who you were, what your skin color was, who you worked with, any of those things. Everybody was everybody's friend. And all they wanted to do was for the most part, figure out how to help you. And it's, and it was everybody, right? It was like the, the, as we were walking up the street, you know, all the little stores and, you know, they have a New York, the guys were out there with bottles of water. Bodegas. Yeah. Everyone's like handing out bottles of water. Do you need a bottle of water?

[00:19:38] Do you need, you know, whatever it is, it was free. It was like, there was no, um, getting on a bus. I remember we had to get on a bus when we got up to 96 and the bus would just pack with people. And they're like, no, no, move over or get every, just a completely different. Um, and I, and I think the city stayed that way, you know, for a little bit, maybe not for too long, but for a little bit, but it was certainly something to admire and see, especially in a city that's maybe known for the opposite of that.

[00:20:08] Um, and I would just, you know, ultimately we ended up getting out of the city that night. We had some, I had some friends, um, that we ended up, um, able to stay with up in the Maranac, which is outside of Manhattan. And, uh, Steve and I went, we were able to get on a train with them and get out of the city. And they had a one bedroom apartment. So the first night we just slept on the floor and whatever, it was fine.

[00:20:33] Well, the next day, the landlord found out that we were there and offered to give us a free apartment while we were in town as long as we needed it. Um, I mean, it's just like, you know, you don't see this kind of stuff, you know, every day. And, um, ultimately end up driving back cross country. I'll save that story for, uh, for another day. But, uh, yeah, it's, um, it doesn't seem like 25 years ago. It doesn't seem like 25 years ago.

[00:21:02] And, you know, I think you learn a lot from it. I know I learned, I know Steve and I learned a lot from it. You just learned to appreciate things a little bit more, appreciate people, appreciate situations. And I think we were, had a little bit of luck and a little bit of some good decisions. So we'll take it. Yeah. Hey, before we jump and kind of move into things, I always think it's worth talking about this, but.

[00:21:26] Unfortunately, I think there's still a huge risk in this world of, of those types of things happening again. I don't know that we're really that far removed from those things that could happen again. It seems to like, you know, the world is kind of back to how we were before all of that. Um, but Tom and in, in, uh, I don't know the first half hour, what was erasing through your mind?

[00:21:56] And then when did you through all of that kind of finally, I've never asked you this before, actually, all the times we've talked about this. Um, and I, I wish, I know you have somewhere in your desk is that you're, you still have your key from your, your hotel room. And I wish I still had the note that said, call Tom Burton. Uh, that, that'd be pretty cool. But, um, first, first hour, what was racing through your head?

[00:22:22] And then when did you kind of start to get your head around what was really going on? And then what, how was this going to impact you? Were you just immediately like run for my life? Of course. But then when did the impact of what had really happened start to hit you? Well, you know, essentially we didn't know a lot for the first hour.

[00:22:44] So we, I don't remember exactly what the timing was between the two planes, but when the first one hit, right, we didn't know that it was a plane. We had heard something, we had heard like a noise and, and then you just saw the hole in the side of the building. Um, and everything like that, but it, it looks a bit surreal, right? And then everybody, again, everybody's speculation was, was it a bomb? Because I think, was it 93 or whatever? They had a bombing at the World Trade Center. So that was the, the speculation.

[00:23:14] That's what Bob was referencing there in his comment, having been there just right before that. Yeah. Yeah. That's right. Okay. Um, and so the, you know, we didn't really know until this, we saw the second plane yet. And that was very surreal, right? It's like, it was literally, in my opinion, it was kind of like watching a movie because we're seeing how looking at the thing and we're watching this plane come around. And then all of a sudden go into the, to the other tower.

[00:23:43] At that point, then we obviously knew there was more going on here. So you saw the second plane hit? Yes. It came around the other side. We could see it come around. Okay. And then, but it hit the backside. So it didn't, it hit the different direction, but we could see the thing coming around. You saw a plane and you saw the results. Yeah. Yeah. Yeah. Yeah. Yeah. Um, see, I'm glad we're talking about this. I don't, we've talked about this a hundred times. Yeah. And I don't remember you saying that.

[00:24:10] Um, so I think that point we obviously knew, but then again, nobody expected a tower to collapse. Right. I mean, there was nothing in anybody's mind that was something like this was going to collapse. And I think that when that first tower collapsed and yeah, when you're, you're saying they're looking at something and then all of a sudden it's just not there anymore. And it's 101 story building. Right. It's there. And all the things was there.

[00:24:39] I think at that point, obviously we knew we weren't going back to our hotel. Um, we weren't going anywhere and we, you know, both came to the conclusion. We weren't likely coming back to this building where we were working for some period of time. So we kind of knew at that point, Hey, we were on our, we were on our own. And fortunately we had friends in the city and stuff like that. So we figured we, but again, remember there were the cell sounds were down for hours. There was no text messages.

[00:25:07] I still to this day don't quite figure out how we all ended up meeting together at the same place, but we somehow figured it out and got to the same place to meet up. So, um, yeah, it was, it, it, it was an evolutionary, I guess, process of things versus I think it might've been different watching on TV where maybe you even knew a little bit more of what was going on. Listening to Matt, I think it was Matt Lauer on the today show, you know, then Wolf Blitzer.

[00:25:36] So, um, quite, quite an experience. Okay. So this winding down, you got back what a week, a little over a week later. Okay. A little over a week later. So we were going to fly out. Was this Tuesday? I think we had, we had scheduled to fly out again on Thursday and we were about ready to go to the airport on Thursday. And then there was another terrorist threat or something that came through and they shut all the airports again.

[00:26:05] I don't know if it was Thursday or Friday or whatever, but the rare air traffic was down for a day or two, I think. So no air traffic didn't start again. Tell I think the Sunday after. Well, we were the first, yeah, I don't know the first day that it was whatever that was, but it was opened up again. We were going to get on a flight and then there was a, uh, and, and Steve and I just remember us talking about going, you know, everybody's freaked out. Right.

[00:26:32] This, this is, you know, when mistakes are made, people forget to put fuel in the plane or whatever it is. I was like, why don't we just figure out how to drive? And we were able to find a rental car, which was took an act of God as well. Um, and then we just, uh, decided to pilgrimage across the country, which in and of itself is really quite amazing at the time.

[00:26:56] Um, well, now you got to drive across the whole country and see the reaction through all the different parts of the country, what was going on. Did you get any free meals along the way because you're being a survivor? We did. Well, we got some free meals. My, uh, my cousin and her family lived in Iowa. We stopped there and they just created this huge major barbecue for us and invited people over.

[00:27:20] And, you know, we had, we would talk to people in restaurants and hotels and they'd all want to, you know, how can I help you? And, and, you know, it's like Dan just said he was in Ireland. Dan judge said he was in Ireland. And when they were stranded there and the people there were super helpful in trying to. And so I think everybody, regardless of whether you're in New York or wherever you were, it was, hey, how do we help each other?

[00:27:45] And all the divisive, divisive, divisive, easy for me to say, but all the division and divisiveness has just kind of gone away. And it was, you know, we were a country and well, I wish we could get a little dose of that back. Without having, without having to have something like that happen. With, really, it was a world, right? Because to Dan's point, right, all the Irish people there. It was interesting. Dan was playing golf.

[00:28:10] I was scheduled to be up in San Francisco Thursday through Sunday for a big international yacht race. It became a fraction of what it was supposed to be because there was teams coming in from all over the world. And, you know, the, all of the professional racers that were coming in from different parts of the world, Australia, New Zealand, the UK, Germany, couldn't get here, right? So they narrowed it all down.

[00:28:37] We actually only did one day of racing on Saturday, I think it was. But it was really cool. We had, I don't know, 100 boats instead of 250 or whatever it would have been racing in San Francisco Bay. And before we did, started all the racing, they'd set it all up. All the boat owners had agreed. I remember then the only way to get there was to drive. So I had rented a car and a couple of guys I raced with, we were all on different racing teams.

[00:29:04] But we drove up together and we're like, we'll have the car. If the airport's open, we'll fly home. If they don't, we'll drive. But what they agreed to do is that all of the boats, we sailed up to the Golden Gate Bridge and then turned around and then came back down with our spinnakers up down to over in front of St. Francis Yacht Club. It's right on the water with a view of both the Bay Bridge and the Golden Gate Bridge.

[00:29:33] And they had a little spot that we all had on our GPS. And we hit that spot. Every boat dropped big bouquets of flowers and then did a turnaround to go back to the starting area. We did a race. And there was this like sea of roses and all these different flowers. I remember I had a car, so I went and bought like the $400 worth of flowers that we dropped off the boat.

[00:29:59] But the only reason really I share that story is because I think it was Saturday when we did that race. And that's when the airports were opening up. So I flew back with one of the guys I drove up with. We dropped the rental car off at the airport and flew back. And there was six people on like an MD-80, right? And then going through security, we got all of our gear, sailing gear, which is fine, except for I told my buddy Dave Oborn, I said, he's from New Zealand actually originally.

[00:30:29] And I said, hey, we're not even putting our bags through before we take the canisters for our life vests out, the CO2 cartridges. I had those out and I literally handed them to the security guy. I was like, keep these if you want to. Because you know how sketchy those guys were, right? And then we get on the flight and Dave's telling me on the flight as we're boarding, he's like, why didn't you upgrade us? You have all these points. Why didn't you upgrade us?

[00:30:57] And I looked at him, I'm like, you're an idiot. It's a 45-minute flight and there's eight people on the plane. And the flight attendant looks at me and she goes, sit wherever you want. And there will be drinks. So it was quite an experience to be on one of the, and it was like, probably, I don't, it was one of the, I'll say one of the first probably 50 flights out of SFO for that time. So anyways, you know, Bob makes a comment. It's a shame that it takes an event like that to bring out the best in people.

[00:31:26] So anyways, as I always try and end this show, be kind, be safe and do good things is what we would love to see more of out there. And hopefully there's a time that will come for that. But I have a confidence in it. So anyways. It is amazing what can occur, right? When people come together and want to help. And so it's just, it's quite remarkable what can happen in the other direction. And we got a little witness of that. Inherently people are good.

[00:32:00] So let's talk about the news. Yeah. Yeah. Anything happening? I don't know. Yeah. It seems now we get to go back to all this crap about the Fed and interest rate hikes and all that kind of stuff. So. We got durable, durable goods rising, rose in July. We got hiring beat the forecasts. But the Feds, you know, I just, I. One day when I only work part time, I don't think I'll ever stop working.

[00:32:29] I want to really become a student of economic history. Because in the last four years, I've talked more about the economy and interest rates and tariffs and things that I ever have in my life put together probably. But I just look at this. We can't see any of these data sources that are continuously supporting each other, right?

[00:32:58] We've got durable goods rises. We've got trade deficit though widens in July. We've got hiring beating forecasts. And we've got all of these push-pull things going on without any really specific set of guidance that would say what should be done. And I think it's, it puts the Fed in a really bad place.

[00:33:23] And then obviously, you know, my thoughts on maybe we should be looking at some other data sets and maybe 2% isn't the right number anymore. Stock markets not had a great week. But in general, we've had good markets for the last few years while we've been going through these struggles. But now we see, we've got an article in it from CNBC that like the Fed interest rate hike next week is much higher than before. What's, do you have Polymarket handy? Yeah, I do.

[00:33:50] So Polymarket is now saying that 81% chance of an increase, 20% no change, 1%. I don't know how it all adds up. But nonetheless, 1% of a 50 basis point increase in their minds is kind of a foregone conclusion. They're going to be an interest rate hike next week.

[00:34:12] Look, I've been saying, and yes, first of all, I agree with you, is there is a whole bunch of just disparate, all kinds of, you know, I guess dynamics, if you want to call it that. Whether it's the tariffs or this or that, I think the Fed is, with the tools they have and the way they operate, they're kind of just a lame duck. They're not a hell of a lot they can do one way or the other.

[00:34:37] A lot of precedence is put on them for a group that can really do very little, right, to change anything. But, you know, I did a little bit of homework. I've been saying all the way along that I think a rate hike is not a good idea at this point. The main reason being is that most of the cost increases or the expense increases now are related to fuel, again, related to the Iran's conflict, which is what now?

[00:35:06] It's the eighth month or seventh month. And it continues to be the catalyst to drive fuel costs on it. So if you look at the job, you know, report good, but not like, oh my God, over the top. You had revisions that even in June and July, it was very average at best. So I don't know. To me, there's, I understand that they may feel like they need to throw some fuel, or I'm sorry, some water on the fire. Sure. Just to do something.

[00:35:35] But I don't think it really does anything. I don't think it's going to do anything to really change the situation. It's not going to change the Iran situation any. It's not going to change the straight-up Ramos situation. It's not going to lower the cost of fuel. And there's already evidence that, you know, some consumer on the consumer side were already starting to slow down a little bit on some of the spending, especially as it relates to energy costs and so forth.

[00:36:03] So, look, it doesn't mean they're not going to do it. I think it's a high probability that it will double happen. I just don't, I still don't think it's a good idea. And, you know, based around some of the analysis I did, there's a lot of economists that tend to agree with that approach that it doesn't, it just doesn't do a lot of good. And all it does is potentially create a situation where you could end up with a recession or at least moving in that direction. Mm-hmm. Great.

[00:36:35] Well, CPI came out this morning, right? Right in line. More or less in line, yeah. Yeah, four tenths in August. So, 12th increase to 3.4%. I just, I mean, I think it's a foregone conclusion that we're going to get this hike, right? It's going to happen.

[00:36:59] But the interesting thing to me is, and I agree with you, and I think you should share a little bit more of some of the research that you did with this. But I just feel like a rate increase would have more risk to it likely than a rate decrease to see if you could get some stimulus into other areas.

[00:37:28] And the risk of a, I don't know, maybe I don't understand this well enough from an economics here, but I just feel like the raise could cause all kinds of headaches, right? And it could do a lot to loans that are out there. Interest rates are going to go up on credit cards. All of that has shown, I mean, interest rates on credit cards are ridiculously high to start with. It has not stopped people from spending.

[00:37:58] So, I think the risk of that going higher could put defaults in place maybe quicker. That's not going to help much. Leaving things alone seems like maybe the best thing to do. But a reduction should certainly, if there was just a slight reduction, would put a lot of probably energy and momentum into things to let at least businesses go start getting more stuff done. Yeah, I agree.

[00:38:27] Because the, well, an increase or a decrease is not going to change the price of fuel, right? No. No. It's not going to have really any effect on the energy costs, which are predominantly driving the cost increases. If you remove, in fact, if you look kind of behind the curtain and you look at what they call the core inflation, which removes food and energy costs. Right. I think we're at 2.4%. We're very close to the 2% that are there.

[00:38:54] So, if you look at, if you, again, you strip away the fuel and the energy costs and so forth. Now, the argument is in favor of it as well, but we can't let this get out of hand. Everybody else is going to start raising their prices. I have noticed prices actually increasing at the grocery store over the last three weeks or so. Again, I don't know the correlation of that, but things definitely seem to be going up now.

[00:39:21] Maybe that's because the transportation costs are higher and so forth that are there. You know, I just, you know, came back from a trip up to Lake Tahoe and we were driving on the 5 and, you know, a big truck route, right, coming back. And price of diesel, I think, on average was close to $8 a gallon in California. So, yeah, that's expensive.

[00:39:47] So, you know, so maybe that, but again, I don't know that the rate or rate hike is going to change any of that, right? Because, again, you have the cost and you have the cost of the transportation and so forth. Like I said, look, I'm not going to argue with Polymarket. My guess is they'll probably do it just because they need to show that they're trying to throw some water on the fire. And almost like they feel like they're relevant. Yeah, they're relevant, right.

[00:40:16] I'm not going to just let this fire burn and be, you know, like, hey, at least we threw a bucket of water on it, right? That kind of thing. But, yeah, it doesn't mean it's the right thing to do. But who knows? We might be surprised. And they hold it steady. You know, maybe there's a factor we're not thinking about here. But I think that and we have a very bright audience that's listening in and commenting here today. So I'm sure if we were missing something, they would help us.

[00:40:45] I think there could be even some of the pressure that, you know, European Central Bank raised their raised rates earlier this week there for the second raise of the year. But their focus of it and all the discussion is on fuel, right, and the impact of the conflict in the Middle East.

[00:41:03] So I think if we get that settled, I think the president said yesterday that the war should be over right at the midterms. It's like, that's why. I'm trying to remember exactly what he said, but it was like, I don't get the logic on that. I don't know what's going to happen with that.

[00:41:28] But, oh, because they're, because they can't, he said because Iran can't continue like this. But he's been saying that for quite some time. So. I think we're on version six or seven of the war now in terms of starts and stops. Yeah. No, the issue is getting fuel out of there. And it's impacting China significantly now, but it's a big impact on Europe as well.

[00:41:54] So let's jump off of that and let's just talk a little bit about tariffs. You know, the Canadian thing is now this retaliatory thing is pretty significant. I comment on this. We were on a call a couple of weeks ago with a Canadian customer of ours, the Leedsports, and some very good friends there that were hemming and hawing if they were coming to the U.S. for an event coming up later this year.

[00:42:22] And it's a lot of tension there, right? And a lot of back and forth and a lot of pushing. And you have to figure that it's, I guess, let me throw this out to you. Certainly throw it out to the audience. I've talked to this year, I've talked to people who are friends and multiple times customers in Canada who are business people that I respect,

[00:42:48] who are very, very frustrated with the U.S. and the tariffs and so forth that are going on. Now, Canada has announced the article that we quoted here talks about a counter tariffs against the U.S., right? Basically saying we're going to match everything. Do you know anybody in the U.S. that even cares about that? Or have you had anybody talking about it or being? I have not. No, I have not.

[00:43:18] I have not heard anything. That doesn't mean I'm not in the right meetings, right, where they're taking place. But I have not heard anything in particular where there has been a tremendous amount of concern about that. So I talk to every day, either potential users of our technology or our current customers. You talk every day at some level to our existing customers and then our team in that setting.

[00:43:46] So I'll lump these people together because the people that I've talked to from Canada with this frustration are people in wholesale distribution and or our customers who have a high level of frustration with the U.S. Like between the two of us, we talk every day to many, many wholesale distributors or manufacturers.

[00:44:08] And I've just not heard anybody make any comment or any impact in my travels or in my phone conversations about people here feeling a frustration of Canada having that response. And I guess it just suggests that maybe it's the trade imbalance that was already there and the cost of the Canadian dollar versus the U.S. dollar. It has such a significant impact.

[00:44:35] But I don't know what and I'm not not throwing rocks at anybody on any on either side of this. It's just a unique thing to me, I guess, is really what I'm commenting about is it's a new thing is there is this frustration with people that I know and care about in Canada with the U.S. And I'm just not hearing anybody here in the U.S.

[00:44:57] Maybe it's our prices are already so high and continuing to rise that we're not noticing that there's something from Canada that impacts us more. But look at the Canadian dollar, right? The Canadian dollar is weaker compared to the U.S. dollar. So it's already expensive. Right. Right. Now you add in the tariff piece, right? It becomes more than just expensive. It becomes a bit almost of a show style.

[00:45:23] So it's it's yes, I think that's part of the reason you have to combine those two together, the strength of dollar and the tariffs and obviously just smaller. Right. Overall. So I understand it. I don't. Again, this comes back to the point is you would think this would be relatively easy to solve. No, it doesn't seem to be. No. And but you would think it should be it shouldn't be all that hard to solve between two allies.

[00:45:54] But this has been going on for months or maybe more than months, you know, just since the whole tariff thing started. Yeah. Yeah. So and I think that we have a situation right now where we don't necessarily have too many allies. So, yeah. Moving a little bit further, though, Tom, in the discussion of tariffs is there's got an article in here, too, that I think were fairly relevant. It's finally happened.

[00:46:23] I've brought up over and over again in the last year about all of this, about what happens to me at Costco. Well, finally, some people have sued Costco and what Costco is saying they're going to do. And it's going to be interesting to watch other large retailers with this. Costco is saying we're just going to be lowering prices across the board. And that's all I don't think it's across the board. I think it's for some products or some products. You're correct. You're correct. Yeah. But we're lowering prices.

[00:46:51] And so they're trying to counter this lawsuit by saying, well, we're just going to lower prices. But I think that's going to be really interesting to see how, and this isn't just Costco, but other retailers look at that and say, well, okay, how long does that last? What percentage of it is there with that? And I haven't been to Costco in close to a month, I think. So I was realizing the other day I need to get there. So it'll be interesting to do some pricing comparisons on that.

[00:47:21] But then we talk about this is what's impacting consumer. But then if you think about it, we posted an article within the newsletter. And again, as a reminder for those of you that are listening on the recorded podcast, we are discussing the newsletter that we publish. Unless you can't see this, we have it up on the screen right now. But that's called Around the Horn in Wholesale Distribution and Manufacturing. That goes out every week to thousands and thousands of people in many, many countries. And we'd love to get that to you.

[00:47:50] Just send us a note at hello at leadsmarttech.com and we'll get that out to you as well. But a follow-up article to that in one of our sections in the newsletter is called A Second Look. And there's an article there about William Sonoma. And what they're doing is they're spreading the tariff refunds to some vendors but to employees. And what they're doing is they're funneling $10 million of that towards the retirement accounts of workers who helped it navigate the tariffs.

[00:48:18] And then it reimbursed some vendors for discounts, which I'm not sure I understand that fully. But I thought it was kind of interesting. They went back and said, hey, this group of people that had to work overtime and do more than they would normally have to do and really help navigate is the term they used for that. They're funding $10 million in the retirement accounts of those people that really help with it. I like seeing that. Well, I think it boils down to what we were talking about.

[00:48:46] Look, there is no fair way that this is all going to end up getting or is being handled. Right. So if you think it's all going to be fair and waterfall out to all the right people at the right percentages and all that stuff, that's never going to happen. We've said that. So the way that you need to handle it, I think Williams-Sonoma is probably doing a better than average job, is how do you, you know, what's the PR? What's your position on it? Are you transparent about it?

[00:49:13] Are you, you know, the Costco thing to me is a little cheesy. And this is what the lawsuit is saying is that, well, it's nice that you're lowering costs now because you don't have those tariffs necessarily. But what about the money you collected from us during the tariffs that you're getting refunded? Right. I think it would be really easy for some, for Costco to, when you get your rebate check, I don't know, take a percentage, a small percentage. It might only be 50 cents. Right. But it shows the effort.

[00:49:42] It shows effort that they're trying to share that. And I think the, you know, what Williams-Sonoma is doing is a good PR exercise for the company. And so I think the best that you can hope to get out of this is good publicity and good PR versus expecting something to be perfectly fair and allocated because that's never going to happen. Right. Yep. Yep. Yep. So it's interesting.

[00:50:08] I just, you know, we were talking about the Canadian-U.S. thing, and I'll go back to that for a minute because there was a comment that was made here about any move. Bob made this comment here about any move off the old status quo trade imbalance was bound to generate strong emotional reactions. The imbalance was already factored into Canada's forecasting. This tosses a real monkey wrench into their economy, which it does. I asked Gemini real quick. I asked him, why are Canadians so upset versus Americans about tariffs?

[00:50:37] It says that Canadians are far more upset about the ongoing trade war and tariffs than Americans because the dispute is perceived in Canada as a direct attack on their national sovereignty, identity, and economic survival. They talked about a disrespectful rhetoric and these ongoing proactive actions that are taken.

[00:50:58] It says, too, when you look at the scale of the economy, right, that this was from a YouTube video and then a Yahoo Finance quote that it's giving here. It says, while the U.S. economy is vastly larger, meaning that tariffs represent a tiny fraction of overall American consumption, Canada is heavily reliant on trade with its southern neighbor and it impacts them so much more. So, anyways, there's job risks, GDP risks.

[00:51:25] It says economists estimate that 50% tariffs on $20 billion worth of goods could risk tens of thousands of Canadian jobs and measurely impact Canada's GDP. So, those aren't going to have those types of impacts in this market or this economy because of the sheer magnitude of this. Sure. Yep. No, I think that they feel like they're being picked on and bullied a bit. Yep. Yep. And maybe they are. I mean, I'm not suggesting that they're wrong in how they're feeling that.

[00:51:55] We just don't feel the same effect from the other direction. Right. Yeah. So, all right. I want to scroll through a couple of good articles in our supply chain news and views about cargo flow and financial risks. The volume of that is going to be a major impact on what the ports are seeing. And we're seeing this impact for these ports movement of things through there. I think it's really interesting.

[00:52:21] We live so close to, you know, the third busiest port in the world when you combine Long Beach and L.A. together in that. The flow, they get these big pushes, right, when people are loading up. And then all of a sudden, you know, when we were dealing with pre-tariffs and so forth. So, it just, as that concentration moves, the article talks about magnifying the consequences of disruptions that are happening with it.

[00:52:50] So, they get these big spikes pre-pandemic and then pre-tariffs and so forth. And it really puts us a pressure on both the labor side of it and the use side of it in the ports. So, it's a big issue, right? I think right now we're probably seeing more in the last, really related to the tariff discussion in the last year, approaching a year and a half, about the global shipping markets.

[00:53:20] Between what we saw on the, first we started with the Suez Canal issues. Then we had Panama Canal issues that weren't political. They were weather related. And then now we've got the straight-over moves issues and its major impact on both the ports and the shipping companies. Yeah.

[00:53:40] And, you know, even I think it's this third article here, right, where there has not been, I mean, there's not that much freight relatively, at least right now, compared to previous times. Yep. And so, they're expecting maybe more, they call it a freight recession, but they're expecting a recovery in 2027.

[00:53:59] Interestingly enough, a lot of the freight right now is chips and technology to fuel a lot of the AI data centers and everything else that are being developed. Man, it's a lot of chips. It's a lot of stuff. Which, now we have so many states wanting to block the building of those, right? So, we've got all this need, right? And we're going to get into our AI section in just a minute here.

[00:54:24] But we've got all this need, all this desire, all this consumption that's coming because of AI use. But now you've got, I mean, even Texas is putting some moratoriums on things and, you know, balancing of how that's working. And then you've got, you know, Bernie Sanders and a handful of others that, you know, are the NIMBYs, if not in my backyard.

[00:54:46] And it's interesting the misinformation out there as well about data centers. Well, and if you look at some of the places that are now, you know, have invested or are investing in data centers, and you look at some of the numbers and some of the positive things that have occurred in those areas, it'll be interesting to see if this gets balanced out, right?

[00:55:12] Because what has been found is places where there are data centers, tremendous amount of high-paying jobs. These are not like, you know, minimum wage jobs. These are, I mean, you know, electricians are doing, making maybe $250, $300 an hour, right? That's a half a million dollars a year. You know, so these are high-paying jobs.

[00:55:34] A lot of towns and cities are starting to get some really good, you know, side effects from those things, whether it's a reduction in their energy costs and just, you know, more economic, you know, boom in the town and people spending money and things like that. So there's starting to be some evidence in places where they are building these data centers that there is a real large benefit to the economy and a real opportunity for jobs.

[00:56:01] Now, it'll be interesting to see if that can offset some of the doom and gloom crap that you hear from everywhere else to, you know, related to data centers and really all, as you said, the misinformation that is tending to exist. Yep. But it doesn't seem like it's slowing down. You know, even if there's, you know, people resisting it or whatever, there's still a lot of it happening. And there's a need for a lot of stuff, which is fueling a lot of the supply chain shipping at the moment.

[00:56:33] Yeah. I'd like to see, well, I don't know. I guess we wouldn't have much to talk about on the show if things were balanced and fair and even and going normal and we didn't have a Fed doing goofy stuff and a President doing crazy things. It'd be kind of fun to do that for a week or two. We can just get on the show here and kind of go in. Everything's just running fine. Nothing really to report. Everything running smooth. Everybody's getting their tariff refunds properly allocated. Nothing to worry about.

[00:57:03] We can talk about the difference between Blue Dot Gin and Monkey 47 Gin or the difference between a pellet smoker and a stick smoker. Right? We're going to have really interesting weekend discussions on Friday morning. I don't see that happening. Talk about sports, you know, football, things like that. The Rams lost to the 49ers last night. The miscalculation of getting there 24 hours before versus a week before.

[00:57:32] That's pretty stupid. So whoever wins. Which, the getting there so late? Is that what you mean? Yeah. I mean, that's a big ask, right? You know, you're about, I don't know, it's about nine hours, I guess. So it's almost, you know, it's the next day, but it's about nine or ten hours, I believe. Of travel? No, it's like 14 hours of travel. No, no, no, but of the time shift. Of the time shift. Oh, yeah, yeah, yeah.

[00:57:57] So, yeah, it's, anyway, to think you're going to do that and be ready to go and, you know, in time shape after, that is kind of a stupid assumption. It's so funny, you know. Well, I shared this with you before, my wife Darlene's stepfather that raised her and her sisters was a scout.

[00:58:23] He and his two brothers owned some hotels in Anaheim near Disneyland, but he also worked for the Rams when they were in Anaheim and LA and Anaheim as a scout. And so she grew up going to Rams games and spend, I think, three or four Super Bowls and stuff like that. But I'm a college football guy. Tomorrow is what I care about. I don't care that much about pro football.

[00:58:50] I'm a Rams fan just growing up where we grew up in Long Beach and going with Rams games with my dad. But I care about what's going on tomorrow and the extra, you know, extra second of play that you get if you're Michigan to win a game you shouldn't have won. And I get home from the office last night and we're getting ready to go to Bible study. And Darlene's doing her hair in our bedroom and the TV in our bedrooms got the RAM game on.

[00:59:18] The TV in our family room has the RAM game on. And they're both on really loud and I'm cracking up. I brought dinner home for us and there's my wife and she's doing her hair, getting ready to go out. And there's the RAM game on. So it's pretty interesting. Then she's the one telling me about the, yeah, I had read about it, but yeah, the Rams coach decided to, you know, maybe they won't be,

[00:59:41] they won't have time to have jet lag if we get there and play versus the 49ers that have been there for a week, you know, drinking Victoria bitters. Yeah. And they kind of won the hearts of the fans too there because they were there, they were out, they were around. So a little bit of a home field advantage. And I don't know if you've ever been to the Melbourne cricket facility. I have, I've been to some Australian rule football games there. That can be an intimidating place to play.

[01:00:09] It is massive and it feels like people are kind of right on top of you. So anyway, regardless, they certainly didn't put up a very good showing yesterday. No, for a team that's supposed to win it all and, you know, blah, blah, blah. And Aaron Donald coming back and all that. But I don't think anybody came here to hear us talk about the Rams. No.

[01:00:31] Let's just really quick, let's just kind of hit, is this something I, there's an article in our manufacturing distribution and M&A segment about this price fixing settlement in the pipe valve and fitting and in marketplace. And there's really kind of an interesting thing to, to, to kind of get a look at is that I hadn't been following this closely, but I'm going to do a little more research on it so we can talk about it a little bit further.

[01:00:56] But basically there's been $415 million of, of settlements paid from lawsuits related to some price fixing and additional co-conspirators added in this.

[01:01:12] I won't name any of these companies because none of them are our customers, but three of them are our prospects that we're in some discussions with or multiples of them, I should say, are people that we're talking with right now about our technology.

[01:01:30] But basically we went through, there's a civil antitrust lawsuit about, they, they use the term in the recap I got here about weaponizing industry data platforms about PVC pricing. And then the direct competitors communicating within the marketplace.

[01:01:50] So there was just a multiple other distributors added to this list that are now in this civil litigation and settlements from both manufacturers and distributors of $415 million so far. So I think there's, you know, there's a, there's one thing that it says to be friendly with your competitors. There's another that says being cautious about how collaborative you might be. So are the, are the people that are going to get the settlements, are they going to share the wealth with their customers?

[01:02:20] No, yeah. So it's going to roll right downhill to the homeowner. Right. Right. And make sure the waterfall will be perfectly allocated. Yeah. No, no. That's an interesting thought. That's my comment all the time about having just had a new roof put on my house and fencing around a 10,000 square foot lot and redwood fencing, no less. And, and all kinds of other work done on our house recently is like, I'd like those tariff reliefs to flow down. I'm sure. I'm sure you'll be receiving a couple of big rebate checks. Yeah.

[01:02:49] I, I, maybe, maybe Costco will listen to you and I'll get a dollar. I mean, we have an executive membership, so maybe we get a dollar rebate extra. Yeah. So want to roll down, want to roll down and talk about AI for a bit? Why not? Yeah. We got a few minutes left. We had a handful of good articles there. There's a PricewaterhouseCoopers, 2026 digital trends, and then McKinsey published.

[01:03:15] I always like this stuff when we get good McKinsey stuff, but we got PwC, McKinsey, and Gartner in the first three articles. The state of AI in 2026 on the road to ROI. And then the Gartner piece was about new AI challenges and it isn't adoption. It's about AI spend. I think we could kind of combine those a little bit, don't you think? Yeah, maybe we start maybe with this third one, the Gartner article. Okay.

[01:03:42] Because this is something I've seen firsthand, I guess, in talking to customers and so forth is, you know, with AI, right? Let me back up. In technology, historically, people are used to purchasing seats, right? Number of users, maybe you're purchasing based on the functionality you're using, but it's based around the number of users. You can roughly budget that.

[01:04:10] You know, you have 100 users, you're going to buy technology for 100 users. And if I added five more users, I can budget them. Whereas with AI, a lot of the big AI companies and a lot of even small companies are trying to change their pricing model to be based on consumption. So, you know, depends upon how much water flows through the pipe. And in the AI world, that's considered quote unquote tokens, even though it's kind of an oversimplification.

[01:04:39] But nonetheless, it's how much water is flowing through the pipe. And then you get a bill, you know, every quarter or you prepay, right? You put money into the coin box first and you get a certain amount. Like the old pay phones, right? Right, right. Cause up more coins to continue your call. Exactly right. But that is very difficult to budget. It's easy to get out of control, right?

[01:05:06] Which is the, especially if you're using it for coding and for other things. And what I'm seeing a lot in our conversations with our customers is they're recognizing that this may be the future, whether they like it or not. But how do you manage this? And it's not just a budgeting thing, but it's like, well, who should have the ability to burn the tokens or use the tokens?

[01:05:35] How much should they get? Right. Who should be governing this? Who should then, and this ties into the other one. The other two articles is, okay, if we're using this, the spend, what is it getting us? Right. Are we just, you know, wasting it or is it actually helping us? Is there a return? Is there a return? Right.

[01:05:55] So the scrutiny of the process and the involvement of it is very different than it is when you see about seat-based licensing that are there. Obviously, the jury is still out on how this is all going to work and come together. But I think it's naive to think, I don't, you know, we shouldn't be thinking this way that it's just people are going to be, oh, yeah, let's just, you know, turn on the spend.

[01:06:23] And if we spend, you know, we spend, maybe there's been a little of that in coding, which is, but I don't think that's going to continue in companies. So, you know, there is going to have to be a philosophy, a strategy, and an approach to how the AI spending process is working, but that hasn't been figured out yet. Right. Right.

[01:06:42] Well, it says Gartner predicts that AI spend will more than double the $5.6 trillion by 2030 as organizations expand AI use cases, embed AI into core processes, invest in both technical and human readiness. Now, I think if we boil this down a little bit, right, if we think about it's taken, it took a while for most industries.

[01:07:08] And then, you know, certainly wholesale distribution and manufacturing aren't the most tech forward organizations that are leaning in. Usually they kind of wait and see a little bit is what we've mostly seen in this setting. It took them a while to get used to seed prices. Right. You know, when we went to a SAS model, instead of saying we're spending X thousands of dollars for this. You all right? Yeah. Sorry. The water's a little strong.

[01:07:38] Is it water? I shouldn't put vodka in my water bottle in the morning. Yes, I would agree. At least not until after our show. Not until after the show, yeah. Is that how you prepare to deal with me for an hour? I do. Yes, exactly right. Very good. The bottle is almost gone, I think. And that's what's happening. Okay. Hold the intelligence together in your comments for a few more minutes. Yeah. We've got a few more minutes to hold together.

[01:08:05] But, you know, I think that you used to, you know, as an organization, you used to get a box in the mail with dozens of CD-ROMs, right, that you would go load into your servers that are in a closet down the hall. And that's one cost. And then we started migrating to a SaaS model. And now we've got a receipt. Wait a minute. You want me to pay for every person in my company? Now, this guy hardly ever uses it. Or this guy won't log in. Or this guy doesn't, you know, she's on it all the time. So I'm willing to pay for her, but not.

[01:08:34] And then people have adjusted to that now. And then now the concept of, say, having a consumption base that says, you know, I'll just use a great example. Because most of the people that would be listening to this show, Broadscope, are using AI with a $20 a month cloud plan or a $20 a month plan. Or maybe they have a corporate account where they're, you know, what is it now for a quad?

[01:09:03] It's $125 for five people and then another, I think, $25 a month per person on top of that, whatever it might be. So from that standpoint, that's what people are used to right now. And that is all you can eat for that whatever chunk. And they're losing money on those, right? Of course. Those are generally being subsidized as a way to get people in the door. But then I'll give you another example that might help this audience.

[01:09:31] I was down the hall the other day, and I was talking about a similar conversation. This is with one of our lead developers, software developers. And it resonates with me so clearly. You know, he's got, I'm looking at you on a, you know, on a 27-inch monitor that's wide. He has his flipped upright. So he's seeing all the code that's running. And I'm watching him, and I'm watching code running. And we were having this very discussion.

[01:09:59] And he said, this one query that I just made is about two pages of instructions to the query. And for it to process, he says, is going to be about $30 for that one thing that he was working on at the moment. Right? And I wasn't concerned about the spend because I know that he tracks it well, and you guys have a handle on it on that side of the company. I wasn't concerned about the spend.

[01:10:27] But he was just doing one piece of what he was doing that day that was spending more than the vast majority of the world spends in a month on their subscriptions. So this is when we're using APIs and we're using direct connections to do large chunks of work. So now that's what this is really talking about is how do you then go back and say, what are we getting as a return? You and I have talked about this many, many times. We had a meeting.

[01:10:56] You know, our software is – our Channel Cloud and our Meridian 360 products are all built on the same software development platform that Salesforce is built on. So it gives our customers the benefit that they get from Salesforce with our industry-developed products. So we had, you know, our partner manager from Salesforce was in town earlier than we were spending some time talking about that.

[01:11:20] And we started having that same discussion is how do we introduce to a pipe valve and fitting or a lumber distributor or an office products distributor that says, hey, you just probably in the last four or five years got used to paying per user price. And now there might be this menu that says, you don't know what your bill is going to do. And the only way you can solve that is if you prepay for a bunch of stuff that you may or may not use. And now we're not doing that.

[01:11:50] We don't know if we'll be doing that at any point in time. But that is a whole new shift is what you're describing of people having to understand. And, you know, you could run a login report. You know, our customers can have a dashboard and from their leadership team that shows all the login data and use data of how their people are using the technology. But in this setting, it's like, are you really going to be and how long is it going to take people to get where an IT manager or the distributor is going to go say,

[01:12:19] OK, our spend is up by this versus this period of time. And what did we achieve by doing that versus how often are people logging in? I think there's some challenges coming from that. Yeah, I think here's where it's going to end up, though. And when is I don't know the answer, but I would if I had to guess probably in the next two or three years. If you remember back in the day, right, of cell phones, you paid for, you know, you paid for your cell time. Right. By the minute. By the minute. Right.

[01:12:47] And you could end up on a long call or whatever and have a massive, you know, cell phone bill. Right. So you were, you know, people were rationing the use of the cell phone when you could use it or so forth. Eventually, those costs came down to all you can eat. So it was virtually nothing. Right. And it became something that you just, you know, you don't even think twice about it. Right. You don't think twice about how long you're on a call. Even if you're overseas now, you don't generally think much about it.

[01:13:17] Sure. I think we'll get to that point with the AI as well, where the costs will come down. And again, the question is when. Right. And we just talked about data centers and all that kind of stuff. The question is when. And you'll end up paying probably a flat monthly fee that will cover, you know, a number of people or whatever. Kind of like a platform fee, if you will.

[01:13:42] And, you know, unless you just completely go out of the top or go over the top, I think you'll start to see some consistency here. But in the early stages, much like we have the cell phone. Right. It's, you know, it's not that way. And yeah. I mean, as you know, as Justin was saying, I'm going to spend $30 for a query. I mean, that's not all that absurd. Right. But if you're doing that in a large organization with many, many different people, that can add up pretty quickly.

[01:14:12] Yeah. No, I mean, think about that. And, you know, it's not like the typical distributor would have or even manufacturer, unless they're very, very large or multinational, would have dozens of people. But it's when you start wanting to get those larger groups working on coding and those types of things. I think, you know, I liked your example of what you where you think will be.

[01:14:41] I think where we need to be for is. Maybe it's a split. Right. You have a for coding and specific types of activities. You do have consumption because those are the people that would know how to manage that consumption. But on a day to day user of technology, that is in your cell phone example, I think is good. So. Well, and even today, I believe you can buy different levels of plans on a cell phone.

[01:15:08] You can get more minutes or I don't know. Maybe the cell thing now is pretty much unlimited for everybody. But you can buy other plans and so forth. But I think we're going to get to that point. I just the question is how long. And until then, we got to look at this much like we did with cell phones is when do we use them? Who uses them? Who gets to use them? And then. Right. Because it says here in this article, what's the discipline about using it? So if you place a cell phone call, you said, hey, I'm at the airport.

[01:15:37] Let me schedule a time to call you tomorrow on the landline and then we'll go through it. Right. You were disciplined on the conversation versus doing into an hour conversation. Yeah. Or certain people in your in your organization had cell phones and certain ones didn't. Right. You had a new space. So, you know, Tom, I think that leads us into another article here. And it's we've got this from Digital Commerce 360 and it's talking about Salesforce and Anthropoc putting a big new partnership together.

[01:16:06] And I think it's really interesting. This is a I wish we had our buddy Steve Levy from Infor that was with us on our 200th celebration show. So just from what, you know, he and Infor are seeing in the marketplace right now as well. But, you know, I think we're.

[01:16:27] You know, we think about the Gardner hype cycle, right, about our flow and adoption and and that what is a trough of disillusionment is the section after the first part of hype. And I don't want to fully relate this to that. But I think what we're really starting to see is an interesting being in an interesting place. And I just kind of think back to a large plumbing and PVF distributor that we met with about two years ago.

[01:16:56] And maybe a year and a half ago. And they had run out and put. Just got chat GPT licenses for everybody in their company. Right. And said, go give this a try. Right. And then you have a whole lot of distributors out there and manufacturers, both who have been going to a lot of shows and events. And they've been seeing all of the bright, shiny objects that are coming out. Now, we've also got this.

[01:17:28] Abundance of new one off companies that are popping up. I call them sometimes the Silicon Valley shiny objects of people who have built a product and then went and found a market to sell their product into versus having market experience and so forth in that setting. It's really of a significance. We're seeing just an abundance of those as well coming into the marketplace. And if you're a wholesale distributor, where do you look?

[01:17:58] Where do you turn? Because they've been looking and trying to kind of figure all of this out. And I think we're coming back to this place. And I think there's a handful of the world's largest enterprise companies and Salesforce is one of them that has been saying, hey, you have too many things to do in your business to go try and figure out token usage or how are we going to go build things internally?

[01:18:26] And then there's all of these products that are bouncing around out there over and over again that people are seeing and looking at that across the board as well. And now we're getting this place where people are starting to say, hey, can you do this for me? Help me with this. Do this for me. And that's where I think we're seeing this. So now we see this announcement last week is that Salesforce and Amthropic are not just saying, hey, we have an API connection. That's been there already.

[01:18:56] Right. HubSpot. Lots of other companies have API connections in with others as well in that setting. And now we're seeing this organization that says, come do your work here. Right. Analyze your internal data here instead of having a small handful of people within your organization that are going to export CSV files and load them in and come back with some analysis.

[01:19:21] And the idea of needing to hire more data analysts or revenue operations people or whatever it is, it's, hey, if you have a system of record like Lead Smarter, in that case Salesforce they're talking about, your system of record where we're bringing all this data together into a true platform, analyze it here versus needing all of these other necessary tools out there. Anyways, that's my key takeaway on that for the moment. Yeah.

[01:19:48] I mean, look, you know, even in our world, right, I would say Anthropic and OpenAI or ChatGPT probably are about equal. Again, from what I'm seeing in terms of their usage, some companies are using OpenAI and ChatGPT. Some are using Cloud. As you said, you know, I think that's the first foray into AI is, hey, we've got Cloud, we've got ChatGPT. Go ahead and start using this. Right.

[01:20:17] It's, I think, Anthropic has seen a real opportunity, though, to, right, because if you think about right now, what is their data source for the most part? The data source is the internet and the data that they have in their models. So they're starting to recognize that in business, the real data are those systems of record that you talked about. And, you know, systems of record have historically been, I don't know, the weirdest thing going on.

[01:20:47] Now my map says it's going to die in 30 seconds. So we're going to have to wrap up here. I have no idea why. Well, if we go away, we wish everybody a good weekend. Yeah. Well, we very well could here because according to this, it's going to die here within minutes or seconds. It's plugged in. I don't know. I don't get it. I'm glad you're on the technology team for our company. Yeah, boy, today has been the 9-11 of technology. That's for sure.

[01:21:16] So anyway, the point being is, hey, the systems of record have, you know, historically been underutilized, right? Under tapped. You know, even in our world, right, with quote unquote CRM, people haven't really leveraged that data. There's a lot of great data there. There's a lot of great data in the ERP. You take the ERP and you take the customer, you know, facing things and the data there, you put them together, you've got a tremendous knowledge source in there. But it's been untapped.

[01:21:47] So Anthropic is basically saying, hey, we can help you untapped this, but we're not a system of record, nor do we have access to the system of record. So the Salesforce-Anthropic partnership makes a tremendous amount of sense. And yeah, we're going to be, as a lead smart, as a Salesforce partner, we're going to be a beneficiary of that. So more on that soon. We've got customers jumping up and down about it already, which is great. Yeah. Which is great. But I think this is bringing us back to this place, right?

[01:22:16] And I think it ties in. I think we're still alive. It's got to have been 30 seconds. So you're looking around like the world's ending, but it'll be okay. I promise. I'm trying to figure out if I can find another charge port or something to plug into it. But again, I don't know why it's starting to do this. That's right. The interesting piece with this is that I think that when you look at all of the models out there right now, right?

[01:22:46] Is ChetGPT, MetasLama, Gemini, Anthropics, Claude, Kimi, all of the different open source models from China. All of those, right? The thinking now is that they're pretty much all the same, right?

[01:23:05] Right now, the difference between ChetGPT 6.0, whatever just came out this week and whatever the Fable 5 or whatever Claude just launched. Those have minor increases in values to the average person.

[01:23:26] The average person for their typical queries, whether you're a wholesale distributor or you're running a school district, the average queries can be handled by two or three lower level models.

[01:24:08] Sure, sure. And now it's how do you integrate that? And you made the good point with this is that we're in a place now for people where Anthropics doesn't have access to your data to help you, right? OpenAI or ChetGPT. They need access to really help you outside of what you can do from the language model.

[01:24:35] They need access to systems of record, an ERP system, a platform like LeadSmart Channel Cloud in that setting, a platform that brings all of the data from your business together in one place. And now they can take the power that's much more than a simple language model. Yeah, language model is good. You're always going to need that.

[01:24:55] But they're all so similar right now that it's getting that connected into your sources of truth within your business, which should be your system of record, i.e. the world that we work with. So I think we're getting to this place now where some things are becoming somewhat almost commoditized. We're getting past the basic use cases. We want agents to start working and doing other things.

[01:25:19] But if you're running a $200 million a year or a $500 million wholesale distribution company, having an agent expert in your business, maybe it's a good idea.

[01:25:31] But the other side of it is, why not partner with somebody that already has that built in to a platform that can access all of the data across your business from a trusted source that has a high level of security and that has uptime that's 99.9 for 20 years, which is where we sit in that setting. So I think we're getting into a really unique place. Agreed. Hey, let's wrap up before I go to sleep here. My Mac goes to sleep.

[01:25:59] Does your going to sleep mean I don't have to come to our 11 o'clock call? No, I think I'll get a debug before then. Okay. All right. Well, good chat today. Lots going on in the world. Thanks for your recap on your September 11th experience. That was worth the price of admission today for me, and I've heard it over and over again. So all good.

[01:26:20] Last thing, though, I wanted to just give a really a shout out to the folks at DC Cap and Karthik and his team there. They've just done a fantastic job with the podcast that he does. And what Karthik does there is their founder and CEO.

[01:26:48] He has a show that he just does a really nice job with. But it's not a traditional podcast. I think he just does interviews. And I had an opportunity to sit down with him last January and talk about technology. And the reason I wanted to shout out to them and Karthik at DC Cap is that, in effect, it's funny enough, I got a text message just a little bit earlier from Mike Hockett, who's my executive editor, senior editor with MDM. And been on the show a number of times, good friend.

[01:27:18] I've been on Mike's podcast. He's been on ours. And we were just talking about the quality of the Karthik's and the DC Cap show that they do from an editorial standpoint, from a production standpoint. They just did such a nice job. And so I sat down with him for about an hour at the NAW Executive Summit in Washington, DC in a big snowstorm last January. He does all that recording and then just plugs it out through the year.

[01:27:45] So one of the final articles in our, we call it a good read or listen segment of the newsletter around the horn and wholesale description newsletter has a link to that and a YouTube channel with that. I don't know if you've gotten a chance to see any of that time. You get tired. I looked a little bit of it. It was a very good production from what I saw. I just think that his questions are fantastic, how he puts those together. So anyways, if you get a chance, check that one out. It's really good.

[01:28:12] It's not just production quality, but the quality of the questions and the things that come from all of that are just great in the way he does all of that with the shows that he does. So it's good news. So anyways, we'll wish everybody, we'll wish you a new battery and a new camera that I'll have sent to you shortly. Although you look fine today. Maybe you fixed it. And we'll wish everybody a great weekend. Be kind, be safe and do good things. We hope to see you next week. Take care.

[01:28:46] 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.

[01:29:12] 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, LeadSmart Technologies and their manufacturing and wholesale distribution industry CRM customer intelligence and channel collaboration platform. That's LeadSmart Technologies at LeadSmartTech.com.