Amazon’s China Pipeline, Tariff Fallout, and Autonomous AI in 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.

[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. Keep going. Nobody's watching. Don't worry. Okay, here we go. So how come you, once you do that like once or twice in our very beginning intro, you forget about the rest of the show? I know. Well, you have to remind me. What's the fun in that?

[00:00:54] I know. I'll try and remember. Okay, you're supposed to surprise me. You're out of sight, out of mind, right? So there's a page for it. Right. Well, clap for yourself for having that. Okay. Is that an app you got or what is that? Is there a gong? No, there's a gong. Okay. Yeah. Yeah. We gonged, I think we gonged a few things before. So, with that, I think the show has officially started. Fantastic. How are you today?

[00:01:24] Good. Good. 9.02 Pacific Time on Friday, May 1st. This year is going fast. That is true. You were letting me know in a meeting the other day that I'm behind on some things. So, I got to get on it. Okay. All right. What was that? Start of a new month. It is in the start of a new month. Stock market had its best month since the pandemic in April. What are your thoughts on that?

[00:01:53] That's, you follow the stock market a lot closer than I do. It's pretty remarkable, actually. Yeah. If you take in, if you were to take a step back and look at, you know, the war and everything that went the roller coaster of the war and the oil prices and everything else that occurred. And I think it was just like, you know, as I told you before, right, the market is based on momentum. Mm-hmm.

[00:02:18] And you've had strong momentum and it just keeps, you know, building up. So, money keeps flowing in. And as long as money keeps flowing in and the momentum keeps going, it'll keep going up. And then there'll be a point where it won't. It will reverse. When is that? Can you let us all know right now when that's coming? So, we know? Yeah. I think, I think we're going to see another good month, a decent month, probably not like

[00:02:47] we saw in April and in May. It'll be interesting to see, you know, summer tends to slow down and some, you know, volume tends to slow down a little bit. Although over the last couple of years, it hasn't been that way. I think again, with so much computerized trading and everything like that, it's not quite the same as it used to be. Well, we'll hold on and watch the ride, see what's happening. I'm sure you were, you're pumping money in all month, right? I pump a little bit in. It was a good month. It's a good month.

[00:03:15] Well, I bought my fancy new glasses so I couldn't put money in the stock market. Yeah. I hope the stock market paid for your glasses. So. It could have over the last few months with some of the, some things or even if you got a little bounce with the crypto. So that was a positive thing as well. So we're excited about to see where that goes. Well, let's dive into our show. Lots to talk about today. We've got some great information on the economy, some supply chain stuff, some cool stuff regarding

[00:03:42] AI as we always talk about at some level, but some good stuff regarding distribution and M&A and so forth as well as we dive in. But before we do that, I'm Kevin Brown. I'm here with my lifelong friend and co-founder of LeadSmart Technologies, Tom Burton. Today is 188. I'm just realizing, Tom, we have 12 weeks. That's three months. We haven't talked about it in three or four weeks. We have got to do some planning for the 200th show. Okay.

[00:04:10] So, Twitter is 12 weeks from now, May, June, July. It's like right around, well, May to June. So it'll be right around the 1st of August, I guess. Yeah. And, hmm. Bob says, Ryder Toshi Bakshia. I think he's, I think he's referring to the stock market. I hope so. Yeah. Yeah. I hope so. Morning, Bob. Coming in. Yeah.

[00:04:34] So the, it's funny, someone says in January took, 2025 took 250k and we'll never put it back in as long as a Republican is in office. Okay. Well, there we go. You're probably losing money. Yeah. So, so much for that thought, but it's up to you. Um, the, um, kind of little interesting one when you're live on YouTube, Facebook and LinkedIn,

[00:05:00] some of the stuff that comes in is kind of interesting as you, we scour through those things. But, um, anyways, back to our introduction. We're such a professional show here, aren't we? Yeah. So again, uh, 188 in August, we've got to look at that and get some planning done for our 200th show. We had a great panel and a great lineup and a lot of fun when we did our 100th show. So I can't believe it's been this long, but Tom and I get together every week. We have a great slate of guests coming up.

[00:05:26] We've got, uh, Mark Gillum with, uh, enable Mark's a finance guy and, uh, works with, uh, enable that does rebates management and so forth for some great customers and partners of ours. Um, we've got a Taylor St. Germain coming. We've got some e-commerce experts coming. We've got a handful of good folks coming in the coming weeks. So we're looking forward to all of that. But again, we do this every week. We, uh, get together and we have a chat. It's kind of funny.

[00:05:53] Tom makes me think is I get three to five emails every week from, uh, PR people that are trying to promote people to be on the podcast. And none of them have ever, I don't say none of very rarely, are they people who have ever paid attention to the format of our show? Cause, uh, we're highly successful podcast, uh, kind of bounce around in the top one, two, or three spot globally in wholesale distribution manufacturing. And I think people see that and they reach out to get, want to get their, their, their clients on our show.

[00:06:21] And then when I asked them to go listen to the show, they realized their clients probably wouldn't be a fit and couldn't keep up. So we move pretty quick on the show. But again, we do our show. We talked about the newsletter that we publish each week, which is called around the horn and wholesale distribution and manufacturing goes out to, uh, I think we're 12,000 plus. We got to get a look at that now we're growing and, uh, excited about that part of it. So if you don't get that newsletter and you would like to, we'd love nothing more than to get that out to you. You get it one of three simple ways. You're on LinkedIn consistently.

[00:06:50] You could look the show up there and, uh, you'll see the opportunity to subscribe to the show. And, uh, if you go to the lead smart technologies page, love it. If you click the follow button there and on the left hand column about halfway down, it says a newsletter and you can subscribe there. We have a website for the show. It's called w it's at www dot around the horn pod around the horn pod.com. And then finally you can send us an email at hello, lead smart tech.com.

[00:07:19] And we would be happy to get that newsletter out to you as well. Just request what you would like at that, uh, email address. Hello at lead smart tech.com. So again, we do this each week. We review the newsletter and the happenings of the week in the economy and supply chain and M&A and technology and so forth. And along with that, we give some perspective on how that applies to wholesale distribution and manufacturing. You might wonder why Tom and I have any relevance related to wholesale distribution and manufacturing.

[00:07:46] Tom and I work together at lead smart technologies and lead smart is a company that has developed a, what we describe as a enterprise growth platform for wholesale distributors and manufacturers. We combine sales enablement tools and technology that helps teams uncover opportunities, find risks and get alerts to that directly to their smartphones. And we have a smart CRM solution powered within that as well. And we have tools to support marketing automation and digital selling and e-commerce tools where

[00:08:15] we bring all of your customers journeys from across the, their journey with you, uh, AI, excuse me, um, their personal journeys that are in your CRM solution, their economic journey with you in your ERP, their marketing journey and their e-commerce journey. And then we apply AI to that across all of those journeys to help you understand your customer better, your company better and your team better. So if you are digitally expanding and going through transformation in your organization,

[00:08:43] looking to accelerate growth, we would love to show you those tools. So that's who pays the bills to run the show from the team we have on the front end of the show and the back end of the show. And once in a while they even give Tom and I a paycheck. So Tom, anything to add to that before we dive right in? No, let's get to it. All right. So stock market is what's it doing this morning so far? Where are we at? Well, it was, it's up to, uh, Dow Jones is pretty flat.

[00:09:10] NASDAQ up 252 was up to about 300, I think earlier. Um, so, but decent, decent gains. Yeah. VIX is down. Gold is up. Bitcoin is up significantly. How's your crypto trading going? It hasn't been a great, uh, six months. Let's put it. That's why I've been buying finally. So how long, how long have you been buying crypto? Not long enough, actually.

[00:09:40] Um, I don't know a few years, which I would have been buying it back in 2011. Just going to ask you that. I was thinking about this recently. What did, what did, uh, Bitcoin sell for when it first launched? I was like, like literally a nickel or, or somewhere pennies. Right. Um, what was the famous story? People were buying pizzas with their Bitcoin back in the day. And when it first came out.

[00:10:05] So, yeah, I mean, it was pennies for quite a while and then it's not pennies anymore. So it's $78,501 and 95 cents at this moment. Yeah. $78,520 as we speak. So if you had bought a thousand dollars worth at a nickel a share or a nickel. Oh, you'd literally be close to a billionaire. It's astounding, isn't it? Okay. Well, I didn't, you didn't, um, you know, I'm paying a whole lot more than that.

[00:10:34] So, so what happened this week? I guess the fed decided that, uh, they were going to stand firm. We had the interest rates hold. We had interest rate hold, although there wasn't certainly not a, uh, unanimous decision. Um, that's an understatement, right? Yeah. Eight to four. Um, the logic I heard, and maybe you've heard something different for the people that dissented

[00:10:59] and wanted the rate cut was they thought the job market was, um, slowing significantly and that the rate cut was justified due to the job market situation. Yep. I think there were, you know, certainly other opinions in a sense that, Hey, was this a, um, kind of showing the new chairman that's coming in that, uh, worse that, you know, Hey, we're behind you. Um, was there some political aspect to it?

[00:11:27] I don't know, but we've only had, I think previously what one or two dissents. That's what it was. It seemed like a strange time to have that many dissents. So I think there's a handful of things. I think you're right in the discussion about the job market that goes with that. Um, I think they were kind of sticking a flag in the ground. That says, uh, we're going to maybe we're the group that is going to take a little bit different

[00:11:52] position and, um, looking like they're going to be supportive of, uh, worse is the Kevin worse is the new fed chair. I thought what was really unique about that though, was that while, uh, in, uh, in Powell's comments, through Powell's comments, uh, he went very quickly three or four minutes into his lengthy discussion. He went right away, straight away to the fact of him leaving in May, but that he wasn't

[00:12:21] fully going to leave. And the expectation has done in May. He has a chairmanship. Yeah. He's a governor until 2028, unless he steps down, which is pretty common that they do, which is common. Right. Right. And so, and that's the expect was the expectation. Um, and it was a big component of getting Warsh approved. Right. Was that they had to drop all of the investigations of Powell.

[00:12:49] Uh, but he, I didn't catch all of it. And I had to flip the TV on in my office and, uh, but he was very much continuing to talk about a threat of other legal actions, uh, against the fed and against him ongoing. Basically said he's sticking around until that is completely clear and gone. Um, not sure the value of what that brings or what he can do differently by being there in that case to change what the legal issues are.

[00:13:17] So it'll be interesting to watch, but yeah, now, now he is a vote versus the chairman. Well, and he also stated that he will, he's sticking around because he wants to make sure that there isn't political influence and he's going to be the, I guess, the voice of reason against the political. He's one 12th of the process. Right. Well, I guess he can vote against stuff or whatever, but yeah, not, I don't know. Or maybe he looks pretty, maybe he has a lot of influence on the other people that are there or he feels like he does.

[00:13:46] Well, he didn't, he didn't earlier in the week, did he? No. Well, not because historically maybe he has, but that went away. Yeah. Right. Because he had four people that descended and fairly strongly. And so that's right. That's a third of, of the whole body there. So, you know, I was in Cleveland last week and in fact, I was taking a walk and I was on the phone with you and I don't think I ever sent you the picture, but I was right in front of the Cleveland fed office and took a little picture of that. And you go in and you should have gotten an interview.

[00:14:15] You know, it was eight 30 at night. Okay. So I'm guessing they were, they had been gone for probably six hours by then. Okay. You know, those political and, and governmental related bodies, you know, it's in at nine out at three, something like that. So then looking ahead here, if you look to Polymarket. Yep. What's it saying? Yeah. June. June. No change. 96%.

[00:14:44] And July, 89% no change. 25, 8%, 25 point decrease in September for the most part, no change. Although 19%, a little bit higher here on the, on the other side of it. So how these add up, these kind of weird, these don't quite add up to a hundred percent. A little more, right?

[00:15:11] Um, it's still showing, it's still showing an overwhelming, um, bias towards no, no change for the next several. How, how, how do you feel about that? I'm, I'll just tell you, I'm quite surprised that that hasn't changed significantly when you saw four dissenters earlier this week. Yeah. Um, in fact, it looks like no change has gone up significantly. Maybe that's because they, he, because Powell is sticking around.

[00:15:40] So they believe that potentially could have influence on that. I mean, look here, this in June, this went up 39% this week. So significant change towards no change in the, in the week. Uh, yeah. So, well, I think we're going to see a lot of what's going to happen in June with that based upon where, where things are at with a war and where things are at with the, um, um, fuel prices and, uh, and how that plays out and so forth.

[00:16:10] I think it's interesting and I'm not, not sure I understand this fully, but we have a comment on that. I think it's interesting.

[00:16:41] I think it's interesting. I think it's interesting to see a lot of people who are going to be in the, uh, and I think it's interesting to see a lot of people who are going to be in the way. Is he, yeah. If, if you have, would he, and I don't know the answer to this. I'm literally honestly asking a question because it, but it feels a little bit to me like him

[00:17:08] saying he's trying to stop that is influencing things politically. It seems like it. Yeah. I mean, there's a political, there's a political, uh, agenda, I guess you could say. Right. And you know, even with the second article here says, right, he rejects that he is going to be a shadow chair. In fact, this is the first time in nearly 80 years where you've had a former chair and a new chair together in the, in the meeting center here. Yeah. Right.

[00:17:38] So, you know, the argument, again, I don't know the people inside, but the argument I'm sure is he still has some influence, not only for just to himself, but for others that are in the, in the other governors. So what it seems to me that we might, might be seeing coming out of this, that could very much be the case is that the, um, you've got four people there potentially that have said,

[00:18:04] okay, I'm done being under your thumb or your pressure of kind of toeing the line. And I'm saying right now I have a dip. I'm saying right now, but obviously these people, what's changed, right? We're still in this simmering mode. Not a lot of anything. No. Not an effect of anything you could argue. To me, you could argue more now to not cut than you could have a few months ago. Agreed. I mean, and there's... A higher thing. Right.

[00:18:32] And there's absolutely discussion out there right now. You just, you hear a few people mumbling here and there about, you know, fuel prices stay up or go higher and so forth that there should be talk about a raise in, in interest rates. Now you don't, you've got a far more people saying stay even or cut than you do, but there, I mean, we hadn't heard anything, um, um, anything about an interest rate raise in two years, right?

[00:19:00] Until we hit this point. Um, but you've got now four people on a board of 10 who have said we're voting for a cut. Yeah. Right. So it's pretty significant. And to me, this would say, uh, how am I to put this better? I think what we're seeing there is a potential risk. Um, what's going on? I'm just kind of looking at Bob's comment here.

[00:19:25] I actually think that Powell would be, it would be better served for him to potentially just step down and move. I agree. Totally agree. Um, I think, look, the, the, I agree that, you know, remove the, all the investigation and all the legal things and, and get that off the plate. I bet that seems to be a reasonably fair thing, but then just step aside and let the, let the group do what they need to do. Yep.

[00:19:53] I think that would be the better, the better approach. Cause it's like Bob saying, is he there? He isn't, or is he not? Right. And I don't think it's kind of a halfway in halfway out. So I, I wish I understood all of this better than I do. Um, but here's what it looks like to me. When we look at this scenario is I, I had always hoped that the fed was not politicized and it was independent, which is what

[00:20:22] Powell's jumps up and down and screams. But when you've got him at his last meeting that he's there as chair and they've been reasonably well in lockstep for the last few years, you know, maybe a dissenter here and there, but reasonably well in lockstep.

[00:20:38] And in his last meeting, you've got people who have said that, um, four people dissented and then him saying, well, I'm going to stick around, which is a little bit of to assure that I, my power and control can make sure that this doesn't get politicized. And to me, it almost speaks not just to him, but in general, there is a lot, a lot of political influence there when you've got people that have waited till this end to, and a lot of pressure to toe the line.

[00:21:08] Um, and maybe it's just, this is such a fragile, fragile component of the global economy, not just the U S economy, that it's important that they stay in line. So, but I think the important component of this time is what we talk about here, right? Is what does this mean to wholesale distributors and manufacturers, right?

[00:21:25] So what the real play on this is that, you know, if we're looking at a new developing a new facility or opening in a new market, this means that likelihood for the majority of the year that the money is going to cost you the same. And, uh, it's not going to be easier to access the, the second article that we were talking about today, uh, from CNBC talking about inside the fed pal vows.

[00:21:50] He won't be a shadow chair, but worse clash would, will be a tough to avoid, which means he could get pushed out at some point, but it talks about the labor market in this article, um, hitting the low, the lows, uh, low signals, uh, the, uh, most since 1969, you know, in distribution right now and manufacturing, but really distribution, finding good people is really hard.

[00:22:15] And it has been for a number of years, you know, we came out of the, uh, uh, pandemic with people still getting free money. So why go to work? And then a lot of them went and found different jobs, uh, along the way, but it's harder and harder. So there's going to be likely pressure on wages and tough to get people, uh, new people where you need them.

[00:22:35] And then if oil prices stay high through this whole thing, then we've got the supply chain issue that hits with that is raw materials and transportation costs are going to continue to stay high. Right. It's tougher and tougher to get a container across the ocean, especially with, we've got an article later talking about the, um, Suez Canal or Panama Canal and, uh, the Strait of Hormuz and some of the impacts with that. Right. We've got shipping costs are much higher. The cost to move a container is dramatically higher.

[00:23:03] And then if you've got trucks on the road, if you're a distributor and you've got a delivery trucks out there, it's significantly more costly to have them out and about. So it would be very nice to see interest rates come down so we can see more expansion and more investment in the economy. Fuel prices come way down and, uh, maybe some support to the labor market would certainly help the audience that we address. Yeah. I, I, again, I wish I could vote on poly market or bet on poly market. I would.

[00:23:32] I think you can now or Kelsey, you can. Yeah. I don't, I don't know. I haven't, I know, I know there was certainly talk of it becoming legalized, but it's in certain states and I haven't tried it recently, but the, if I were to bet, I would bet that I would take the bet of a rate cut in the next 90 days between the next three meetings, right? The June, July and September meetings. You would think that there will be. I think there, I think there is a reasonable chance that there could be.

[00:24:02] I don't think it's over 50%, but I think there's a reasonable chance and a reasonable, um, yeah, I just think there's a reasonable chance. I don't think it'll happen in July or in June. Sorry. So I don't think you'll come right in and, you know, cut rates the day one. I think that would kind of send the wrong message also. Yeah.

[00:24:20] But I do think that in July or put, or more probably in September, again, all things being equal, um, as long as the quote unquote, you know, war doesn't continue or flare up faster and bigger and stronger than what we have already. I think you'll see something that that's, I think there's a, I shouldn't say, I think there, I think there's a reasonable probability. Okay. So I would take the bet of the, of the 8%. That would be a pretty good bet. Yeah.

[00:24:50] I, I would, I would say we're in for one, you know, we talked about later in the year. I, I would suggest we're probably going to have something earlier than that. Well, then I should figure out how to get my bet in to poly market.

[00:25:04] So I think with, you know, Calci, I think you, you can do that now is what, what I'm, you know, hitting at there is I think there's some been some updates and some changes because, you know, Calci is consistently, um, promoting the fact that, uh, you can do that. So if Calci has the ability to do that here in the U S now, then you should be able to see that with poly market as well. I don't know which one of them. I'll look at it for the next episode. And if I can do it, I'll make the bet right here on that.

[00:25:34] That'd be pretty fun if you did that. Yeah. We'll do it right here. I don't, I guess that's legal, right? For me to be making bets. Yeah. That would not be funny. Right. The FBI is at your door, Tom. Yeah. Yeah. So, you know, Hey, real quick on the Iran war though. I think there's something we're talking about. I don't know.

[00:25:52] We don't have an article here, but the war powers act, you may or may, may or may not have heard of that allows the president to declare a war, but for only a 60 day period of which point after the 60 days, Congress has to ratify and approve. And continue a war, right? Well, the war is now officially 60 days old as of, I believe today is the 60 day mark.

[00:26:19] But there is some, however, however, yes, there is some Congress, I think on the democratic side that have introduced some legislation to stop the war. And I don't know what exactly what that would mean, but to stop the war, but the Trump administration is saying, well, wait, the war is on hold. Right. So we shouldn't be penalized for the days that were in the ceasefire mode, but yet there's still things that are, you know, going on.

[00:26:47] I wouldn't call the war over. It might, I don't even know if I'd call it paused. I just kind of consider it. Well, there's a ceasefire, right? There's, there's, there's, and that's, that's the pushback, right? Is it's irrelevant about what day it is because there's a ceasefire. So there's no point that that's the argument. I'm not saying what's right or wrong. I have no idea from that component, but the, the argument is the fact that there's a ceasefire in place. So it doesn't matter.

[00:27:13] And there's no point in anybody talking about it because it's not a day 60. It's day, whatever is 60 minus whatever days there's been a ceasefire. Well, that's the argument. And then the other argument is, well, wait a minute. We still have a blockade. We still have naval blockades occurring. We still have, you know, military actions occurring. Well, ceasefires don't mean everybody packs up their bags and goes home. Right. But that's their point, right?

[00:27:40] Their point is the ceasefire does not mean the end of the war or that the war should be paused. But at this point, nothing has come across. There's been actually nothing, no legislation. It'll be interesting to see though. There hasn't been a lot of talk about this until last couple of days to see how this plays out in the next week. Yeah. Well, to add a little bit more variability to it. What's your guess? I think we'll see.

[00:28:06] I don't think we'll see any action as long as it sort of continues in this sort of ceasefire, quote unquote, negotiation period. But I think if something were to escalate or go in the other direction, then yes, it would. I think you would definitely see Congress trying to step in. Good. Well, I don't know what they would do, right? I mean, what are they going to do? Just say, stop this?

[00:28:34] And is it like the tariffs where, okay, you can no longer, you know, take military? That I don't fully. It'd be worth looking into a little bit more. Well, I think the reality that comes from that in that setting is that there's a big political risk now to come. You know, we're here, right? We're there. We've done, the country's done everything they can to knock out so far to, you know, without leveling the country.

[00:29:01] He's done everything they can to stop the enrichment of uranium and so forth. And so by saying, okay, just, you know, no, this isn't authorized. Let's turn the ships around and let's get any troops that are out. Let's just go back to life as usual. Now, the total spin on that from the opposite end of that, right? The other side of the aisle, so to speak, is, okay, do you want to be the ones responsible for them now enriching uranium and, you know, this, that, and the other?

[00:29:28] So I think it's a very difficult place and I, no question in my mind that the, you know, that the administration looked at this component of it and said, let's just get in there and get going and it'll be too tough to leave because anybody that says they want to leave looks like that they're acknowledging that it's okay for Iran to have a nuclear weapon. There's certainly been a lot of Democrats that believe or have stated that this war is wrong. We shouldn't be doing this. You mean Republicans to go along with the Democrats on that side?

[00:29:57] Some, yeah. Some. I mean, most of the Democrats, it's, look, it's anything that this administered, and this is the sad state of this country, right? And it's, you know, you look at the challenge that goes with it right now is, you know, if you, for, I mean, we both live in California. If you turn the television on, it doesn't matter what you're watching. If you turn the television on, it is just hardcore one side against the other.

[00:30:23] And it's not about what's best for, you know, our guests that are here on the show or anybody here. I mean, we, I joke and say that people's Republic of California, I was talking to somebody yesterday at our offices down the hall, you know, that say he's in the mortgage business. And we were just talking about the fact about living in California and you pay 13%, you know, personal income tax. But what do you get for that?

[00:30:47] You know, I, I try and look at it as I saw somebody say a while back that living here is, you know, you and I both live within a few miles of the ocean. And the comment was, look at that 13% as an admission tax, not an income tax. Yeah. Right. So it's your, your, it's your, what you pay to be able to live near where you live and see snowcap mountains. But I just think you look at this and that this is just so partisan on anything that's going to get done.

[00:31:14] And when you have a lightning rod type bombastic president that we have now, it's just going to be that much more. We'll see what happens over the next, next week. Well, it's, we're 32 minutes into the show. We've not talked about tariffs. So let's do that really quick. There's a great article in the newsletter about, from the Harvard Business School, talks about tariffs, tariffs leave consumers and companies splitting the tab. We've kind of talked about that over and over again.

[00:31:43] And it's my comment about what's Costco going to give me back if they get their 200 million from the government. Any thoughts on this discussion here, Tom? Well, I think this is the first time where we've actually seen a number, right? And what they're saying here is consumers shouldered 43% of the tariff burden. You know, usually these Harvard Business School reports are pretty thorough and pretty well put together. Pretty good source, right? Yeah.

[00:32:11] So, and then I believe the remainder of it was in shouldered by the 57% shouldered by the businesses, right? That are doing that. So now, obviously, if you were to double click into that, there would be a lot of other, what does that mean is the consumer, right? Who are they calling the consumer? Especially, and let's say in our world of distribution, is the consumer the contractor? Is the consumer the homeowner? Who is the consumer? Right. And is their example there?

[00:32:40] So I think there's definitely more, you know, homework to do there. But yes, we've been talking about certainly the wealth or the burden has been spread around. We knew that. I don't think that's rocket science to know that the burden and the costs have been spread around. And as I've said before, the recovery and the refund process is not going to be entirely fair. It just won't be, right?

[00:33:10] So to your point as Costco or some of these big retailers, will they try and make it a little bit more fair? Will they use this as a way to build goodwill? We'll see. But there'll be a lot of manufacturers or importers or so forth. They're going to just go, I'm taking the money. Thank you. And moving on. Sure. Yeah. I'm surprised we've not seen any major lawsuits from consumer groups to go against this. Well, maybe they are.

[00:33:39] We just haven't seen them. Well, we would see them because we scour the news every day for these things, Tom. One of us does, at least. So we would be seeing that from the things that we watch for the show here, if that were the case. I would assume that some of that is going to happen. And that's why part of, you know, we had our friend Nick Bearclay on the show a few months ago, and we were all kind of threw our bets in for tacos.

[00:34:05] And I think it was the, I can't remember what, I said Q1. You said, was it September? You said before the midterm, wasn't it? And Nick said before the end of the year or something like that? Nick, before the midterm, I said before the end of September. Okay. My guess is, and that's why I pushed into the new year, my comment on that, I think we have a lot left to see.

[00:34:35] One, is the process going to work? And two, what other lawsuits are going to come? Now, the process with the portal, right, that we talked about last week, I believe it will start dispersing refunds here. And as it said, in the next, will now be about 45 days. So probably by the middle of June, somebody will be getting some refunds. How much refunds they are, to what quantity? Is that through the noise of the lawsuits? Yeah.

[00:35:04] All that kind of stuff. Yes, is Bob's question here. We talked a lot about this last week, right? Is that not only just companies are allowed, but it's the importer. It's the person of record who paid the tariff. Correct. So it's not just a company.

[00:35:21] It's who is that, you know, business of record that paid the tariff, of which then could be, again, passed on to other, you know, downstream, other businesses and or the consumer, potentially all the way at the end of the food chain. Hey, I look at, I've been saying this the entire time, right? And this is my view. And now I'm playing into this, right? You were here at our house the other day. I'm getting ready to do quite a bit of work. I'm not.

[00:35:49] My wife is getting ready to direct quite a bit of construction work and home repair stuff coming up shortly. Guess what? It trickles down there. So we're going to get to the new roof on our house. There are increased prices in lumber and roofing materials and equipment and tools and so forth. And manufacturer is going to go back. And I'll just, let's just say my...

[00:36:14] Tell your, tell all your contractors to put their tariff line item on your invoice so that you can... But that's the problem is they're not going to have it because it depends. And this is what I go back to all the time in this discussion, right? It's, so let's just say he's the, you know, contractors coming in and they're going to be, you know, putting a new roof on. Right? So let's just say you went out and bought a new saw or bought a box of saw blades, right? And those saw blades had a tariff.

[00:36:44] Well, guess what? Let's just say it's Milwaukee Tool. Milwaukee Tool paid a tariff on that. But then they sold those to Ganahl Lumber, as an example, depending on how Milwaukee Tool invoiced that to Ganahl Lumber. That's, you know, there are eight or 10 locations here near where I live.

[00:37:06] And if that got passed on in a line item to Ganahl, then Ganahl has an ability to go back to Milwaukee and say, hey, there's the flag. But I can almost guarantee you that distributors are not putting line items to the contractor that says, here is the price increase from a tariff component because they don't know the answer to that ultimately.

[00:37:31] And then what are the chances that my contractor that has a roofing contractor that has two or three teams is out there? You know, I think some of the work that we're having done on our house, we got handwritten estimates. It's never coming. We're just getting a higher price, right? And that is the way. And, you know, look, I've said over and over again that that's the problem. And I've described it that way every single time. Your comment every single time is it's not going to be fair. It's just going to happen. Right.

[00:38:01] But my push in discussion about some of this stuff, really the big impact of tariffs refunds coming in the new year is I just have this expectation that there will be some pretty major lawsuits that may push pause on this. But I don't feel nearly as strongly as I did about that, Tom, when we had the discussion with Nick. And you know why? Because the president's not pushing back on it. No. Yeah. Right.

[00:38:28] I thought, sure, they were going to file some other suits and push stuff to the Supreme Court in a different way. But if, you know, if you don't ask for a refund, we'll remember that. You know, you'll be a, you'll get brownie points for that, whatever that means. Well, and then what was it? A group of congressional leaders, I think, asked large companies to find a way to pass that on to consumers, too. But, you know, that asking them is, you know, OK, great. That's nice.

[00:38:58] Congratulations. So. OK, well, let's see. It's not going to be fair when everything's said and done. And probably you won't end up getting as many refunds out of the system as people spec through bureaucracy and other sort of, you know, you know, basically fine print along the way. But there will be money that will come out. It won't be fair. Like I said, there'll be a lot of noise trying to get it.

[00:39:22] And really, I guess the bigger picture is what continues to happen with the tariffs or the tariffs going forward and some of the new, you know, routes that they've been taking, which you haven't seen a whole lot of conversation on that recently. Yep. Yep. Well, so do you have your straight of her moves map open this morning? I do. Let's check that out real quick. What's happening there? It looks not same. This is the this is a screenshot from last week. Come on.

[00:39:51] No, refresh it. I'm just playing with you. It's nothing's moving, right? Well, they said, I mean, I was reading that there was absolutely, absolutely more traffic moving through. Right. So not nine a day versus two or? Yeah. I mean, it's not like it's not like a flotilla coming through here. That's for sure. That's right.

[00:40:15] So those of you that are listening to us on the recorded podcast on Apple or Spotify or whatever it might be, you're not seeing this. But Tom has an image up on our screen for the people that are with us live that are on YouTube live, LinkedIn live or Facebook live of the straight of Hormuz. And if you were to look at this map on either side of that, I think they should just call it. I think I said this a couple weeks ago. I think they should call it the elbow of Hormuz. Okay. Not the straight of Hormuz.

[00:40:40] But in that big 90 degree roughly turn that we take there, there are just countless ships on either side of it, but very little movement between that. We're seeing that continuing. We have an article from AP that we're referencing here in the newsletter again as well, talking about the fact that companies are now having to pay all of the extra costs to move through the Panama Canal to get to other areas of that part of the world.

[00:41:08] To try and route around the straight of Hormuz and it's quite costly. So now we went to, it says inventory carrying costs historically around $400,000 for that move are now up to about $4 million. So this could be the upcoming geopolitical surcharge that comes with these things versus a tariff. Yeah, I was surprised to read here that these ships turn around basically, go across the Atlantic Ocean.

[00:41:37] To the Panama Canal, which now there's a big backlog at the Panama Canal. I hope they have water. I hope there's water in the canal. Yeah, they got a lot of, that whole thing we've talked about a lot of times on the show about how low the water was that was solved late last year. Lots of rain. Okay. Right. So that's good. So at least there's water. And, you know, there's an auction, right? To go into the canal.

[00:42:02] And so they said the average price used to be around $400,000, between $300,000 and $400,000 to go through the canal. But now the average is more like $450,000 with some, I think, companies paying up to $4 million to kind of skip the line and get through as fast as possible. So capitalism and the US, right? Now, did we ever take over the Panama Canal? Wasn't that something we were going to do? Who's we you're talking about?

[00:42:31] Wasn't the US going to take over the Panama Canal? Wasn't that something we were? We've heard a lot, Tom. Okay. We've heard a lot. Okay. Are we on Greenland now? Well, Greenland is actually now part of the Panama Canal as well. It's all part of the same. Okay. It's a whole buying consortium now in transportation. You know, it's interesting, right? You think about that.

[00:43:03] There is an impact to the value of Greenland. There is an impact to making sure the Panama Canal stays open in the right way. But the idea of needing the rhetoric that says we're going to take it over is a little bit silly, right? I think having some control and some influence on what happens in those places are important to, you know, national security as well as the economy. But, you know, as we joke about all the time, right?

[00:43:32] It's like sometimes, and I'm trying to learn this as someone who talks a lot, is I'm trying to learn from the current president in the US that sometimes it's better that less is more, right? Make your statement and shut up. So, but there is some value. I don't know what it means, Bob. But anyway, Panama Canal is certainly looking like a beneficiary of a lot of this right now.

[00:44:02] Yeah, absolutely. Some of that, right? That could help go to our, you know, deficit and offset some of the other things. Well, that's what made me laugh at that is, you know, when there was talking about, there was talk of Iran wanting to extract a, you know, a surcharge for that.

[00:44:19] And, you know, it's funny about this is if you think back to 1700s, 1800s, what would this be called of this Strader Hormuz charging $2 million and, you know, $4 million potentially to transit the Panama Canal? What would it be called centuries ago? Extortion? Piracy. Oh, well, sort of. You're blocking trade, right?

[00:44:48] And that's what historically most governments have been absolutely against is, you know, I can't remember what they call it, but the US has been fully behind it was the idea of having, you know, open oceans and free passage and so forth and never stopping commerce. But, you know, what do you do with that shipment from a shipper that, you know, can't afford the $4 million in that setting? And there's, you know, certain commodities.

[00:45:14] I'm sure that somebody is willing to pay whatever needed to get that through. But if you stop and think about this is, I mean, there's a picture of this article. I mean, there's container ships that are trying to move in and out of the Strader Hormuz and now they're going to go around it through with this extra charge to go through the Panama Canal. There's container ships that have 10,000, 20,000 containers on them. It's just astounding what's on these things.

[00:45:42] Everything that's sitting on your desk probably was on a container ship at some point. And so you think about that now going back to the audience that we talk to every day, all day is wholesale distributors and manufacturers is it's going to drive prices up and oftentimes delays again. So stability might be great, huh? But hey, let's move ahead because speaking of that, Amazon, we're moving into our next section now. We good leaving economy?

[00:46:12] Yeah. Amazon launches a China to U.S. warehouse pipeline. Mm-hmm. Yep. So what's that all about? Well, they're talking about being able to stage bulk inventory in the Shenzhen hub. So Shenzhen, China is one of the areas where most of your consumer, I don't want to say most, but a very large component of your consumer electronics and electrical parts and so forth are coming out of there.

[00:46:40] And they're talking about having a hub and that'll funnel it directly to the U.S. and use their customs, their freight, international freight, and then all of their AI tools for replenishment management and so forth. So what they're trying to do is, and this is interesting, right? Think about how astounding this is, Tom, with Amazon.

[00:47:02] I've seen a couple times recently on LinkedIn some old video clips of Jeff Bezos talking about what the plan was for distributing books, right? And now what this is talking about is disintermediating literally probably hundreds if not thousands of middlemen, freight brokers, logistics, 3PL companies, and so forth by just saying, hey, we'll handle it all for you. Don't worry about it.

[00:47:29] And now we're looking at this, and it's interesting if you think about this, some of what goes with this is that when did Amazon finally make a profit? It wasn't on shipping me a new suitcase yesterday, which arrived because I'm traveling too much and busted a wheel. But it was on AWS, right? On their Amazon web services. When they went into cloud storage is when they started making money.

[00:47:58] And so now we're looking at this shift outside of this. And Joe Bag of Donuts, who orders a new baseball mitt, is not thinking about all the other things Amazon does. But to help power the funding behind the shopping that people do every day all day is other services like this that they do like AWS. And now they're getting into the fulfillment business fully outside of just their third-party customers. Right.

[00:48:25] So from what I understood from it is if you're an offshore or Chinese manufacturer or whatever, just dump everything into this warehouse and we'll take care of it from there and speedily get it over with efficiency, get it over into the U.S. and other places. Well, and it's shrinking the moat that so many people had by having large U.S. warehouse facilities around what they're doing, right? Right.

[00:48:51] There was a big moat there that said this, and now they're talking about the supply chain side of things. They're talking about being able to reduce it by seven days. I think a big component of this is if you think about it from their standpoint is them being able to use their custom services. And so if you're using, if you imagine what international air freight that Amazon's already doing, think about where their rates are.

[00:49:20] That they already have. And then the logistics that happen on getting customs taken care of, it's significant. Well, and they, yeah, and they were, they were definitely saying that there was going to be, you know, downstream impact on, like you said, all of the different other sort of localized places. Sure.

[00:49:47] You know, why do I need to have all of these different, you know, localized, you know, local distributor or local warehouses and things like that? Yeah. If I get everything through. Well, they're talking about, you know, the kind of soundbite out of this 45% lower storage costs, right? Right. Seven day speed bump replenishment to the U.S. facilities completed up to seven days faster. And you've got one source for doing all this.

[00:50:10] And I think if you think about it, I don't think it impacts a distributor in the same way in this setting that it does a manufacturer. But look, you know, one of the, you and I, the two of us, right, we could go on Alibaba right now and start looking at some things that we wanted to source and develop the around the horn and wholesale distribution tool line. Probably don't even need to go to China to get that all set up.

[00:50:36] Let's just say we wanted to make a line of hand tools, screwdrivers and chisels or something like that, you know, under the around the horn brand. And we could have that up and running and then go use this logistics solution and now be competing against Stanley Black & Decker or DeWalt or whoever that might be. Because from a supply chain standpoint, which that would have been the biggest component or challenge for us at that stage, right?

[00:51:03] Well, and they said this is especially disruptive for consumables, tools, safety products, things along those lines, which would make sense. No, it's a powerful time. We need to get some around the horn N95 masks, maybe. You know, that's a high profit, high margin market that we should enter into.

[00:51:24] You know, Tom, in earlier time of my life, I've literally sold probably, I don't know, tens of millions, millions and millions, probably tens of millions of dollars worth of those. So I would prefer to stay away from those. But, you know, let's go find some other low margin, low cost, highly competitive product to get involved with. Yeah. But it now would be this that's really going to be an interesting tool if you can work with. I mean, in who wins? Let me think about that.

[00:51:52] Even, I mean, we've been to a bunch of these shows, right? I've been to a bunch of shows with safety stuff or whatever. How many of those N95 Chinese companies that were there at the shows selling different variants of N95 masks? Right. Right. Well, I mean, that puts them in a better, potentially in a better position. Absolutely. Now, I think what this really brings is the opportunity for a much higher level of competitors. Right.

[00:52:20] And, you know, there's not been, I don't know that some of the manufacturers that are trying to sell direct, when you bring a group of people that don't barely speak the language to this company and to this country and are half asleep in the foreign trade zone that gets set up at some of these industrial shows, I don't think they're having great results.

[00:52:48] But now they could come, they could just work with, and they're already doing a lot of private label work. And if you're, you know, I'm thinking of a good friend of mine that's up at the Pacific Northwest that runs a safety and industrial supply company. You know, they're already private labeling all kinds of stuff. But now they get to go now quickly look at this and say, okay, well, we're working with, you know, these brokers.

[00:53:12] You know, a lot of times companies that are doing a lot of white label or private label importing of things, they're working with third-party logistic companies that are their representative there. Maybe instead of a large staff of those people, you need a person there that is working with an Amazon rep. And in all frankness, I'm just thinking, again, thinking to get to my good friend Andy about this, is that, you know, I could see, and they're in the Pacific Northwest already,

[00:53:39] I could see a rep from Amazon showing up to a large distributor that says, if you're importing stuff under your own private brand, let's get rid of all five companies that you have to work with to make that happen. We already have a relationship with the factories that you're buying from of bringing stuff into our center. It's a whole new world. Yeah. So, all right. Where do you want to go next?

[00:54:04] Let me spend some time on going to technology a little bit, Tom, right? Okay. What appeals to you there? What excites you? There's an interesting article there about the cost of compute outstretching the cost savings. Basically, it's cost of compute is more expensive than the people. Yeah.

[00:54:30] We are really, I believe, running into this barrier of resources, compute resources, power resources. You know, we keep hearing, I think there's an article we're talking, we have here more and more about, hey, things are moving past the traditional chat bot, right? Where most people have been exposed to AI. And, you know, the idea of all of these autonomous agents running,

[00:54:58] whether they're in business or procurement or workflow, I think that's the next thing that's there. But think about, right, when you run a chat bot, maybe you have a conversation for, I don't know, five minutes, 10 minutes, maybe longer. You're stopping in between. You're, it's not continually running. And so, and that, you know, there, in some cases, right, you'll run out of resources. If you're using cloud, using their high-end model,

[00:55:26] they'll basically throttle you or govern you on those that are there. But think about autonomous AI agents that could, in theory, be running 24 by 7. Right. About the amount of compute power that is required for that, right? Just the compute power that's needed for that. And then, obviously, the cost of power and all of the energy that is behind that.

[00:55:51] So we have a real, you know, there's, we have a real, I think, you've talked a lot about the trough of disillusionment. I don't think it's the trough of disillusionment. It's the trough of lack of resources. Well, okay, go ahead. It may cause the trough of disillusionment, right? But I do believe that if we hadn't the resources, the speed of which we would see a lot more things coming together and being incorporated, right?

[00:56:20] And obviously, those costs are being passed on to us. I mean, even if you look at, like, coding, AI coding, the amount of money that's being spent on AI coding tokens, and I know ourself this week, we probably spent more than I'd like to admit, is, and we're not, you know, anywhere near some huge company that's potentially spending millions of dollars a month on compute tokens. Why do you drop bombs on me like this on live show

[00:56:50] so I can't respond and ask hard questions? What, like how much we spent? Yeah. We spent, I think, $200. Okay, that's fine. Yeah. But my point is, it can add up quickly. Right. And it is adding up quickly. And so anyway, my point being on all of this is, and this is the point of this article, right?

[00:57:17] It's much more expensive now to run AI and AI agents or as expensive than it is with human workers. Now you could argue, well, okay, maybe it's more expensive, but they run 24 by 7. They, you know, show up. They don't have issues. They don't get sick. All of that kind of stuff. And there may be some truth to that, but again, it's not, you know, it's not certainly free. Well, I think the challenge with what, you know,

[00:57:47] you just said there is that there's too much human nurturing and guidance that's still needed with these agents because I think we're still, you know, we're in the early innings of this if we're even started the baseball game yet, so to speak, in this setting. So I think my view of this is kind of multifaceted is it's early, so you have the expense. Now you still have people, right, involved in most of these things,

[00:58:15] and we're starting to spend this money. I think the other component of that is the, in looking at this is that how they're being charged for is, unless you're probably a technology company and understand fully what's going on with this, but if you're, let's just go back to, you know, our audience here in wholesale distributors and manufacturers, and I'll use distributors in this setting, right, unless you have some reasonably sophisticated people

[00:58:43] within your company on your IT side of your business or people that want to go learn pretty quickly, is the whole concept of how you're going to pay for these things and what is a token and what's token intensive and not token intensive and, you know, have a policy about which model, right? Are you using Opus 4.7 or are you using, you know, ChatGPT, whatever version, you know, and are you maximizing token usage?

[00:59:13] You know, what are you doing with this? Most people aren't in a position to do that and they're used to paying, you know, they went from saying, I'm buying Microsoft Office and I get a box of disks that I then go put it on my server for my company to access. They paid for a box of software, so to speak. Then you go to the next level where now we're paying a SaaS fee on a per user base that people now have their arms around. And now to say, oh, by the way, you might have a per user cost,

[00:59:42] but then you're also going to have this variable cost and we can't even tell you what that variable cost really is and how to manage it. So back to your comment about trough of disillusionment, right? If you're listening today and you're not familiar with that, that is part of the Gartner hype cycle concept, right? We have this big in new technological advancements. We have a big run up, right? And then everybody gets excited and I think that's where we've been and maybe we're at the top of that and starting down,

[01:00:10] but there becomes a trough of disillusionment where people are going, ah, I'm not getting the value or it's more trouble than it's worth or there's some frustrations that come out of that. Disillusionment is the term that he used, right? And then we get into this place where now it becomes commonplace and adopted. Fair enough description? Yeah, fair enough. So I'm sure the Gartner people would like it to be much more extensive than have a description of that. But I think we are starting,

[01:00:38] I was texting, text messaging yesterday with a chief digital officer of a major distributor and we were talking about some of the events that he's invited to and goes to. And there's an event later this year that he was invited to that covering the cost, they're covering the cost of him being there because of, I think, because of the size of his company and so forth and his title and so forth,

[01:01:07] which is great for them to be there. But when you have a room full of 20, 30, 40, 50, 60 people that say, I sell AI and you're a wholesale distributor and you're trying to get your arms around all of this and it's great that there are these events available for people to kind of see the latest and greatest. But what real value is XYZ company getting? And a lot of them are starting to get some really good value.

[01:01:36] But most of the value that we're seeing so far is not autonomous. And it's funny, I was talking yesterday with our client success manager at LeadSmart about this and we were talking about all of the wonderful ways that we're using AI in our company at LeadSmart and some of the amazing things that the development team that works for you are doing and the people on my team that are using it to make their jobs better and faster and achieve more. But there's a limited amount of autonomous agents

[01:02:05] that we have running in our business. And we're a leading company in the category. And I think most people would be, I would question the true level of autonomous agents that are running in any businesses these days yet unless you are some of the largest, most advanced technology companies out there. And I'm going to stop right there before I even finish, Tom, and get your take on that.

[01:02:34] Yeah, I don't think it's basically what you're saying, right? It's not practical. It's not practical from an oversight perspective. It's not practical from even an infrastructure, governance, security perspective. It's not practical from a cost standpoint. Will it become practical? Will we, I mean, the second article here, right, from Distribution Strategy,

[01:03:02] talks about all the big anthropic open AI, Microsoft, and the big AI. Sure, the big seven, right? That they're talking about. Everybody wants it. They are continuing to make. If you listen to the earnings reports this last week, which Microsoft, Google, Meta, you know, several of the magnificent seven had earning reports this week. Pretty much all of them said, we're going to continue to spend. We are continuing to spend. We are going to build out more infrastructure. And, you know, the winner here is going to be the people who can provide the compute

[01:03:32] at the reasonable cost. Yep. And the big assumption would be, and I tend to agree, I tend to agree that if the compute and the capability is there at a reasonable price, the demand will more than be there. Right? But yes, right now, practically, we're running into that wall for the reasons I just talked about. Is that, I think the thing, the caution that we should make sure that we discuss here

[01:04:01] is just because we're running into a practicality barrier right now doesn't mean that it's going to go away and not become something in the future that is going to become very, very relevant and real. We've just reached that sort of practicality barrier right now. And again, there's no shortage of money going into it, but it's not easy, right? It's a hard job. I mean, it's not easy to build a data center. It's not easy to have the power sources. I think Microsoft said

[01:04:31] in their earnings report, they're now making an official offer for, was it Seven Mile Island or Three Mile Island or the one that's in the thing out there. Yeah, Three Mile Island? Yeah, and they're also doing some sort of small nuclear reactors that they're looking to put together. I mean, this is not easy stuff that is being undertaken to move this forward. But yes, I think we've run into a bit of a practicality barrier. And again, it doesn't mean

[01:05:00] we should stop using AI, but the idea... Oh, no, no, no, no. We'll get there. An anonymous agent basically running your whole business is probably not as soon as we would like for the reasons we just discussed. Yeah, I mean, I think we're... So, you know, good. This is a great article that Mark Brohan wrote here, and I appreciate him doing that. And, you know, it kind of leads to, you know, what we're seeing right now is when you think about

[01:05:28] autonomous agents running... And, you know, we're going to just continue to see more and more of those and we want to embrace it. We're doing it with our product, right? And we've got our Genius Feed solution and so forth that's, you know, 24-7 looking at what's going on in the year and... 24-7. We're not eating up tokens and stuff. No. 24 by 7 and analyzing data and making, you know, true autonomous agents. We're not doing... And nobody is, really. It's not... It's just, like I said, it's not practical.

[01:05:58] But having tools that are running that are looking for ideas and solutions within... And this is what Mark's referring to here, right? Is you've got... Your ERP company is launching some of these things and so forth. There's a disconnect there and I guess maybe we should address that. What we're talking about at a low compute rate that you're talking about is what we do with Genius Feed and some other things like that that are running in the background. But when you start trying to run entire operations on code that you're writing within some of these,

[01:06:28] whether it's, you know, you're working with, you know, clods taking over a whole solution within an organization, then you start eating up, you know, large levels of compute in large organizations. Is that reasonable to put it that way? Yeah. I mean, think about... I don't know. I mean, obviously every organization is a little bit different, but there are things that can be monitored and, you know, updated and decisions made and actions taken in theory 24 hours a day,

[01:06:58] whether that's in a warehouse, whether that's in looking for marketing opportunities or sales opportunities or dealing with leads or... I mean, there's just all kinds of things that can be done. Right. And anyway, the point being here is we're kind of at this interesting point, right? The cost of getting to the next level that we're... everybody wants to do is a little bit prohibitive. Mm-hmm.

[01:07:28] But at the same time, there's a lot of investment taking place by these big, you know, hyperscalers and everybody else that... to continue to push this through. Right. So, it's just... And I think, you know, Bob brought a good point here, right? Is there's been so much hype by the open AIs of the world or the Clods or the NVIDIAs or whatever about all the things that AI has the capability to do. And it's not that they're wrong. It's just now you're running into the practicality of this,

[01:07:57] which is slowing things down and isn't moving as fast as the... You know, it's one thing where it's really easy to have an idea and a vision. It's another to actually make that real in the real world. Well, and there's some... At some level, right? And it's what we're seeing here is that just because you can doesn't mean you should. Can? What's the example? Because there's a capability of something doesn't mean it's practical to do it on a consistent basis. No, but if it was cheap and inexpensive, you would do it. And we'll get there. Right. We'll get there.

[01:08:27] It's like you look at electricity... You look at just the cost of electricity, which isn't necessarily cheap. But, I mean, I know last month we had a lot of heat and stuff here. Did I think about running the air conditioner? No, I just turned on the air conditioner. I wasn't saying you're going... Now, was my electric bill or our electric bill a little bit higher? Sure. But it wasn't enough for me to stop running the air conditioner? No. But if it was going to cost me $3,000 to run the air conditioner for a couple of days, I wouldn't have run the air conditioner. Right? It becomes a point

[01:08:57] where the cost and the utility, right, and the value that you're getting has to balance out. You're allowed to turn the air conditioning and the heat on in your house without permission? I'm not. I have to ask permission by the one that pays the bills. Don't you pay the bills? I give money to someone who pays the bills. Okay. It's different. So, would you have to put like quarters on a coin box or whatever to turn on the heat or the... No, no. I just have to ask. Oh, okay. Okay.

[01:09:27] I know she's not listening because she's on an airplane coming home from being visited and the kids in Colorado for a week so I can't wait for her to get home and I have not had the heater or the... Ask her if you can turn on the heater? I have not had the heater or the air on so, yeah, so it doesn't really matter. So, following up to that, there's a Bain & Company article and that we have featured here as well today about the rise of autonomous intelligent procurement and they talk about AI enabled procurement can increase

[01:09:57] a company's return on investment up to five times while boosting productivity by 60% and early adopters are compounding advantage with one scaled agentic AI solution alone projected to save up to $180 million. But I think this is interesting because the first thing that it said there in this article, again, this is Bain & Company and we've used a couple of sources today that I want to start using more and more with what we had there from Harvard Business School and then this

[01:10:26] Bain and so forth is great to have. We can talk about this for a moment briefly, Tom, as well though, but there's the two components, right? No, Bob, my wife does not have a lockbox over the thermostat. He just commented there. But she has an incredible amount of impact and control on me. So she doesn't need a lockbox. She has my willingness to submit to

[01:10:55] what she describes or dictates. That's not fair. Darlene is just very cautious about when the heater is on and when the air is on. So that's it. No lockboxes. But back to this article of Bain & Company here. They use this term, right? And we've used it historically with our software as a lot of other people do as well. But I think whether it's AI technology built into software you're using or it's how you're using it in your business is that term AI enabled

[01:11:26] versus autonomous agents is the big thing that people are trying to figure out right now, right? Is do we have some tools that have AI embedded in them that are helping us? Those are very reasonably cost solutions that also have a very low cost of compute. I would suggest that goes with that versus do we want to try and truly create fully autonomous sections within our business? Is that a reasonable way to look at that, Tom? And what are your thoughts on this particular article as well? No, I think so.

[01:11:57] You know, again, this was talking though about again, autonomous agents doing procurement, right? Running around looking at websites, negotiating deals, finding things, right? That's not a resource. That's a resource intensive set of agents. It's not even just one agent. It's a set of agents doing those things. Yep. And, you know, a reasonable, you start gathering a lot of data, right? From different websites and then you're having agents process that. All of that is

[01:12:27] tokens and all of that is cost. Right. No, it's there. So to me, it's just another flavor of what we just talked about. What's saying here, it's an increase of companies return on investment by boosting productivity by 60%. I don't disagree with that if we can do it. Yep. Well, I think what you're just saying there ties really well. We've got a couple articles down. We have an article there from cfodive.com that says, hey, I could unlock 10 margin points of growth for CFOs by 2029 according to Gartner, right? But it says to

[01:12:57] capture the margin upside, CFOs need to align AI and technology investment to business outcomes. And I think that's a big part of, as we were describing earlier, the risk of the trough of disillusionment of that is, okay, we've got a big investment. We spent all this money. Now what are we getting from it? But without a roadmap, you're putting yourself in a difficult spot. Without a roadmap and expectations. So I think the

[01:13:26] winners here, and I think there's an article on this, maybe this is the next article here, the one from distribution strategy in the next section, is maybe there are some practical barriers like we've just discussed that you're up against right, or we're all up against right now. But the thing to be doing is getting your foundation in place, whether that's your data, your agent fabric of how you're running the agents

[01:13:55] and how they're being governed and how you would utilize these and how you would orchestrate this and manage this and the technology platforms that you're using. Because when these things start to get solved, and they will get solved, right? And I think this is what the next article says here. The winners are going to be the people that have invested in having the infrastructure and can take advantage of it. Correct. If you don't have the infrastructure, we could have unlimited capacity and so forth,

[01:14:25] but you're going to not be able to take advantage of it if you don't have the infrastructure. There was something in a previous article, it's the first time I've heard it, called sprawl, agent sprawl or AI sprawl. Yep. You've got all these things running all over the place with no governance, no visibility, no... You talk about siloed data, you talk about siloed AI and AI agents. It's like that is a recipe for complete disaster, right? Yeah. Over time. So anyway, my point

[01:14:54] being, and I think this is what this article is saying, is now is the time, in my opinion, to take the time to get the right infrastructure in place so that as these become more affordable and more practical and so forth, you're in a place to take advantage of them because others will be. And if it all comes together and now you're a year or two behind on the infrastructure, it's almost impossible to recover. Yeah. Yep. Well, and so this was

[01:15:24] kind of leading to having this plan, having some guardrails built in, understanding things, and that kind of leads us to there's a couple articles here. We won't dive deep into them, but there's a couple articles in our technology, cybersecurity, and robotics section, which, by the way, as a reminder, we are referring here in the show today. If you're listening versus watching, we're looking at our email newsletter that goes out each week. It's called Around the Hornet Wholesale Distribution and Manufacturing. If you do not get that and you would like to, we'd love to send that out to you.

[01:15:54] You can just pop us a note at hello at leadsmarttech.com or go to the website for the podcast, aroundthehornpod.com. You can sign up for that. So we dive into our cybersecurity, robotics, and technology section here. We talk a little bit about cybersecurity, and there's an article from cybersecuritydive.com, which is great. This hashtag dive.com, I'll say, organization has great

[01:16:24] HR stuff, great marketing, and great CFO-related things as well as cybersecurity. So this cybersecuritydive.com, they talk about fundamental tension undermines manufacturer cybersecurity. It says, simple security mistake could cause roughly one quarter of all financial losses in the sector of manufacturing, cybersecurity insurer talked about doing. But on a broader scope of

[01:16:54] this is, and I just, I was talking to a prospect for us at LeadSmart yesterday, and we were just talking about the overall procurement process. And I asked him what his view on security was, because this particular company had just, you know, had this, you know, I don't know, 50, 70 criteria points in a spreadsheet about what they wanted, the technology that they were looking at.

[01:17:24] They were looking solely at CRM to start with in that setting. And they were, you know, doing a traditional enterprise, you know, RFP, RFQ type solution. And I asked him about the security component, and he wasn't that he was shocked that I brought it up, but it wasn't on their list. And they asked about what you're going to do with our data, but there was nothing in depth about security. And, you know, you talk about this oftentimes is not about the risk of not

[01:17:52] having a structure in place and guardrails on your AI and so forth, because, you know, you don't want somebody to do a query, whether you're using a Slack bot or you're, you know, I was with one of our customers last year, they last week, I should say, and their CEO was showing me that they've got Microsoft Teams tied into being able to look at HR policies. You can ask, you know, within Microsoft Teams on the mobile app, you can hit the chat bot that

[01:18:21] they've built and installed there that accesses their data lake, and you can ask a question about vacation policy. Well, if you don't have good AI guardrails in place and good system guardrails in place, you know, that question or the next question might be, what is our CEO stock plan? And you might just get that answer. You might. Right? You know, what is our profit margin as a company

[01:18:51] for the whole year that is private data because it's a privately family-owned company in some instances. So I think that's a big place that we're in right now. Well, what do we want to do here? I know we want to. This is where you stop and go. That's a really good point, Kevin. That's brilliant. Yeah. No, I don't need the chat GPT or the body response. I know you're used to that positive reinforcement. I do. I'm in need of that on an ongoing basis. Okay. Exactly. I will acknowledge that I can be needy.

[01:19:21] That is an excellent. What would you get? Good chat GPT response. Let's see. That is so insightful. It's insightful and grounding us in the right place. Yes. Perfect. Something like that. Yes. If I ever need that positive reinforcement, I just need to go do a voice chat with Chad GPT or Claude, right? You should put it on cynical and then it kind of talks back to you like, are you out of your mind? I have you for that. Okay. That's true. I'm in the cynical mode. Yeah, that's right.

[01:19:50] I have two people in my life for that. Okay. So I have you and the beautiful woman that's on her way home. So no, I didn't. And the funny part about that is you were in town this week and my wife was out of town. So I was able to actually have dinner with you without two of you picking on me. Yeah. You only have one. You guys certainly know how to team up, which is probably in anything I get is probably deserving. So let's pick one more for the day before we call it quits. What do you want to chat about?

[01:20:20] Um, you know, this article from MDM, right? I kind of hit home because I kind of write, wrote a book on this topic here. Um, where they're talking about buying. You wrote a book? I did. I did. Oh, look, it's right behind you. Yeah. What's it called? The Revenue Zone. Where can you get it? I didn't get it through Amazon. I ship it right from China immediately, right through the warehouse. Yeah, it goes right through their pipe and everything. But, um, you know, the book's a couple years old

[01:20:50] now, but it's, I think, more relevant than ever. And that's what this article is talking about, is most B2B buying decisions actually happen in the dark funnel, meaning that a lot of, you know, companies are doing their own research and they're doing their own everything as much as possible before they actually want to talk to a sales rep, right? Again, this is another area where you'll see once you have practical capabilities is agentic research taking place in a lot of the things that are here.

[01:21:21] Um, I was interested and I wanted your take on this. You know, when I wrote the book, I didn't write the book from the viewpoint of the manufacturer or the wholesale distributor, but do you see the same sort of scenario? You know, what's, what, in what use cases or what scenarios would you see this, you know, being applicable to say a wholesale distributor or a manufacturer where people are doing a lot of their homework, they're not calling to talk to the rep or immediately calling for a quote or whatever. Where does this fit?

[01:21:52] Well, I think it ties really well to all of the activity we're seeing in the e-commerce world, right? Right now within distribution. I mean, almost all of our core customers are, you know, really working and enhancing their, their ability to expand and develop the better fit within their overall, um, overall web presence to be playing in that setting. Uh, we've had a lot of articles about a genetic search and AEO versus SEO and so forth to go with that.

[01:22:21] So I think everybody needs to be in a place where they're playing. And at the e-commerce is supporting this dark funnel and enabling. Well, I think, I think that that component of it is not sure I'm following your question fully, but I think e-commerce allow, enable, right? The customer to do that research and homework, do all of those things, even potentially get a self-serve quote or estimate without having to quote unquote,

[01:22:51] talk to the sales. Of course. I mean, we've seen, and we've, Mike Marks has talked about this on this show and, uh, in a number of other presentations. I can't remember what the number is, but the number is ridiculously high of, of B2B buyers that are, have, um, um, expressed the idea that they would like to do a kind of a faceless purchase for the most part. And, and you talk about this in your book and we talk about it all the time with our customers and it ties right into what I started the show describing

[01:23:20] what we do at LeadSmart is your customer has lots of journeys and you need to track them across your journey, right? And one of those journeys is your, because you don't know what else your customer necessarily is doing online. Yeah. If you did some really sophisticated trying to cookie tracking and stuff like that, maybe, but in general, you don't know where else they're going and what else they're doing in general. Um, so you, you need to understand that customer from every component that they're looking at you and you have data on your

[01:23:50] customer from what the truck driver tells the, your branch counter person when he stops off to pick something up about a frustration they're having with another vendor or somebody was out of stock on something and now he's visiting you for something. That all should be in your CRM. You have the data from your marketing automation tool about what events are people coming to? What promotions are they taking advantage of? You've got, uh, the e-commerce journey. What are they clicking on? What videos are they watching?

[01:24:19] What did they maybe ask for a quote on or check pricing? And you've got then their transactional journey, which is that rear view mirror view of what's happening with your customer in their, uh, ERP transaction. And never before have we been in a place where following the entire journey of the customer. And this is, I probably sound like I'm on soapbox here now, but if I believe if you're in the wholesale distribution arena and you are not tracking and looking at all of your customer

[01:24:47] journey, you're missing it. And this description of what you're just talking about there, right? Is this dark journey. You'll never know what they're doing in that setting unless they pop their head up and ask you a question. But if you're tracking all of your customers journeys with your organization and then applying AI against that, that's when you get the insight as best as you can. So there's a five minute response to a question that I'm not even sure I answered exactly what you were saying. I think that's actually quite good.

[01:25:17] And those came from NDM, right? So this came from. Yeah, some water distribution management research. Right. So the dark funnel is alive and well is what I'm hearing in our industry. It's very different maybe than a dark funnel for technology companies or something along those lines. But yeah, it's like if you accept, if you, if you, if you agree and accept the fact that this is occurring, at least some cases, and maybe in a larger number of cases.

[01:25:47] Yeah, absolutely. It's like, okay, then how do we mitigate that through the using, utilizing the technology? And to me, this again, not to look, people are going to do what they're going to do, but how do you influence them? Which is what a lot of, you know, I talk a lot about in the book is how you influence that and, and, you know, get yourself in the competitive advantage compared to others. Right. Well, I mean, if you look at it from that standpoint, and it's interesting, we have that

[01:26:17] listed as that article here from MDM, but it's actually from sales and marketing management. But, okay. Yep. We had a little hiccup on our newsletter is what that's referencing. We apologize for the editorial mistake there. But, you know, our friends at NAW and MDM can thank us for the shout out for other people's work, right? Yeah.

[01:26:47] But the point behind that is, I think if you take all this together and it doesn't change where the topic came from, is, and by the way, around the horn, we'll be sending a an invoice to Revenue Zone Media for the shout outs on the book. So, we, we, I'll share I'll share commissions. We need to have a referral arrangement on that or something that we don't have. But anyways, my, my point

[01:27:16] is we are living in a world where people is, are, they're buying habits, right? We know that 70 plus percent of B2B buyers are millennials. Their buying habits are different. They buy their, we were having this discussion with, I think I've had it with Stephanie in our office recently and I think you and I have had it. Maybe the three of us had it together is generationally it's astounding to look at the amount of money that,

[01:27:45] you know, we have people that are in, I see regularly that are down the hall from us, you know, 22 year olds that are having DoorDash bring Starbucks to them. You know, they spent $20 on, on a coffee. The buying habits are changing. The lines are graying very quick, quickly, and there will become very soon, I believe, no line between an expected experience between a B2B transaction and a B2C transaction. So if that is happening,

[01:28:15] the more that you can understand what your customer is doing, whether it's their, your customer's organization or an individual, the better you can serve them and the better you can serve that customer, the more they spend with you. Yep. So. That's it. Okay. What's the weekend hold for you? Nothing too exciting. No? Can you eat some good barbecue as your neighbor cooking stuff up? No, but we may make some fish and chips. Okay.

[01:28:45] That sounds good. With a lot of halibut. Fresh fish and chips with the last one halibut. That sounds fantastic. I'm on my way. Good. Well, I'm looking forward to a couple of days where my email box is much less full than it has been this week, but appreciate everybody being with us. We love it when you join us for the show. And again, we do this every week unless someone is in the hospital on vacation or an airplane. And we got a couple of times in the next couple of months where we're not going to have a Friday show, but the newsletter

[01:29:14] will always continue to go out. If you'd like that newsletter, please let us know. The one thing that we always ask if you enjoy what you hear on our show each week, please do us the favor. If you're on YouTube, hit that subscribe button, hit the bell so you get alerted when we go live for the show. If you're with us on LinkedIn, certainly follow LeadSmart and you'll get those alerts as well. And you can get the newsletter there. But if you're listening on Apple or Spotify or Amazon or iHeart or

[01:29:44] whatever it might be from the podcast platform, please hit the subscribe button. And even better, leave a review. And if you do that, that'll get this show out in front of more people. I think we had visitors joining us today. I saw on LinkedIn from Italy and Spain. I think one from Denmark, a handful from France. I think one from Germany and quite a few from Canada, one from Brazil. And so we're appreciative of that audience and we'd love to see that audience grow.

[01:30:13] So we appreciate if you share the message of what we do each week. So we will close the day out. Tom, I wish you a good weekend and we'll wish everybody as well a good weekend. Be kind, be safe, do good things. Thanks, everyone. 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

[01:30:43] 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. And finally, please check out our sponsor, Lead Smart Technologies and their manufacturing and wholesale distribution

[01:31:12] industry CRM customer intelligence and channel collaboration platform. That's Lead Smart Technologies at leadsmarttech.com.