Tariff Refunds, Core Inflation & Data Centers: The New Pressures Reshaping Distribution

[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. Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain, we're going to be a business owner.

[00:00:30] With the high chain issues, we peel back the onion with our guests into the topics that impact your business the most. Good morning, sir. Good morning, morning. Very good. You're underway. We're officially underway. The train has left the station. That's right. Very good. How are you? Okay. How are you? I'm doing just fine. Hectic week. I don't know about you, but, you know,

[00:00:57] the three days on the road and then trying to catch up on those three days in one day was hard, but that's all right. I have full confidence in you. Do you? Okay. Well, that's, you know what? I need the lovely Mrs. Brown to have full confidence in me and you to have full confidence in me. If I got both of those, life is just fine. That's life is good. Yeah, I'll take it. I'll take it. Happy Tom, happy life, I think is how it works.

[00:01:23] Um, can we go with happy Darlene first and then happy Tom? No, I think Tom first. Okay. Well, when you're here in the next couple of weeks and you run into her over dinner, once you guys have that chat and then I'll, you know, you guys decide. Yeah. Okay. I don't, I don't think so now, but that sounds good. Actually. Well, I didn't catch that. What were you saying again? He said, Bob said, where are we? Binionas? Why is that? I missed that.

[00:01:52] And things like that. Oh, gotcha. Gotcha. Gotcha. Okay. Yeah. Well, you never know. You never know where you might find us. We're, uh, we're a big one. So does it even still exist? What's that? Does that even still exist? Benihana? Yeah. You know, there was up until, I don't think it's there anymore, but up until a few years ago, there was one in, uh, in, uh, right where Irvine and Newport beach come together, right at John Wayne airport. There was one forever.

[00:02:20] Um, that was the, that was the business people's, uh, spot in, uh, when you were staying in hotels by John Wayne airport. So, um, but yeah, I don't know, but there's no shortage of those Tepon places. No, no, no. Yeah. Um, talk about digressing just as we're getting started, huh? Yeah, let's do it. Let's get back into. Let's, uh, it's exactly what we need, right? Um, Hey, you know what? I've got a little bit of a hiccup going here. I've got a monitor that's going in and out.

[00:02:50] So I'm just going to do the most unprofessional thing here and do a big pivot and shift to shift monitors and camera. So, um, of course now the other one pops back in perfectly, but let's roll into our show and, and, uh, maybe help, uh, provide people with some value for the time that they're giving us today. I'm Kevin Brown. I'm here with my lifelong friend and business partner, Tom Burton. We get together every week on our show around the horn and wholesale distribution and manufacturing.

[00:03:19] We talk about the news of the week that's happening in supply chain, in AI and mergers and acquisitions and the economy tariffs. It seems like we can't get away from, we're going to talk about more today, sales and marketing, robotics technology, and what's happening in the world and how that all relates back to wholesale distribution and manufacturing. We've been doing this now for 196 episodes. So we're about a month. Well, I put a couple of shows that I know we have, we're taking off probably a month and

[00:03:48] a half away from the 200th episode. We got some exciting stuff coming with that. The guests are coming together. We got a little work I need to do with you on that still. In fact, I should talk to you about it today a little bit, Tom, but that's going to be an exciting event. I think the statistics are somewhere out there that 90 some percent of podcasts that launch don't get past 10. So getting to 200, I guess is a pretty good milestone that there's an article I read that this year, 500,000 new podcasts have started.

[00:04:18] Right. And pretty much all of them will not exist in two or three months. Right there, there might be new ones, right, that are coming through all the way, but that's a lot of podcasts. It's astounding, but I guess that would tell you why so few get past 10 episodes. I mean, I was, there was another, I saw an announcement probably six months ago about

[00:04:44] a big organization that relates to the same market we serve was starting a new one. And I think, I thought they were doing it multiple times a month and I've only seen them post two. So in like six months. So it's just hard. But anyways, here we are. So I don't know if we're, if we're doing the right thing or if we're just a bunch of knuckleheads here, but we'll, we'll keep giving it a try and we're going to keep showing up as long as our, our guests are willing to come in our audience is willing to show up.

[00:05:13] And I just see our good friend, Dan Schubert popping in. So Dan, great to have you with us. Dan, are you in a backup in a Lockport, New York area for the summer, or are you still in Florida? I'm hoping you're in Lockport. So love, love having Dan with us from founder of a net plus Alliance. So good friends of ours there. But anyways, we do this every week. Um, as we say, whether, unless someone's on an airplane on a, in a hospital or on a planned vacation, we will be missing a show in August.

[00:05:42] Cause I'm taking a couple of days off after a business trip. I'm going to put my feet in the sand for a couple of days. So we'll miss one of those, but in general, we're here. And, uh, we do that by means of our live show here that we are on LinkedIn lives, uh, YouTube live and Facebook live. And later in the day, our editor and producer, John will put all of that information into, uh, Apple and Spotify and Odyssey and all of the other podcast platforms.

[00:06:09] If you're listening in on the recorded podcast, you won't be seeing the newsletter that Tom and I are going to be looking at referring to today. That newsletter again, it's called around the horn and wholesale distribution. It goes out to, I guess we're somewhere between 12 and 13,000 people now. And, um, that list continues to grow. And that newsletter again, goes out on early Friday mornings. And, uh, to typically, I think we're in seven or eight different countries. People get that newsletter in as well. We would love to send it to you.

[00:06:38] So if you don't get it and you would like to simple way to get it is, uh, if you're on LinkedIn consistently, just search for around the horn and wholesale distribution podcast, uh, or go to the lead smart technologies page. And you'll see them in the far left column. It'll say newsletter. You can connect to it there. If you would like, send us an email at hello at lead smart tech.com. And, uh, we can get that out to you right away. And we also have a website for the podcast and that's www dot around the horn pot.com. And we will get that to you right away.

[00:07:08] We couldn't do our show every week. We couldn't support the people that are on the front end of the back end of it. If we didn't have the sponsorship of the company that Tom and I both work for LeadSmart Technologies, lead smart has developed, but we refer to as a enterprise growth platform. And an enterprise growth platform is a, uh, tool that gives wholesale distributors and manufacturers an opportunity to use what we call our, our data 360 hub and bring connected data from across their business.

[00:07:33] Uh, marketing automation, e-commerce ERP data, uh, data that's in a data warehouse processes and different things like that that you use in your business. Bring that into a single unified platform where we have tools for sales enablement, for CRM, for marketing, for quote management, and all kinds of different tools that are available to that. Where now we're bringing unified data from across your organization and we apply AI to that. So we reduce the amount of silos that you have within your business.

[00:07:59] We put you in a position where you can get deep insights into your customers, your teams, and your overall business, rather than having silo data across your business. So if your company is looking to digitally transform, expand using artificial intelligence as well within your business, we would love to talk to you. So Tom, what did I miss there? Anything? I think everybody is well informed. Let's see if they still feel that way when we're done. Yeah, that's right. So what's happening in the news today?

[00:08:28] We had core inflation up 3.4% in May, highest since 2023. But right in line with expectations. Yes. So that was what was expected. Most of that no shot coming from energy costs and so forth. It'd be interesting to see. Oil is way down, right? I think oil is down below what it was when the war started, if I'm not mistaken. We're close to it.

[00:08:57] It's there. It'll be interesting to see how fast, you know, whether we're, this was the May one, June one impact. I guess July would probably be the first time we'd really see any change in the, in the readings here. Correct. So that's still a couple months away before we would see that. Because no, we don't have real time data. But yeah, nobody seemed to really freak out about it. It was kind of what was expected.

[00:09:26] Still obviously much higher than the 2% that they all want, but not completely out of line. Yeah, I think one of the challenges that we're going to see with this though, is this article was even talking about that. There's, there's more to this than just, just oil. And, you know, the president has promised over and over again how fast this is going to turn around and the economy is going to be wonderful.

[00:09:55] I think it, we're in a position where it could take it a little bit longer to actually happen than the president is, is really thinking it might or promising that it might. I don't know what are your, your thoughts on that? Well, I think it's how fast are, you know, the oil companies and everybody else, right. So, you know, you kind of, you know, skyrocket straight up and then you kind of feather your way back down. Right.

[00:10:22] So how, you know, and then I think a lot of other, you know, companies that quote unquote, maybe had the side effect of that, have raised prices, whether that's through freight or just overall costs of things. So the question is, what is the time for that? Even if the cost savings, how long does it take for those savings to percolate through the system or, and if they do percolate through the system, do prices really change all that much as far as, you know, going back down? Really good point.

[00:10:53] We tie that so quickly to what we see in the gas pump. Right. Um, and, um, it's going to be great because you're getting an EV soon, right? You wish we tell everybody you're getting a Tesla. No, you have a job to do before I go get a Tesla. That job is not finished. And until that job is finished, so we're not going to talk about it. All right. All right. So Tom and I are both looking closely at EVs right now. And, uh, which is pretty funny.

[00:11:19] Kevin has a, has a sales target that he has to achieve for me to get my EV. So it's all dependent upon you. Tom needs a bonus before he's going to go buy a car. Right. Try it. You know what I did? Just as a side note, I have a, I have a deposit on, on an EV. I'm the risk maker, right? What's my role in this company? Yeah. I'm the guy who's a spend. Your role is a spend. My, your role is a spend. And no, no, no, no. I'm betting on myself, right?

[00:11:50] Okay. I'm betting on myself. That's all I'm doing. Uh, that's all I'm doing. So back to what matters. Um, I think we look so closely and clearly Tom at what's happening. Yes. We've talked a little bit on the show before with the issues with the straight over moves. We're going to talk about that a little bit more in a few minutes, but, uh, we've chatted about this, but we've not, what we don't think about is that long-term

[00:12:15] impact that's going to come from this, from the fertilizers, from the helium, from the other, you know, the other, uh, rare, even some rare earths that are coming from that area. One are, have been delayed. Two prices are through the roof. Farmers crops are different this year based upon the lack of fertilizer that was there. And then the other thing we don't think about is our world is full of plastic and to make plastic, we need petroleum products.

[00:12:43] So think about the, I don't know if you've ever been, I've been many times into, um, injection molding plastics or rotational molding plastic factories, and they literally have rail cars of little tiny beads that are made from natural gas and from petroleum products. So think about the trickle down effect of a series of months of higher prices of fuel prices.

[00:13:08] And the little things that are going to come out, the Legos that are going to be made from that and the widgets that are going to be made from that months and months down those, we're going to see those impacts for a while. So we make, do we make these plastics here in the U S tons and tons of them. Okay. So are we really impacted though, by the Strait of Hormuz and the, and the supply chain in that part of the world? Unless, unless we're using U S oil for that. And there's a mix of where those, you know, obviously we get, I'm sure we get dramatically

[00:13:38] more plastics in this country from, from China and other parts of the world than we make here, but it's, there's huge industries of that here. Um, you know, think about just serving the automotive industry in, uh, in the north central part of the country. But I think the, the idea and let's see, I mean, I would love nothing more than to see inflation at 2.5% and rates getting cut and, uh, gas prices down real low and energy prices lower.

[00:14:04] I'd love nothing more than to see that, but I just, I don't have a confidence in this administration's comment that says, Hey, we get the Strait of Hormuz open. And we're going to talk about that. There's crazy risks at the Strait of Hormuz still as well with all of that. Right. So I don't know that we're going to get that snap back. That's been described. No, I don't think it's going to be a V shaped recovery as I say. Right. But, um, I guess that it'll be interesting to see if we start to see any sort of change over the next couple months.

[00:14:34] Yeah. Yeah. Bob thinks you should get a hybrid tongue. I mean, it's a good option. It's a good option. Just a few of them. And they're either, they're either ridiculously priced or ugly. Yeah. I mean, I, the, the Acura I think has a hybrid that is pretty cool looking. Oh, there you go. You gonna look into it? Um, no, I don't know. I'm still, but you know, I told you I'd get a Tesla. I've told everybody, I promised all kinds of people. I'm going to get a Tesla. So. And it's on my shoulders. Yeah.

[00:15:04] I better just, yeah. So all you. You told my wife at dinner. Uh huh. I know. I know. Okay. I hope she's, I hope she's putting pressure on you too. For your Tesla. For my Tesla. Yeah. I haven't heard anything about that. Well, I might have to give her a call and, for a little pressure on. She's a little busy, which is why I'm in, in our offices today versus my home office. Cause there's two different contractors working on our home today and she's in her, in her

[00:15:33] glory pointing around what needs to be, what needs to be done. And are they doing the construction? Okay. So anyways. So what's happening with tariffs? We got to get back past that. You know what? Let's do this real quick. We've got an article down there about, uh, let's, let's jump to tariffs. After we finished, we were talking about straight over moves, right? Iran's been rumbling this week that you've got to the, uh, you've got to clear your shipments coming through, through the Iranian national guard or Republican guard. Right.

[00:16:03] Um, haven't heard the president's response to that yet, but this does not look like the rumblings that we're seeing and what's really happening. There was actually a, I think we have in one of these articles that there was a, um, there was a ship that was, was, was saved from the Philippines that had a, um, had a drone, uh,

[00:16:27] hit it, um, that is being attributed to the revolutionary guard there as well. And so this just seems super volatile to me. I don't know what your takeaway is, but they say it's open. I looked at AIS, the shipping, uh, tracker this morning and, um, the, every ship that I could see was moving, um, at a consistent speed. So there's things happening there, but it does not seem like the, um, the Iranians and the,

[00:16:57] you know, the Iranian government and the, the Iranian Republican guard is they're different. So I'm not sure how that you can control both of those. And it doesn't seem like the, uh, Republican guard is, um, abiding by the same rules that, uh, they were discussing in Switzerland last weekend about what's supposed to be happening. Yeah, look, there's going to be, I think all kinds of rogue sort of activity occurring along through here.

[00:17:26] The other thing is there's all this conversation about charging tolls, um, to get through. I guess that's illegal per a lot of international law. Um, I was reading that, you know, is that that's, this is international waters and there is no legality for charging tolls along the way there. It doesn't mean that they're not going to attempt it. So no, I, I don't believe this is, you know, all done and, you know, the road is cleared and the highway is moving.

[00:17:53] Um, I think there's all kinds of different sort of risks that are going to continue to exist in this area and it's going to slow. It's not going to be, you know, 90 miles an hour down the, down the four or five for this. So, um, at any given day, I think it's going to, it could change one way or the other. Yeah. Well, I think it was going to remain extremely volatile. Frankly, I hate to say this, but I would be surprised if it doesn't, we don't see it

[00:18:21] closed multiple times again before all this is done. And it's been the only leverage, right? It's the leverage point of this entire, you know, war. And, um, yeah, I agree. You know, Iran did not have a single leadership structure. Right. And so within the country, they've got a lot of dissension on what's going on here, but it's a little chaotic to take the list.

[00:18:45] So it, um, yeah, I don't, it's, it's not going to be necessarily straightforward. Yeah. Well, then, uh, you know, the, the challenger, my, my concern with that is, you know, the, you know, as the president keeps saying, we're just going to go blow them up and bomb them and bomb them and bomb them. And, and I don't, that's sad because that seems to be the only thing that is making a

[00:19:12] change or making anything move ahead or the risk of that. Uh, but the, the human toll and the economic toll and all of the toll that comes with more bombing is horrible. So, but I don't know what's going to get this to get solved, but there's a whole lot of risk for this president, this administration right now. And the approval ratings have never been, been lower. So it's like either cut a deal that maybe isn't the optimal deal or send the bombs and the troops.

[00:19:42] Yeah. I don't think we're going to send any bomb and troops, but even this MOU is loose to say the least, right? It's, it's not, it's more or less here's some ideas. Right. Right. That we can maybe agree around, but there's nothing firm. There's nothing. Um, and again, because of the things we just talked about, right? Things are changing by the day. So I think that the, the situation is still volatile.

[00:20:09] The fact that oil has dropped to the degree that it has. Um, I don't really fully understand that. Right. I don't understand the speed of that drop. Mm-hmm. And unless they figure there's going to be enough oil coming through that at least some of the shortages are, you know, and in the U S right, we never really had the shortage. We just had the price increase based on the spot price of the international market. So. Yep. All right.

[00:20:39] Well, let's roll into our, our tariff discussion that we've had over and over and over again. The first one article here from Yahoo finance talks about, uh, FedEx has sent tariff refunds to customers starting in August. You know, we've talked about this quite a few times, but now we're seeing it actually come to fruition. UPS has said that as soon as they get their money and the UPS doesn't have any of their money yet, which is odd that FedEx would and UPS doesn't kind of surprised me with that. But, um, it seems like at least some people are going to start getting some money.

[00:21:10] Well, people have been getting money back, right? They've been getting money back from, from shippers from FedEx. Yeah. Um, what's interesting in that article is it's talking a lot about the infrastructure that FedEx is having to create in order to support this. Yeah. Um, and you can log onto a portal, I guess, and see what the status is of your refund and any interest that you've earned and all of that.

[00:21:39] So now it's, you know, it's been forcing FedEx to invest in a infrastructure. I'm sure there's tons of costs and putting this a vibe coded it, I guess for, for cheap. But, um, anyway, it's, uh, yeah, I mean, at least they're, they're starting the process of, I'm waiting for Costco to start theirs. Yeah. Well, 800 million is, uh, tariff refunds at FedEx is, uh, slated to be returned to rate, to rate, to return to customers.

[00:22:08] They reported that in our Q, uh, Q4 earnings report. Um, and then 20 million entries that recap for me here said that, uh, individual shipping entries FedEx is currently managing to process these duties, but they're prioritizing to shippers who have allowed them to share, um, their shipping data back with them as well. And then they've got very specific partners that they've, they've initiated this with as well. So it sure looks complex. It sure looks a challenge.

[00:22:38] Um, but this is going to be large businesses that are done the shipments. It's not going to be, you know, Judy's Amazon business that she ships direct from and uses FedEx, you know, it's going to be prioritized for the big guys. And, um, it's probably not going to trickle down to the next level. Right. Which, uh, which is what we would like to see. And what you were, I think we're alluding to in your comment about Costco is, you know,

[00:23:06] Costco getting their 200 million that they asked for in the lawsuit is, do they get that back? And how does Tom get that back from his, uh, rotisserie chicken and sauvignon blanc? Yeah. Well, it should be coming in my rebate. So let me know. Yeah. We'll watch, we'll watch for that. So, but back to the tariff side of things.

[00:23:27] And I think this, it triggers nicely for us to, uh, what, um, um, Treasury Secretary, uh, Besant has said, he said in a, this is a, um, uh, Yahoo finance and article. And he talks about tariffs will snap back to exactly where they were before the Supreme Court's IEA ruling. And, you know, we've talked about that a number of times over the course of the months of tariffs

[00:23:55] is that, and I think this ties really well to the European union and they rat further ratified this week, the European union did. Um, there now it's not even tariffs. It's just a trade deal that they have that gets us those, the same as those tariffs is. I think the, the betting person, right. Has, uh, has looked at this and said, this administration is not going to stop or slow down on tariffs.

[00:24:22] So if that's where their focus is, they're going to find a way around it. And what, what Besson is saying is, well, now we're using these, um, you know, uh, section 301, uh, tariffs that are in there. They're working. And he's basically saying, we're going to get back to where we were before. Yeah. And I, this was something that was mentioned in here is that what he said is that these

[00:24:46] tariffs are not designed to be permanent penalties, but as leverage to bring manufacturing back to American soil. He compared tariffs to a shrinking ice cube, explaining that international companies that move production inside the U S tariff debt revenues will naturally decline while domestic corporate income, income taxes and payroll revenues increase. So, um, you know, I think that's a nice idea. Maybe it's happening to some degree.

[00:25:16] Um, there's also quite a few countries supposedly that are still having active conversations and negotiations along, along those lines. So, um, but yeah, there's tariffs still being collected and there's issues still, I think, again, with China again and some, which we haven't heard a lot about. There's been a lot of rhetoric back and forth on some, some increases on the Chinese side and all that.

[00:25:44] And, you know, so, but that hasn't really hit the news very much. Well, we're five months away from the midterm elections. Right. And if you think about it from that standpoint, you've got, you know, this president has said fentanyl borders, fair trade re reshoring manufacturing and, and more better paying jobs. What did I miss? This is the focus on that lower cost of lower cost of living. Yeah.

[00:26:13] So, um, we're not seeing too much of that yet. I think the tariff thing is the one thing that one thing I think that is, and I've, I've really felt this all along that this is going to work out where there's going to be that balanced. Let me rephrase it and say the closest we've ever been to balance trade is probably coming in this setting. Maybe not, not say ever been, but in recent history, I think should come from this. I think there's progress.

[00:26:42] Um, for sure. I don't know that we would, we could go so far as to say balance trade, but I think there is some progress. Well, um, and there's more than maybe more than anything is awareness. Right. There was never really any awareness before. Yeah. It was just, this is the way it was. Right. And we all just, you know, bought our Amazon stuff through China and, and no one thought much about it. I mean, now there's definitely more awareness about, I don't know about you, but I know from

[00:27:10] us when we buy stuff through Amazon, we're actually looking to see, well, where is this made? Is this a Chinese import or, or, you know, when we buy anything online, it doesn't mean we're not going to buy it. It's just being aware. Talk about that further. Uh, unpack that a little more. What, what, what is the, what is the reasoning behind that? And what, what are you looking to achieve through that? Well, if you look at the, we let we as a country, right.

[00:27:36] Let the, the trade imbalance in China get, you know, basically the, Oh, you were referencing the country. I was thinking about you and Lauren, when you buy things at Costco or whatever. No, we do. No, we do. Right. So if we look on Amazon and we're buying something or we are online or, you know, I guess you could, I haven't really looked at Costco, but I guess you could. Um, is this a product that has been manufactured in China? Okay.

[00:28:02] And again, it doesn't mean we're not going to buy it, but we might look for an alternative or at least there's an awareness of it that's there. Right. Because as a, because in the country that we let this, that's what we basically created this situation. Of course. We want low cost goods. Right. Right. And, and we never really thought about it. Well, who cares if it came from China? Right. It's just because we assumed it was been so often. I think. So we guess what?

[00:28:32] We assumed it was coming from China. Sure. But we didn't think it was an issue. Right. We never really thought of fair trade as, I mean, I don't know about you, but it wasn't a discussion in our house is, well, that's not a fair trade. You know, we didn't, we weren't because we weren't aware of the, of the trade imbalance that's there. Right. And you become more aware of the trade imbalance as a country, which we are way more so than we were, what, two years ago.

[00:28:57] Um, again, what the outcome of that will be, I don't know, but at least there's an awareness that didn't exist a couple of years ago. Yeah. Um, so what are you, so you, you're getting ready to buy something for your kitchen, right? An appliance. So you're looking at it before you buy it to look at its country of origin.

[00:29:23] And then do you go search three or four more that are different prices and say, well, this one's made in Malaysia and that one's made in, in Panama and come to a conclusion. Yeah. I mean, obviously, depending upon the product. Right. So it's not a, you know, one size fits all situation. Um, I know there's some cases where we just kind of looked at it and just said, do we really need this? And then we just didn't buy it. Right. That's great.

[00:29:53] Um, well, I, I assume that if we're doing this, others are too, to some degree. Right. Oh, really? No, but I think, you know, I say it's probably a really good idea. Maybe people should be doing more of it. I guess that the part of what goes through my mind related is there's so few alternatives. So in so many, so many things, I mean, we just had that discussion this morning, right?

[00:30:21] We got all this work being done in our house and Darlene wants to put some on the slope behind our house. That's, you know, landscape. She wants to put some solar lights up there that point up at the trees and some of the, the, the growth that she's worked on with a gardener in there. And the gardener came back and he's got these like a hundred dollar lights, a hundred dollar each. And we want to put like probably eight or 10 of them up there.

[00:30:46] And, uh, I was like, well, um, how often are we going to entertain in the backyard? Five to seven times a year where we have large groups over and we, we care. And another five times that we're really going to care about them. And so why don't we start with the low cost ones? And in my mind, I didn't even think twice, but those are obviously going to come from China. Probably. Yeah. The $30, like, you know, solar lights for the, for the, for the yard or the garden are going

[00:31:15] to be much, you know, no question about where they're coming from. Right. But I didn't even, to your point, I didn't even think about that. Right. The idea of like, okay, well we should look at that. I guess it's the good news for Costco for Amazon when you're doing that is you're spending a whole lot more time on their site. So you're helping their e-commerce metrics go up with, uh, times on the site because yeah. So, I mean, you're seeing more and more products advertised with that are made in the U S right. They're really spotlighting that. Yes. Of course.

[00:31:44] And spotlighting those types of things. Yeah. And I do believe to a certain degree that is a competitive advantage or that builds goodwill. Yeah. The majority of consumers. So, so what do you think that the chances are that we get to a place? Um, the, uh, Bob made a nice comment there. These sound like first world financial decisions and you know, he, Bob could not be more correct. Right. We were talking about you buying a Tesla.

[00:32:11] It's like, okay, that's, you know, we're not talking about, are we eating this weekend and is there food on the table and can we pair electric bill, which, you know, there are people in that dire straits, uh, from what's going on with the economy right now as well. So you're a good point, Bob. I appreciate that.

[00:32:29] Um, but back to the, um, tariff component of things is it'll be really interesting to see when we're, and we're probably going to be somewhere around the, um, 230th show or something like that will be my guest. If we look back and we see how many trade deals have been struck. That just allow the tariff component to go away. Right.

[00:32:57] And, and in theory, right, you could be seeing, um, this is a, maybe a little bit of a stretch, but maybe not. Uh, uh, you could be seeing here, Tom, a playbook for the future for future presidents that say, Hey, you know what? We have a 10 year trade deal with the EU for this amount of, of, uh, now it's just taxes basically on that as opposed to having, um, a, uh, a true tariff on it.

[00:33:26] And, um, but we, we could come out of this with a, a multi-year trade deal with China, multi-year trade deal with Japan, the EU, um, other parts of Southeast Asia, Canada and Mexico become critical. Other parts of Latin America. And obviously the, um, uh, looking at that most particularly with India as well, you can come out of this with trade deals that you don't need the tariffs, but a new playbook that says, if somebody doesn't want to play ball.

[00:33:54] On the extending that their trade agreement, three years, five years, 12 years, whatever it might be, they don't want to play ball on that, that they just come back very quickly and say, well, you know what? We know that IEP is probably not going to work in this, but we got section 201, section 301, and they worked in 2025, 26. So that's that playbook. We just use moving forward. Yeah. And even a lot of the agreements have tariffs associated with them. Right. I think even the European one has a 15% tariff.

[00:34:24] So, but it's, it's not a tariff at that point. It's a tax on goods. Right. But it's a negotiated amount. It's a negotiated. But the point is because of the fact that when you work on this with the, the mindset of it, uh, section 301, right. That has a limited time caps. Yes. The other ones, some have to be approved by Congress. That's what I'm pointing out is that the, the playbook is play ball.

[00:34:51] On a trade deal, because we proved in 2026 that this is our playbook and it works and it works in our courts and it works in these other settings. So play ball, let's get a good trade deal in place for balanced trade. And then if you don't want to do that, then we will just go back to our playbook and we'll go straight back to putting these back in place. Sure. So, um, well, let's see.

[00:35:21] I mean, that's what it says, right. Our treasury secretary says is he has the term snap back. Right. To back where we were before the Supreme Court, which is interesting. If you think about all of this is we're getting right back to the same place. We're getting those dollars flowing back in. Um, we spent boatloads of time and resources and bandwidth on this show talking about the Supreme Court and all of this. The upside of it is the system worked right.

[00:35:48] Uh, going through the courts and using the courts for the right things. The system worked in that setting. Yeah. It's just been a lot of, I mean, you just look at all the extra costs and uncertainty and trial and tribulation along the way. It's been a pretty disruptive process. Yeah. Yeah. All right. Enough of this. Where do you want to go now? Let me roll into our supply chain news there.

[00:36:13] We just had a couple articles about cutting tool orders and a few different things that we had in the economy related to distribution in general. But, uh, I thought this was an interesting article as well, talking about that the supply chain uncertainty now is higher than, uh, the COVID-19 pandemic era.

[00:36:31] So, you know, we, if you think about now the last, you know, the, I guess the 2020s, you'll call them the, we're back to the roaring 20s and, um, is been just gutted with supply chain issues. Right. We went through the challenges of that with, with, uh, with COVID and so forth. And now what we're seeing with, you know, whether it's a Stradar Hormuz or the Suez Canal, you know, Panama Canal issues that we had last year, all of those things.

[00:37:00] And there's an article that we have later on here about the, uh, the, um, Stradar Hormuz, uh, closure and the issue that it's had on U S ports has just been hammered. Right. So we went through this with tariffs, people ordering huge amounts in the supply chain world, right. To beat the tariffs and having those landed in the U S then the same thing started with kind of with oil.

[00:37:25] And then boom, we've hit this shock of nothing coming in in comparison because of the port or of the, uh, of the Stradar Hormuz issues. So we've got a really interesting and super volatile issue going on with not just our ports, but in general, the overall supply chain. And, and, and that it's pretty, pretty scary from that standpoint of how this is looking at it is looking at it. It's, it's just as bad.

[00:37:50] This uncertainty of it is basically as bad or worse than, uh, when we had the issues of literally ports around the world, completely closing because COVID. Sure. But on the flip side of that, do you think that companies are much more better prepared than they were in before COVID? I mean, again, it seems like just what I was just saying before, I mean, more than awareness, right.

[00:38:16] The, the supply chain conversation seems to be much, much more critical and much more strategic in businesses than it was probably, you know, back in the, and before, before COVID that's there. So obviously maybe not all businesses have improved, but I would suspect there's a lot of improvement with using technology and AI and other things. And just, and just, and just dealing with it, right. Confronting and dealing with the situation.

[00:38:45] I would, I would argue that there's an awareness, Tom. I don't know that there's anything really beyond that. Now, are the, are people working on having much better, um, are they managing it closer and faster and more consistently? I mean, I remember literally, um, the, um, a conversation that we had, I think it was, it might've even been late 2024. Uh, funny.

[00:39:13] I was talking to this gentleman earlier this week, uh, Mike Mortensen from, uh, ARG Alaska rubber group. Um, Mike and I were talking and he was on our show and he talked about it. I think he said, and I want to say this might've been either early 2025 or, uh, it's probably when it was, but Mike said, um, that, you know, there were, they were going from, you know, checking in with suppliers, key suppliers.

[00:39:37] They were having regular conversations with, you know, monthly or quarterly that now they were down to talking to them weekly about supply chain issues. So I think the awareness has risen. There's probably some really good software tools that people are using to kind of analyze supply chain a little bit better, whether they're third party or they built some in-house baby tools, but you can't control what's going on. You can't stop. You can't control or plan for a port strike too well, right?

[00:40:06] You can't control, uh, what's going to happen if the Suez canal, you can look to it a little bit and maybe pre-buy. So I would suggest, I think what, and I would love it if somebody that truly is managing a supply chain themselves, uh, versus pundits, so to speak here. Uh, my guess is the awareness is much more higher. They're trying to put some systems in place, but does anybody have it really figured out or nailed? No way. Okay.

[00:40:35] I just, I just can't, I mean, I've spent the, first of all, I mean, no one's ever going to have a hundred percent figured out. The question is, are they, are they more figured out? Is it better than it was before COVID and more figured out and more under control on a regular basis? Right. I think there's definitely some companies that are better, much better off than they were prior to COVID. So let me, let me restate things in case I wasn't clear.

[00:41:04] Are they better? Yes. Is it, is it dramatically better? No, because I don't, I don't believe they can, there's not enough that can be controlled. Right. Uh, are you managing your inventories better? Are you, I've got actually a call later today with a startup company that reached out wanting to talk a little bit that is, you know, working on better demand planning and, you know, and, uh, buying better and so forth. Is, are they better at that? Yeah, we're better at that.

[00:41:32] I would say distributors in particular are better at that, but is it, have they solved the issue? And to your point, forget about a hundred percent. Have they got to 70%, 60%? I don't think so because there's too many variables. They're just better on managing it and understanding things better. And a lot of that is tied to technology and they've been forced into it. Yep. Which is good.

[00:41:55] I mean, you could look back and say, Hey, is what did the COVID era and, uh, you know, and this, um, Iran war and so forth. Did that make us better? Absolutely. Did it make them great? Some, but probably not the average guy. Good. That doesn't kill you, make you stronger. Yeah. I've heard that way too much. So I must be, I must be really strong. Yeah.

[00:42:25] Want to roll ahead a little bit here? Yeah. I don't, um, is there anything that you want to, do you want to focus on here on the manufacturing section? No. I think we've hit a lot of this stuff kind of one way or the other. Yeah. We talked about quite a few of that already. There's just interesting. There is, you know, by the way, just as a side note, we, you know, forever in our, up until last week in our newsletter for 196 of them, we've mixed this economy and supply chain together.

[00:42:56] And now we split those out. And so now you are going to become a supply chain expert because we're going to have a whole section. You're going to be paying attention to, to, to, uh, freight rates on 20 foot and 40 foot containers. And you're going to be, uh, noticing as you drive down the road now, what size containers next to you on that, that semi and where did it come from and which shipping line is doing what? And looking forward to you being that supply chain guy soon. And you just keep looking forward to that. Yeah.

[00:43:23] Well, I mean, Hey, you've, you've turned me into a vibe coder. So why can't I turn you into supply chain guy? Okay. Fair trade. Good. No, anyways, truckload rates keep rising was, uh, one of the components. This is from, uh, uh, trucking info.com and, uh, truckload rates keep rising. It's tight. Where are you looking? Uh, I was looking at the article about, uh, Oh, you're still in the previous section. Okay. Yeah. I'm sorry. You were, you had moved ahead to manufacturing.

[00:43:53] All right. Yeah. I'm sorry. No, I didn't put it on the screen either. So you didn't know I was moving ahead to manufacturing. It's pretty funny. Cause I'm always trying to get you to go full screen or focus on the guests that we have in single screen and, and have less of the newsletter up. And then I needed you to have the newsletter. Yeah. Um, I think, uh, there's nothing in there's a few things about MNA and our manufacturing distribution and MNA section in there. Uh, anything that you triggered on, you want to chat about?

[00:44:22] So it looks like, uh, I don't know if this is breaking news, but Trump just said he would impose a hundred percent tariff on EU countries that impose a digital services tax. You said that, uh, it was threatening that last year. Do you just have the news up or something? No, I just, Bob just sent this through. I don't know if this is hot off the press or not. Okay. Um, yeah, that was, how would that, how would that, how would that get around their agreement? We have an agreement with the EU.

[00:44:50] Less digital services are not on that agreement. I would assume that those are on, on physical goods. Um, so why don't you ask a Gemini or Claude or somebody real quick? Um, the, um, but that's, that's my, my clear assumption on that. There was, there was rumor about that last week. I don't know if it was clearly that, uh, that he said that he might've reiterated it today. Could be the key to that.

[00:45:17] But yeah, I mean, there's, there is, um, well, I mean, look, if you think about even digital marketing, right. With GDPR and the stuff that the EU has done consistently is they are focused on protecting the residents of those countries, uh, from digital dam. I'll call it digital damage. How's that? And what would be an example of digital damage? Well, the, they, they're, um, G G DPR is the, the good thing.

[00:45:47] Good thing to start with, right. Cause gaming and so forth. And then what's being done with their data from a standpoint of whether it's a Google or a meta or whoever it might be. And that's what they're trying to put all, all different types of controls on. And, uh, and now they want to put all kinds of taxes in to go along with that as well on, I believe it's on consumption and, and what those companies are doing in those countries and ad revenues and so forth.

[00:46:11] And, uh, this president has received boatloads of money from the people that that impact. Right. Um, I mean, I just, uh, one of the podcasts that you and I both enjoyed listening to the all in podcast, you know, they have, well, I remember, uh, looking at a white house dinner that was hosted for technology executives.

[00:46:35] And there was CEO of Microsoft, CEO of Google, uh, Mark Zuckerberg from meta, um, Tim Cook from Apple and four or five other very high powered. And, you know, David Sachs obviously was there. That's the Silicon Valley investor and billionaire who was up until recently. He was the, uh, AI and, uh, cryptocurrencies are for Trump administration. He was there.

[00:47:02] Jamal Paliha-Patea for was one of the early stage guys at, uh, at Meta was there as well. And, uh, you know, a round table of probably 10 billionaires that are driving technology, right? Basically the mag seven, so to speak, as the, as the wall street calls them all sitting around a table for dinner with the president and his wife. And they don't want to have the taxes on, uh, on what they're doing in, in, in the EU. Right. And they're writing checks.

[00:47:32] So, yeah. So it says digital service taxes typically target gross revenues from specific digital activities, such as online advertising, digital marketplaces or platforms for data transmission, um, selling user data collected from digital activities. Um, anyway, I don't, I don't know enough about it to, to speak super intelligently about it, but. Yeah.

[00:48:00] Well, that's why you kind of re I was trying to say something similar to that about, uh, their data taxes and their activities, their ad ad revenue, I think was a significant component of that as well. Um, so I did want to kind of jump ahead, Tom, and I just, uh, we have two articles in there. I'm not, can't remember if, yeah, we're in the same section there still that you just jumped into, um, is there's a couple articles here about, about lows.

[00:48:31] And, um, and so as we kind of get, look at getting started on this, I don't know if you got a close look at that, but there was one from, um, uh, HBS dealer and the other one was for marketing diet, but they were both talking about, uh, some of the things that lows is doing with both consumers and contractors.

[00:48:50] And I think, you know, as we look at, at HD supply and, um, um, um, lows here, right. We, we, we quickly think about them as consumer oriented organizations, right. It's where, you know, the home home gardener and the guy that wants to build a new fence or whatever it is, goes to get all his goods.

[00:49:18] But the growth on that side for them with their is, uh, with their, uh, their professional side is growing. They're really focused on the growth there, but this is a good example. And I think we, we've talked about this a lot and I want to continue to push this point home, um, to our audiences, you know, if you're a wholesale distributor in particular now is just, well, last year was the time to start and now could not be a better time to be.

[00:49:48] Really looking at that. I think we've had that blurring gray line between B2B and C B2C, but the B2C experience is becoming more and more of the expectation of the B2B buyer. So whether that's an Amazon business purchase or it's a contractor that is buying at Home

[00:50:13] Depot and has, uh, um, you know, great discounts there, but he also is buying from the B2B building materials. Just straight. And I'll just use a simple example, right? I've got, I can't remember how many linear feet we have. Our home is on 10,000 square foot lot. We just did both sides of our house with all new, all new wood fencing, redwood fencing, all new fascia around our house. You put redwood fencing around that house? Yep. So the, um, Holy crap.

[00:50:43] Yep. So the, um, it's got to last. That's expensive. Are they going to just, are they going to just stain it? No, it's paint based. It's being sealed and painted. So you're going to paint the redwood. Yep. So why did you use redwood if you're going to paint it? Lasting timelines. We have a, uh, 20 year guarantee on it all. So I won't, I won't be, I won't be living in that house when that fence needs to be redone. Point being is we think about lumber, right? Yeah.

[00:51:16] The fence guy, nor the roofing guy that did all of our, all of our, uh, fascia did not, um, did not have, I think that the, the roof guy that did that had lumber delivered from a lumber yard and the other guy brought, got lumber from home Depot. So, but both of those contractors have guarantee you have accounts at home Depot and they have accounts that can all lumber, right? Now think about that if you're going to all lumber.

[00:51:43] And I think this is, this is a good example here in Southern California, great, a very large lumber company. Uh, they are doing a great job of the, they're not a lumber yard anymore. There's a walk-in showroom there now with doors and hardware and all of those things. My point here being is you've got the B2B experience and a B2C experience and a B2C experience has always been higher touch, more exposure and a different feel and look to it all.

[00:52:11] And we have to be thinking in the B2B world, whether you're an electrical distributor, we have tons and tons of customers at LeapSmart that are plumbing or electrical distributors that have showrooms. They're seeing that value of bringing that experience level high, but it also ties into when are my shipments being coming? And how does that compare to when I buy something from Amazon business, whatever it is, you could be a janitorial distributor and you need to be something close to how quickly can you get

[00:52:41] toilet paper, paper towels, and mop buckets to an industrial facility because they can get it with our Amazon prime account. Right. And I just think that's something we've got to be looking very closely at. Yeah. Yeah. So anyways, that's my rant about that, that we need to continue. Okay. So take us away. Where are we going next? You want to start talking about some technology and so forth?

[00:53:06] Yeah, I'm kind of done with manufacturing and supply chain and building supplies and stuff like that. That is enough. Our AI and news section is a little lean this week, but... How many articles do you want there every week? I'll work on it. Well, but look, there's only three articles here and then there's... Whoa, look at all of these articles here for supply chain and manufacturing. So you want to talk more about AI?

[00:53:35] Well, maybe we should not call it AI. We have people right now getting ready to start commenting that they don't want to talk about AI. They don't want to talk about customer experience. I can see it. It's coming. All right. How many? So you want five each week? How many do you want? No, I don't know. It's quality over quantity. Why don't you send me some of them that you would like? I'm sure people love hearing us argue about what's in the newsletter. Yeah. Some of the high quality show you've produced. I will actually send you some, actually. I get a lot of good AI newsletters. That'd be great.

[00:54:04] So, you know what? Maybe we could do, Tom. Maybe we could do like a second newsletter a couple of times a month that is all AI technology and so forth. Okay. We could look at that. So let's talk about this first one here with our friend Alex. Yeah.

[00:54:30] So I guess he was speaking at, is this article, I think, right from the meeting? Yeah. I missed this event this year. It's historically one we go to. Our friends, Jonathan Byn and Ian Heller at the Distribution Strategy put on a great event. They call it Applied AI. And Mark Brohan, good friend of ours, he's been on the show multiple times, is working with them now full time.

[00:54:59] And Mark was, I think, looks like he was pumping out articles from the event. But Alex, he's been on the show with us multiple times. As soon as we nail down and finalize the date of our 200th show, he's wanting to join us as long as he's available. By the way, the guest list is coming along well. They just all want to know the final date, Tom. So we need to button that up. Man, that's asking for a lot for the date, isn't it?

[00:55:29] Yeah. It's not like these people are busy. Yeah. Just be ready. We'll be just in time. Yeah. That's right. We're going to plan our show just like a distributor does inventory. Yeah. So, good. So, Alex. So what were the key points? What were the key things? Well, you know, it was interesting. And I had dinner with Alex in Cleveland in, I think it was April. And just such an interesting guy.

[00:55:55] He's just one of our great, great guests that we've had on the show. And, you know, he's not a supply. He's not an economist, but he fires out statistics like he's an economist. And as he's looking at these things. So he was talking a lot about two components in looking at wholesale distribution and manufacturing.

[00:56:18] One was the idea of data centers and the big boom that that is to just about every type of distributor out there. I mean, if you stop and think about, right, you got your construction supply companies. You've got your building materials companies. You've got plumbing, electrical, HVAC, industrial, janitorial. They're all being touched by these things.

[00:56:48] Now, when you think about it, I mean, we have, well, there's an announcement later on in the newsletter here about one of our customers. And, you know, they're ramping up even more that we'll kind of talk about that before we go. But we've got distributors left and right, specifically in the HVAC plumbing and electrical space that are really scaling up for all of the data centers. So Alex was talking about the boon that that could be for the distributor that's well structured and well organized.

[00:57:14] And I want to spend a little bit of time kind of talking about this article because it's it may wind us out of getting to too many more because there's so many things unpacked. So there's that component. But then he was also talking in the article here. And I want to try and do a phone call with him to get a little more of his feedback on it. But talking about the use of AI, right, because all roads are tied back to being in an AI event and the use of AI and wholesale distribution manufacturers.

[00:57:42] The two things I think we can unpack in this discussion is the data center component and then what is really going on with distributors and how successful are they being adopting AI and getting not just adopting but getting returns. So those are my two thoughts I want to talk about with you. Okay. So let's talk about data centers first. Go ahead. So was one of the things that he brought up, I know you had mentioned maybe you had mentioned this and not him,

[00:58:10] is that is there a risk investing so much in the data center proliferation in a sense that, A, there's some pullback on the number of them that are being created or... So I brought that up. Yeah. Yeah. So I'll talk about that just so you can fire bombs at me. Okay. Yeah. I can debate that. Yes. I can see as you, the look on your face for those of you who are listening versus watching Tom.

[00:58:37] I've known Tom for 56 years, I guess it is. And I, which I just can't even, not even imagine. I don't want to be 56 years old, let alone having known you for 56 years. Tom and I have been friends since kindergarten. Our new marketing director starting, she just thinks that's the best thing in the world for a marketing department to play off of. I'm like, who cares?

[00:59:01] The, I was telling somebody the other day, what I was telling you a while back, I said, when we both retire, I don't ever want to talk to you again. And then my wife says, until you guys started another company. So the, but I can tell on the look on your face when you're ready, when you see red meat in front of you.

[00:59:19] All I was saying in our pre-show discussion was that I had been reading or listening to other side of a, the other side of the argument was that you have a whole group of politicians who want you to stall or stop data centers being built.

[00:59:47] You have a lot of people that are saying not in my backyard. And we have a LinkedIn user. So I don't see who it is. Just made a comment. This has got to jump, but I bought some Tesla stock with all this buying a Tesla stock. By the way, I'm looking at buying it, not a Tesla, but a Rivian. In fact, it's funny, I haven't made the final decision, but I did put a deposit on one because they, you know, you're looking at the inventory online.

[01:00:17] I've been working with it. Is Rivian a public company? Rivian is, I don't know. Because I know they've been having some trouble. They've been laying off. There's some issues with them. They did an AI layoff, right? Just like everybody else. They right-sized. They right-sized. They called it AI. I don't, hey Alexa, is Rivian a public company? Yes.

[01:00:45] Rivian Automotive is a public company trading on the NASDAQ under the ticker Riven. Rivian. Ticker Rivian. So the funny thing is, is I just have been working with this advisor, haven't made a decision, looking at another car, have to sell the current car. I don't think I'm going to trade it in. But they found one at the right numbers within their system. So he texted me yesterday. He goes, look, he goes, their deposits are supposed to be non-refundable. But I talked to the manager. Just put the deposit down.

[01:01:12] And if you don't, because I'm going to pick one up tonight and drive it till tomorrow. And, which is great, right? I pick it up at 5 and I have it back, I think, at 11 tomorrow. And so I put the deposit down. And I just got a text during the show that my pickup appointment for it is on June 30th in Costa Mesa. Okay. I don't have to go get it, but it's there in the middle of the week if I want to go get it, which is pretty funny.

[01:01:40] But back to the data center component, right? Is so if we've got people saying, and Bob made a comment here, that in Texas is now requiring data centers to bring their own power and water if they want to build. Right? There is a lot of discussion that the infrastructure, the impact that it can have on existing infrastructure with power costs going up, water needs, and so forth.

[01:02:06] All of those have pretty much been debunked by the data center providers, right? Recirculating water and so forth, right? Guarantees in writing that it's not going to change local power costs. They'll absorb all those costs. We'll even subsidize local power in some cases. Right. So great. Great point. But there is all kinds of red tape there now. You've got people within the government trying to stop them. You've got states that have outlawed them.

[01:02:33] You've got, I heard on a podcast recently, they said that, I can't remember, there's like 172 of them or something like that slated right now. And there was a comment made that if 50% of them get built, it would be great. Here is the point that you're interested in jumping on. The question comes is not do we need them for the AI-powered future that we're looking towards.

[01:02:59] The question is with my question would be with all the delays and the challenges that are coming to those with that happening. Will AI and the chips continue to get so much better that maybe we don't need 400 of them? Maybe we need 200 of them. And what does that mean overall? So how about that?

[01:03:25] So first of all, the chips and the efficiency will get way better. Okay. So, however, as it gets way better, costs should come down. Okay. As costs come down, demand will go up significantly. Right. So rather than us using AI an hour a day, right, because that's all we can afford, right?

[01:03:48] I mean, literally, Justin, our programmer, stopped doing work or slowed down doing work because the bill for some of the AI stuff that he was using, quote unquote, got too high, at least in his mind. Right. And so what did he do? He slowed down the use of some of the stuff of AI. Right. Right.

[01:04:10] So right now, especially at a business level, we are governing our use of AI either by the availability of it or the cost. Right. Cloud will shut you down if you use too much. Right. Or they'll charge so much that it's not practical anymore. Right. So we have a cost and availability problem.

[01:04:31] If we had much more effective and efficient chips and efficient even how the models run and the efficiency of all of those things and the costs were less, then we would have much less. We would use much more of it and we'll build things and continue to build things that use much more of it there.

[01:04:50] So I argue that reduced cost and higher efficiency will create even more demand for data centers because we'll just get more out of them. Right. We'll be able to get a lot more out of them than what we go for. I mean, if you look at this in the Internet, right, in the days of dial up, we used to dial up and check our mail and we'd shut down the phone because we didn't want to have a busy signal on our phone.

[01:05:16] And then all of a sudden we had always on Internet, right, on our phone and in our life and everything that's there. I believe we'll have always on AI eventually here in our life. And it won't be something we do, you know, and then we don't do it. It'll be always on one way or the other. And that's going to take a lot of computing power. Okay. So I think there's even a law. I can't remember the, can't remember the, I'd have to look it up.

[01:05:46] But as things become less expensive, consumption goes up significantly. Sure. And far away. More is a lot. Yeah. More is a lot. I think. Okay. That's interesting. Okay. So your, your position would be, we're not only going to need the ones that are on the books, we're going to need dramatically more because things will get more efficient and that will drive consumption. So, so is it dramatically more? Is it roughly what they're looking at now or?

[01:06:17] Oh, I think we're way underestimating what we need. Okay. We're way underestimating what we need in data centers. We're underestimating what we need in power to power data centers and to do the things that we need to do to really take full advantage of what is coming and, and what is, what is capable of what, what's going to be out there. Yeah. Okay. So where are they going to be? I don't know. I mean, that's the problem, right?

[01:06:46] Is that not in my backyard thing, right? I mean, that's. Look, I'm not suggesting that there's not going to be pushback. I'm not saying it's, I'm not saying it's happening now and there'll be continuing to be pushback. And there'll be certainly data centers that even, you know, or on the nine, on the, on the 99 yard line that won't ever get built until we get over the line. Right. So I'm not suggesting that that's the case. I think it's dumb.

[01:07:12] You know, if you ask my opinion from a political perspective, it's, it might make sense politically because it, you know, appeases some people. But I think it's short sighted and stupid, right. To, to look at those things. So, and there, you know, we have a lot of land in this country. It's just, you know, how do we utilize it?

[01:07:32] And, and look, I agree if I wouldn't want my power to go up significantly or have a lot of environmental issues, but I do believe there is certainly those are being, you know, rectified as they, as they go along. So, yeah. I mean, if I owned a lot of land in the middle of the country, you know, I'd be thinking solar, solar, solar and data centers. Well, they're going to be in space here soon. So.

[01:07:55] Well, I think that's the, I mean, it just, it, it's so hard to even fathom that it takes the Jeff Bezos of the world or an Elon Musk in my mind that, that type of thinking. Um, to be able to even, I mean, obviously they understand the technology that the capabilities are there to create that power and get it back here. Um, but boy, that's, that's a standard. And Bob mentioned distributed data centers.

[01:08:24] It's not a far-fetched idea where you will have, you know, put a server on the side of your house and get paid for it. Um, that's not a far-fetched idea. Right. Right. There's a lot of horsepower that we, especially as we get more and more higher powered machines and all of those things, there's a lot of horsepower that we have in our, you know, within our house that we're not using. Right.

[01:08:48] And, um, I don't, you know, I don't know quite the logistical aspect of that, but it's not a completely crazy idea. Agreed. Agreed. All right. Well, let's now take the other side of what Alex was talking about. Right. Okay. And that was the adoption. And we've got another article here. It talks about, uh, as well from DC, DC velocity. It says AI adoption accelerates in supply chain. Um, so that event, I took a look, uh, there was.

[01:09:16] Um, there's 45 or more technology companies that were exhibiting at the event that Alex was speaking at. Um, we were at a separate event this week, but, um, there's no shortage of AI based technology companies for distributors to take advantage of. Um, and we see boatloads of new ones coming in day after day from Silicon Valley.

[01:09:43] I use the term Silicon Valley is minting new AI companies that are looking for somewhere to go sell what they do. And lots of them are coming to distribution and manufacturing. Um, most of those companies I've had this discussion just, uh, three or four times with people this week. Most of those companies are calling themselves a platform.

[01:10:04] Uh, we've got distributors that are, there was hundreds of distributors at this event that Alex was speaking of, uh, from the article that we're talking about now. Uh, probably representing the equivalent of, um, there's, I'm thinking there was four or 500 people tops there. I know that they're out growing the facility, which again, congratulations to Jonathan Ian at DSG and their team.

[01:10:28] Um, I'm going to say there was 150 companies, maybe 200 companies represented there. Forward thinking people really looking to get their head around AI. How can it help us in our business? What we're seeing though is in, in, in some of the articles I watched, uh, earlier in the week that Mark Brohan, our friend here had published.

[01:10:47] Um, every time I saw a chart that, that was related to AI adoption and return on investment, it was tied to one piece of AI type of software, which they had five or six vendors for in that room. You would guess what it was? Order processing. Yeah.

[01:11:09] Right now, everything that I'm seeing out there, uh, of research studies that are done is return on investment is manual order processing and AI technology that solves that. That can literally, some of them can capture it from a phone call. Some of it can capture it from an email. Some, you know, most of them can take it from, uh, take it off of a picture of a piece of drywall. That's got an order written on it, which is great.

[01:11:36] My point being is, and this is a little bit of a soapbox that I'm going to be on for quite some time is distributors have lived in a world and manufacturers have lived in a world historically where they have disconnected data systems across their business. I was having lunch with a prospect of ours who happened to have been in town. Uh, he's a manufacturer.

[01:12:00] Uh, I met him at a, at an affiliated distributors event cause he's a vendor to AD and sells to quite a few of our customers, existing distributor customers. And, uh, we were talking about this over lunch yesterday about silo data across the business that it is literally hamstringing companies because what they're doing right now.

[01:12:19] And his company was running into this as well is there's a rush to AI and technology because we see the hype in the media and we have lots of solutions and people are going, and I don't want to say in general, but many, many people, because I see it at the events I go to. And I talk to people that are looking at solving a quick pain point, which is great, right?

[01:12:44] If you can buy order entries, AI technology that is going to reduce your, you know, you can do three times as much with the same person and don't need to hire more people, more power to you. That's a great idea. But if that doesn't tie into an action plan and a, a technology and data plan for the longterm, you start running into things. We were talking about it earlier in the week about a customer of ours who went and bought a data lake because everybody was talking about data lakes and their CEO asked about a data lake.

[01:13:14] And then they started dumping stuff into a data lake and now they've got stuff out of SharePoint and into a data lake, but they have the same mess, right? Because there wasn't a plan for what we're going to do with this. And I think where we're at right now is why we're going to see a lot of this is that people are going to start buying shiny objects. They're going to get a little bit of a return, but they're minimizing what they could be doing for their overall organization by having a plan of how are we using platforms.

[01:13:44] I mean, everybody calls themselves a platform. There was, when I looked at that list of people in the building, by the true definition of what a technology platform is, there's only one of all the kind. We had, we've been there, there would have been two, right? So that anyways, I'm throwing a lot at you, Tom. I just talked a lot. Want to unpack that and throw rocks at it or agree or what are your thoughts?

[01:14:05] Well, I think there's probably a half a dozen acute pain points in most distribution order entry and the order process being one of those that can and should be solved by a point product. Yeah. Right. A point AI product. Okay. Solve those. I'm not, to your point, there's no reason not to solve those. Mm-hmm.

[01:14:34] And those are sort of like acute, immediate 911 pain points. Yep. Okay. But then if you take a step back from those acute pain points and you look at, okay, holistically and strategically, how do I want to incorporate AI into my business? And even technology slash AI, right?

[01:14:57] How do I want to put the right technology infrastructure into the business that can support a more strategic long-going use of AI and just technology in general? That's a separate project. It's a separate thing.

[01:15:13] A separate thing.

[01:15:41] And a more and more of a understanding that that is the right way to be looking at it rather than just continuing to try and mandate a million different things in the organization. So I think we should separate the two out. Good point. Like I said, I think there's some acute problems that can for sure and for sure be handled right away.

[01:16:05] But let's not mistake those from just a, hey, we're handling an acute 911 problem versus, you know, trying to then put something that's more of a holistic strategy into the organization. Yeah. I like that. I like that. Makes a lot of sense, Tom. And I was just having this discussion the other day with a distributor that's, that has been to that event.

[01:16:31] And he was, their organization has done a nice job of building some of their own technology. And he was really looking at things from a standpoint of, he was looking to benchmark his company at that event against other distributors that were there. And then also with some of the tools and technology that they have built, he was looking at trying to benchmark that against some of the vendors that were there. And we've had this platform discussion.

[01:16:59] And I don't think he had looked at it this way. I'm a really, really sharp guy. I really always enjoy my conversations with him. And we had the platform discussion. And he was like, well, what, how do you kind of define, how do you define that? Right. Because everybody says they're a platform. And I just said, and you used the word extensible a moment ago. Right. And I told him, I said, he was the perfect example because of their desire to build some internal tools. Right.

[01:17:27] As I said, the simple way is to just ask, ask the company that says they're a platform, how soon you can get access to the code. So you can build some additional tools on top of their solution to fit your business better. Right. Now, if you were to walk into a room, it doesn't matter whether you're at this week's AI event or an AD event with lots of vendors there or trade association event or just went online and started searching.

[01:17:51] The vast majority of point software products that you could never get access to their code because it just wouldn't work is are calling themselves platforms. But where the future lies, right, is in you may not have these people in your organization today if you're listening to this as a wholesale distributor.

[01:18:10] But you will have people over the next few years in your organization just because of the people that the young people that are coming into the market and the things that they are learning that are going to look at your tech stack and say, I want to build on top of this. We can use this in. And so I'll use late smart as a perfect example. Historically, for the first five years, six years of our life, we've been looked at as a CRM. Right.

[01:18:36] But now we're your team is building all these other unique tools that we've got purchasing teams that want to access the data operations team that want to access the data executives that want to slice and dice some data. Right. Because it's extensible. It can expand and extend beyond the original use case. And that's where I think people are getting into a little bit of a challenge and a struggle right now is they're buying things. And their risk is that they end up with the exact same silos.

[01:19:04] And this is the risk that they end up with the exact same silos that they had with traditional server based or cloud based software that now they want to use AI and they can't see the AI across their overall business. So interesting time. I think we spent a lot of time expanding on Alex's simple article. Well, let me just add more. I know we're going to need to wrap up here, but I want to add one. We use the word AI. Right.

[01:19:34] I think we have to make sure that we separate out two different applications, I guess. One is, OK, how am I going to use AI in my business to support the things that I'm trying to accomplish either internally or with my customers or so forth? OK. OK. Another aspect of it is, how am I using AI to build things that I couldn't have built before? OK. Right. I think we underestimate that.

[01:20:04] Right. The thing that with AI enables you to build technologically today, even and I'm not talking about software applications, although that's a huge part of it. But even integrations, API integrations, things like that. API or AI can either facilitate building those for you or accelerate the process of getting those things built and put into place.

[01:20:30] It's that even, you know, we talk about a lot of our customers don't have big IT staffs that don't require a big IT staff. Right. But, and the big but is, what platform are you going to build these things on? Right. Are you going to build a bunch of siloed applications?

[01:20:49] Or do you want to build these things on a platform that can start leveraging data and leveraging information one to the other to then go back full circle to potentially have more capabilities on using AI within the organization?

[01:21:03] So I think you have to separate out AI, the advantage of AI is AI and application, but then there's also AI in the ability to build and construct and test and all of those things that keeps getting better and better every day that literally would have been or was impossible a year ago. OK. So that's final statement? Final word? Final statement. Final statement. Final word. OK. All right.

[01:21:32] Don't want to call it. It looks like you're doing a whole bunch of other things other than when I talk. Literally, I was just writing down that I needed to do something today for you. OK. What was that? It's not for consumption on the show. OK. I think I know what that is. You had something you needed me to do this week when I got back in town. Yes. I was writing the note down to make sure that I was taking care of what your needs were. OK. Good. My role in life. Happy Tom.

[01:22:02] Happy life. My role in life is that Darlene and Tom are happy at all times as well as the rest of the employees. But I think there's a far lower pecking order of the rest of the people here at Leaksport. So this comment was made here. We need to view AI as primarily an efficiency tool, but not an effectiveness tool. That could probably be a whole nother 10 or 15 minute discussion. I think in closing on this topic is if you're a wholesale distributor or manufacturer, you're looking at AI.

[01:22:30] Identify what those use cases are, problems that you can solve. And I would say it's not even necessarily that it needs to be AI. There are some tools that have maybe been built using AI to help build the tools, but the tools aren't necessarily actual true AI. The question is, can it solve these issues? No, but they're remarkable, right? They're remarkable, extraordinary tools that you couldn't have created before. No, yeah.

[01:22:56] But the point is, if you need to solve a problem, go get that. And I'm kind of recapping what you said. Go look to solve that problem, but be thinking bigger picture. And where does my organization want to be in a year, in three years, in 10 years using technology? And if you want to do that and not get yourself in a pickle where you have the same challenges with silo data, be thinking platform, whatever platform that is.

[01:23:24] That can bring your structured, unstructured data. Think spreadsheets versus Word docs and PDFs that can be bringing data in, plus all of your connected other software system. That's where the future lies. Tom, before we go today, though, can you bring the newsletter back up? And we're going to look down to our scuttlebutt section. We're going to miss our cybersecurity and robotics section for today and our people and leadership segment, just because we talked about too many other things, but there's good articles there.

[01:23:53] But in our industry scuttlebutt section, our good friends at Lone Star Electric Supply, they're friends and a great, wonderful partner and customer of ours. They just launched a whole new division to work with data centers. And they're growing and expanding just a rocket ship of a company that came out of nowhere 10, 11 years ago and has taken over some huge market share in the electrical industry. But they have just launched a whole new division with their company.

[01:24:23] CORE stands for CapEx Optimization Reliability and Execution for Mission Critical Projects, i.e. tied to infrastructure. So good for them. Congratulations to Jeff and his team at Lone Star for that. So got to shout out to the people that help pay our bills, right? And they appreciate platforms. Well, they understand what platforms do, right? That's a great point. Great point. Good. All right, Tom, what does the weekend hold for you?

[01:24:54] Nothing too exciting. Go drive a Tesla. Right. Awesome. Okay. Well, just take care of what you need to. And I'll get it this weekend. I know some things they need to do. That was another note I wrote earlier. Okay, good. All right. So everybody, now that you know that Tom and I are looking at new cars, you know, chime in on what you think of those. We've heard from a few people today and people are out buying stock right now. So that was kind of funny. Good show. Always enjoy a conversation.

[01:25:24] Again, this is $196, can't believe it, coming up on $200. Tesla's up $10 today. It's up about $10 since we started the show. Well, you know what? Maybe that people are seeing that if you have one, the reputation of the company just goes through the roof. Of Tesla? Yeah. I mean, look at the market presence that you have. You're an influencer, right? You have a podcast.

[01:25:54] Okay. Maybe I get one of those covers you put on it, those plastic things you put on it, you know, that you can brand your car. You know, you see cars that are kind of wrap. Yeah, that's the word I was looking for. Yes, a wrap. Okay. I'll put it around the word wrap on it. As long as you don't listen to wrap. Okay. That's fine. It is. I joke. I was at an event a few months ago, and my invitation to come speak at the event was I was in the influencer category.

[01:26:23] Could you imagine if I told my kids that somebody considers me an influencer? I think they would get a good laugh on that. They would. Although I provide good laugh for them all the time. So, anyways, we're winding down right now. I'm Kevin Brown. This is Tom Burton. We get together every week. We appreciate you spending time with us. Your time is precious. We hope we bring some value to these discussions. We're grateful for you being with us. We do ask one favor.

[01:26:48] If you like what you hear, if you're a user of Apple Podcasts or another podcast platform in particular, click the like button and subscribe and leave a review for us. If you're listening on YouTube or even if you're not, then jump in there. Hit the subscribe button. Wherever you might be listening, hit the follow, the subscribe, the like, and the review if there's an opportunity. That gets us out in front of more people.

[01:27:17] I think I mentioned earlier, Renee, the newsletter goes out to many, many countries, typically on our weekly download viewer and five to seven countries of people listening into the show. So we're greatly appreciative of it, but how do we get that out in front of the hundreds and hundreds of thousands of wholesale distribution companies and the marketplace that serves one third of U.S. GDP is by you sharing and liking and subscribing and getting it out to other people with us. So we'd greatly appreciate that.

[01:27:46] Lastly, we talked a lot about technology today. If your company is looking to digitally transform, start using technology to accelerate growth in your business and reduce risks within your business, we'd love to talk to you at LeadSmart as well. And you can reach out to us anytime. Tom, there was a comment here. Tom is an influencer. I'm waiting to see him strike a cuquettish Eugene pose for the camera. Don't even know what that means. But, Tom, you do make some good faces for us on the show, so we're appreciative of those.

[01:28:15] We also heard no gongs, no other clapping today from your laugh track. There you go. So that's why we wish everybody a great weekend. Be kind, be safe, do good things. 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.

[01:28:40] 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. 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.

[01:29:07] 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.