Navigating the Marketing, Distribution, and Manufacturing Challenges of AI Integration

[00:00:00] Welcome to Around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton.

[00:00:10] Sponsored each week by Lead Smart Technologies, Tom, Kevin and their guests review the news

[00:00:15] of the week and dive deep into the topics impacting manufacturers, wholesale distribution,

[00:00:20] independent sales agents, and the global wholesale supply chain.

[00:00:25] Whether it's M&A, SaaS and cloud computing, B2B e-commerce or supply chain issues, we

[00:00:31] peel back the onion with our guests into the topics that impact your business the most.

[00:00:36] So how are you my friend?

[00:00:38] Doing okay.

[00:00:39] Doing okay?

[00:00:40] Yeah just okay.

[00:00:41] I wanted you to be doing great today.

[00:00:42] I'm doing great today.

[00:00:43] Okay.

[00:00:44] Just dark and dreary here.

[00:00:45] I know it's hot around the other parts of the country but here it is not.

[00:00:50] It is like.

[00:00:51] It's crazy.

[00:00:52] 60 degrees or something.

[00:00:53] Yeah I was at a Bible study last night and I was standing on the parking lot talking

[00:00:58] to a friend and all of a sudden it's like drizzling.

[00:01:02] And it's like 56 degrees and drizzling and it's not supposed to be that way on

[00:01:07] June 7th of 2024 and it's wet outside.

[00:01:12] So those of you that are listening in about the complaints of the weather people here,

[00:01:18] Tom Burton and Kevin Brown with Lead Smart Technologies to launch into our Around the

[00:01:23] Horn and Wholesale Distribution live show and podcast today.

[00:01:27] Tom's up in beautiful Santa Barbara, California.

[00:01:29] I'm down in Laguna Nigal about three hours apart as the crow flies.

[00:01:34] But you know while the rest of the country and much of the world goes through difficult

[00:01:39] winters we have sunny days that are nice but then this is our I think for me it's

[00:01:45] our worst part of the year is May and June.

[00:01:48] You know it's just May, May, May, June, June, June.

[00:01:51] So that's what we have to deal with but that's okay.

[00:01:55] So anyways any big thoughts on your week before we dive into the show?

[00:02:01] Anything you want to say?

[00:02:02] Oh I want to say hello to James.

[00:02:05] A outstanding Lead Smart customer and he says it's 82 in Atlanta.

[00:02:10] There we go.

[00:02:11] Yeah.

[00:02:13] And so it might be a little sticky there too.

[00:02:16] 82 sounds very pleasant.

[00:02:17] It does except when it's 98% humanity.

[00:02:21] Yeah.

[00:02:22] So that's good.

[00:02:23] Well let's dive in.

[00:02:24] So again I'm Kevin Brown.

[00:02:26] I'm here with my lifelong friend and co-founder of Lead Smart Technologies, Tom Burton.

[00:02:30] We get together every Friday morning unless somebody is on a plane or on vacation and

[00:02:36] vacations we may even do some from but we get together.

[00:02:39] So it's 94, is that right?

[00:02:42] 94.

[00:02:43] So this is the 94th time we've published our Around the Horn and Wholesale Distribution

[00:02:48] newsletter.

[00:02:49] It goes out to distributors, manufacturers, manufacturers, reps, consultants, agencies

[00:02:55] that work within wholesale distribution and manufacturing and what we try and do is

[00:02:59] pull the news together of the economy.

[00:03:03] Sales and marketing, AI, technology in general, mergers and acquisitions.

[00:03:07] We pull that data together and we try and have a nice discussion about that with regularly

[00:03:11] having guests on with us and talk about how that impacts manufacturing wholesale distribution.

[00:03:18] That newsletter goes out to about 10,000 people every week.

[00:03:21] If you don't get that and you would like to, a couple of simple ways to get that

[00:03:25] from us just reach out directly by email to hello at leadsmarttech.com.

[00:03:33] We'll get you on that list or we have a website for our weekly podcast here.

[00:03:37] It's called www.aroundthehornpod.com.

[00:03:42] You can see past episodes there, great pictures of Tom and I and additionally you

[00:03:49] can sign up for the newsletter right there.

[00:03:51] If you happen to be listening on one of the podcast formats later in the day, Spotify,

[00:03:56] Odyssey, Amazon, Apple, whatever it might be or in the future what you won't be seeing

[00:04:02] because you're listening is the visual of the newsletter.

[00:04:07] So we'll have popped up on the screen today, the newsletter.

[00:04:10] We go through a series of different segments within the newsletter and we'll talk about

[00:04:14] those things and see how those impact wholesale distribution manufacturing.

[00:04:17] So we're live this morning on LinkedIn Live, YouTube Live, on Facebook Live.

[00:04:22] If you're with us live check in maybe share a comment about who you are, where you're

[00:04:27] from and we'd love to hear from you as we dive in to the news today.

[00:04:30] So Tom, anything missing out of that?

[00:04:33] Let's get on with it.

[00:04:34] That's very good.

[00:04:34] You know what I forgot to say?

[00:04:36] I always forget to do this and it's probably unwise for me to do that is that

[00:04:43] we couldn't do this each week without the sponsorship that we have of the

[00:04:49] company that Tom and I work for Leadsmart Technologies.

[00:04:51] Leadsmart is a AI enabled customer intelligence and CRM platform that helps

[00:04:57] wholesale distributors and manufacturers get deep insights into what's happening

[00:05:01] with their customers, their teams and their overall company and brings all that

[00:05:06] data together by connecting the ERP systems, working animation systems, e-commerce

[00:05:11] systems and other connected systems to get deep insights into the business.

[00:05:15] So that's who sponsors our show each week.

[00:05:17] The last piece of that that I failed to mention is if you like what you see

[00:05:21] by being with us each week, the best thing you could do for us would be to

[00:05:27] jump on LinkedIn, on YouTube, wherever you might be listening, click the

[00:05:30] subscribe or the like button to Leadsmart page and or if you are on any of

[00:05:35] the podcasts formats, leave a review.

[00:05:37] Would be fantastic for us.

[00:05:39] So that's about it with our housekeeping time.

[00:05:41] We want to dive into the news.

[00:05:43] Yeah, let's do it.

[00:05:44] So economy and supply chain.

[00:05:47] Our first article here is already out of date based upon the job report.

[00:05:51] Interest rate, this is from Yahoo finance from yesterday, I believe.

[00:05:55] Interest rate cuts shift after surprising ADP jobs data.

[00:06:00] So the ADP jobs data came in soft, but today the jobs data came in hot.

[00:06:06] So I was reading that there was, I guess they have, you know, there's

[00:06:10] bets on Wall Street bets on when's there going to be rate cuts and so

[00:06:13] forth. And it went way up yesterday and then way down today.

[00:06:17] Yeah. So, you know, the roller coaster continues.

[00:06:20] Well, I think I think you're spot on with that.

[00:06:22] One of the things we chatted about a little bit earlier today related to

[00:06:25] this that I thought was interesting, you know, was OK, you got

[00:06:32] pure labor statistics with their reports, right?

[00:06:35] The government side of things that came out today yesterday, ADP, who is

[00:06:39] the largest company in the country at managing payroll and benefits and so

[00:06:46] forth, had their data. It's like, who do you believe?

[00:06:48] And I think it's almost, you know, again, we

[00:06:52] I think we both have this a junior pretend economist hats on the side of

[00:06:57] our desks that we put on on Friday mornings.

[00:07:00] But yeah, it's like which one do you believe?

[00:07:02] Right. One soft, one strong.

[00:07:05] The market shifted yesterday to today and all of this stuff.

[00:07:08] I think it just comes back to these kind of tepid waters that we're in.

[00:07:13] You know, as people that listen regularly to the

[00:07:18] the podcasts and the broadcasts here know, we've got a little friendly

[00:07:21] wager together as good friends, lifelong friends.

[00:07:25] You're still saying one cut this year and I'm still saying two.

[00:07:30] I I'm going to go with the idea that I think we have a potential issue

[00:07:34] that we're going to see the sentiment or emotion cut.

[00:07:39] You get you can't imagine that the Biden administration isn't,

[00:07:44] you know, applying some level of pressure on the Fed to have some type of a cut.

[00:07:49] And I think the whole country, because of this up and down, up and down.

[00:07:55] And one of the comments in this article was that

[00:07:59] it says the longer the Fed holds rates steady,

[00:08:01] the more cracks could develop in the economy.

[00:08:04] And we're starting to see more and more cracks

[00:08:06] with pressure on lower income consumers and rising household debts.

[00:08:10] And I think one of the challenges that the Fed has in here

[00:08:13] and this is not an original thought, I've been watching this for weeks

[00:08:17] on CNBC and other things I've been reading is

[00:08:22] the Fed has to be really, really careful that they don't wait too long.

[00:08:26] And then all of a sudden we get a, you know,

[00:08:28] a big rebound effect that causes other bigger problems.

[00:08:31] Yeah, and it's pretty clear that there's

[00:08:35] it's pretty clear about the unclearness or unclarity of a lot of this.

[00:08:39] Not just for us, but for them as well.

[00:08:42] Even in the latest report today,

[00:08:44] even though the number of jobs went up, unemployment went up at the same time.

[00:08:48] So how do you get your hands around that?

[00:08:51] It's like a slippery fish.

[00:08:54] It's very hard to get your hands around.

[00:08:56] So that all said, I do agree that

[00:08:59] I do believe there will be that one rate cut,

[00:09:02] whether it's September or December, I don't know.

[00:09:04] But I think you're right.

[00:09:05] I think it's like, ah, the hell with it.

[00:09:06] Let's do one. See what happens here.

[00:09:09] We don't have enough data to say no.

[00:09:12] We don't have enough data to say yes.

[00:09:14] But what the hell? Let's give it a try.

[00:09:16] And and it will help, like you said, the sentiment.

[00:09:20] And I still think it comes back to the same point of one.

[00:09:22] I don't think they're going to do that twice.

[00:09:24] I think in order to get twice, they'd have to have the evidence

[00:09:26] to start doing that.

[00:09:27] I think to do it once, they'll do it.

[00:09:29] They could do a little bit of the what the hell type of approach.

[00:09:33] Well, I think you can see that quarter point, right?

[00:09:36] As a let's test the waters and see what happens in the economy from there.

[00:09:39] I didn't want to pause, though.

[00:09:41] This was a really interesting point you made a moment ago.

[00:09:44] I've known you for well over 50 years,

[00:09:46] and I have never heard you use a fishing analogy in a statement before.

[00:09:51] OK, well, you know, we fish first for everything, right?

[00:09:54] That's right. That's good.

[00:09:55] OK, so I got to hit a little bit of a pause again.

[00:09:58] So we've talked about this, you know, since we started the show, right?

[00:10:03] We've talked about this consistently week after week.

[00:10:06] We talk about what's going on in the economy and rate cuts and hikes

[00:10:10] and all the things because we were around doing this as hikes

[00:10:13] were kind of getting just getting started.

[00:10:15] And one of the things that I've kind of pontificated, I guess I'll say

[00:10:21] a number of times is, you know, where does this data,

[00:10:24] the 2% and all of the things come from?

[00:10:26] And I've looked at this Paul Kennedy who says the slippery fish gets the worm.

[00:10:33] All right. Good for you. There we go.

[00:10:36] That's just because Paul wants you to come to come to Minnesota

[00:10:39] and go fishing with it. So that's good.

[00:10:42] I was on the phone with Paul earlier in the week,

[00:10:44] and that's that's always an engaging conversation that I learned from.

[00:10:49] But, you know, it's interesting.

[00:10:51] We've talked about and I think I've said this mostly, right?

[00:10:53] It's like, where do we want?

[00:10:55] Where does all this data that the Fed looks to?

[00:10:57] And there's so many components and some of them are antiquated.

[00:11:00] And I've proposed the idea that maybe maybe it's time to rethink these.

[00:11:03] So I've said, you know, eventually I'm going to go do the research.

[00:11:06] So last I guess it was Monday,

[00:11:09] I was listening to a podcast that you and I both listened to.

[00:11:12] So really popular podcast called The All In Podcast.

[00:11:15] It's for Silicon Valley tech executives that talk about everything

[00:11:20] from technology to the economy and politics and so forth.

[00:11:23] But one of them brought up the idea that this whole two percent piece

[00:11:27] that the Fed weighs everything on right now, you know, came from New Zealand.

[00:11:32] And so I went and did a little bit of further research on that

[00:11:34] because I've been saying I was going to.

[00:11:36] So I want to share this with you a little bit.

[00:11:38] And the data that I have here,

[00:11:40] I saw it in two or three different places where I grabbed a couple of quotes

[00:11:44] was from Council on Foreign Relations dot org.

[00:11:48] So pretty reasonably reputable organization.

[00:11:51] And it's just I'm just going to read a couple of quotes here

[00:11:53] because it just astounded me.

[00:11:54] So the two percent target widely adopted by central banks today

[00:11:58] originated from New Zealand.

[00:12:00] And surprisingly, it came from no true academic research or study,

[00:12:06] but rather from an offhand comment during a television interview

[00:12:09] during the late 1980s.

[00:12:11] New Zealand was going through a period of high inflation in 1988.

[00:12:14] Inflation had just come down from a high of 15 percent to around 10 percent.

[00:12:19] New Zealand's finance minister, Roger Douglas, was pressed during a television

[00:12:23] interview about whether the government was satisfied with a new lower,

[00:12:27] albeit still higher level of inflation.

[00:12:30] Douglas replied that he was not saying that he'd ideally want inflation

[00:12:33] to be between zero to one percent at the time.

[00:12:37] There was no set targets, he said.

[00:12:39] What came out of that was basically an upward bias they talked about

[00:12:42] that got them to around two percent.

[00:12:44] Once they said that in that whole interview, off the cup happened.

[00:12:50] It says once that happened virtually became gospel among central banks.

[00:12:55] Canada and England had quickly adopted the two percent

[00:12:59] as their inflation target as did other central banks.

[00:13:02] And then it says the Federal Reserve in the U.S.

[00:13:04] never adopted an official numeric target during that period until 2012.

[00:13:10] Under Ben Bernanke, they adopted two percent as formal.

[00:13:15] No studies, no research, no anything behind this.

[00:13:18] It came from a comment in a press conference.

[00:13:21] Yeah, sounds very arbitrary.

[00:13:23] Yeah.

[00:13:23] I just so I mean, I don't think for a second that that

[00:13:28] vindicates my statements about where this is at.

[00:13:31] But I do think, you know, let's put some science to this, fellas.

[00:13:36] You know, it should at least at least happen with that.

[00:13:39] Now, I'm sure Jerome Powell could spend three days talking about this nonstop

[00:13:44] and about why it works and so forth.

[00:13:46] But it's just to look at, you know, the major economies

[00:13:52] or many of the major economies around the world

[00:13:57] is that are adopted this as a struggle.

[00:14:01] So yeah, well, it's and I think part of the reason my guess is the two percent

[00:14:06] was adopted is if you look at the compounding effect

[00:14:09] in terms of how things compound or whatever,

[00:14:12] the compounding effect is relatively, is that you dingy?

[00:14:16] It is.

[00:14:18] Yeah, I turned on my do not disturb and it's disturbing.

[00:14:22] Yeah.

[00:14:24] So anyway, I agree with you.

[00:14:26] I mean, it's totally arbitrary, it appears.

[00:14:29] And but I don't think on the other hand,

[00:14:31] it's going to get changed anytime soon.

[00:14:33] So I think.

[00:14:34] No, no, no, I don't think there's anybody at the Fed

[00:14:37] that is sitting back wondering what Kevin Brown is saying.

[00:14:40] Yeah, but it is being talked about.

[00:14:41] I mean, not just here, but it's being talked about.

[00:14:44] Right.

[00:14:45] So no, it's just so interesting that there's a

[00:14:49] there's an arbitrary factor to that that just seems unique to me.

[00:14:52] And I just I look at, you know, and I think Powell even has said this

[00:14:56] a few times that, you know, maybe it doesn't need to get to two percent,

[00:15:02] but it needs to be on its way there.

[00:15:04] And then I think is a reasonable statement as well.

[00:15:06] So all right, let's move on.

[00:15:08] We got a lot to cover today.

[00:15:09] Yeah.

[00:15:11] So dive in into our manufacturing distribution segment and navigating.

[00:15:16] Are we talking about blockchain?

[00:15:17] Oh, yeah.

[00:15:18] Sorry about that.

[00:15:19] Let's keep me honest there.

[00:15:20] Go ahead.

[00:15:21] Dive in on that one.

[00:15:22] I missed that one.

[00:15:22] And this article also in the true impact of blockchain

[00:15:27] for global supply chains is yet to be realized.

[00:15:31] I won't spend a lot of time on it.

[00:15:33] It's a good article.

[00:15:34] It really goes very deep into what has been the challenge of blockchain.

[00:15:41] And just at a high level, right?

[00:15:43] If you're wondering why would I care about blockchain?

[00:15:46] Blockchain is providing a decentralized platform for you to

[00:15:51] and this is very simple explanation,

[00:15:53] a decentralized platform to share information across companies, right?

[00:15:57] Basically, you know, blockchain allows you to in theory collaborate across the firewall

[00:16:02] between companies and between organizations and partners and so forth.

[00:16:06] So there's been a lot of talk over time about using blockchain

[00:16:10] to help facilitate supply chains and coordinate with your suppliers and all of that,

[00:16:15] which I do still believe is going to be in the future a really, really good solution.

[00:16:21] But as I said in there, it's a lot of challenges, right?

[00:16:24] The technology is still has been early stage.

[00:16:27] There's not a lot of knowledge about how to do this.

[00:16:30] There's not a lot of expertise.

[00:16:32] So yeah, it's going to be, it's not going to be easy.

[00:16:35] Tom, how long have we been talking about the blockchain?

[00:16:40] 10 years, eight years, something like that now?

[00:16:43] Well, if you go back to, if you look at it from a crypto perspective, right?

[00:16:47] If you look at Bitcoin, which really 2010ish was really when Bitcoin,

[00:16:52] but I think is blockchain and business has been being talked about the last few,

[00:16:57] you know, four or five years, really.

[00:16:59] Probably somewhere in that neighborhood.

[00:17:01] Without any true great progress, right?

[00:17:04] Well, it was the next technology and it got usurped totally by AI.

[00:17:09] Like AI just kind of like push it away and said, no,

[00:17:13] a lot of companies were investigating Web3 and blockchain,

[00:17:17] but that kind of has been pushed aside in a lot of companies because of the whole AI thing.

[00:17:21] So that's not an either or, right?

[00:17:23] You should know.

[00:17:24] No, no, no, it's not either or, but no, but it's not either or.

[00:17:29] No, it is not an either or.

[00:17:30] But they're both new and require new skills and talent.

[00:17:35] The hype cycle shifted to AI.

[00:17:36] Right. That's right.

[00:17:40] So let's watch that and see how it goes and we'll continue to discuss that here.

[00:17:45] So diving now ahead into our manufacturing distribution segment,

[00:17:49] we have our, again, for those of you that might be listening and not watching,

[00:17:53] those that are on the, with us on the live broadcasts that we do on Friday mornings

[00:17:57] at nine o'clock Pacific, we have a copy of the newsletter up here in front of us.

[00:18:01] And in our manufacturing and distribution segment,

[00:18:04] we talk about navigating AI integration into manufacturing

[00:18:09] and it's not going as quick as people had hoped.

[00:18:13] Well, it kind of sounds like what we were just talking about, right?

[00:18:15] Is it's complicated and, but you know, as you says here, right,

[00:18:22] the global AI, the manufacturing AI and manufacturing market is projected to increase

[00:18:28] at a growth rate of 45% until 2028.

[00:18:33] So clearly it's being incorporated or looked at to be utilized.

[00:18:38] But as they said, the integration and the implementation is always not as easy as you

[00:18:43] think for a lot of the reasons I mentioned in there, talent skill sets,

[00:18:47] all of those types of things.

[00:18:48] Well, and you know, let's at the end of the day, right?

[00:18:51] No offense to anybody that might be here in manufacture or a distributor, but you know,

[00:18:57] our industry that leads for technology serves.

[00:19:00] I've spent my whole career and you've been involved in for well over 10 years,

[00:19:04] I think now is it's slow.

[00:19:07] It's a slow moving group.

[00:19:09] And, and you know what?

[00:19:10] You stop and think about it if you're a, it doesn't,

[00:19:13] I don't think it matters if you're a five location distributor or a 55 location distributor.

[00:19:19] When you start looking at major shifts in technology, whether,

[00:19:23] I mean, I think the easiest way to discuss this is,

[00:19:26] you know, the people that we talk to on a day in and day out basis

[00:19:31] in our work with Lead Smart is we talked to distributors.

[00:19:34] You know, some of them are on ERP platforms that,

[00:19:37] you know, if you look at the user interface and user experience,

[00:19:40] it's very 1997.

[00:19:44] But the idea of ripping and replacing that in an organization,

[00:19:48] it's astounding the amount of energy that would in time and resources and costs.

[00:19:53] And, you know, it goes back to as well to what you were describing earlier,

[00:19:57] a couple of key points from this article talked about,

[00:20:00] you know, complex integrations, skill gaps, data challenges,

[00:20:04] because data is all over the place in organizations,

[00:20:07] potential cultural resistance, you know?

[00:20:09] I mean, if you think about if you've got somebody that's been using,

[00:20:13] I'll just use ERP as a simple example.

[00:20:15] You've got somebody that's been using the same ERP system for the last

[00:20:19] 10 or 15 years in your organization,

[00:20:21] and they're, I'll call it maybe a mature worker in your workforce.

[00:20:27] They're not young and excited about technology.

[00:20:30] The idea of moving to a whole new interface

[00:20:33] and a whole new experience is challenging for people psychologically as well.

[00:20:37] And sure, emotionally.

[00:20:39] And if you have a lot that goes with that.

[00:20:40] So I think we're going to see all of this happen.

[00:20:42] I think there's some slowness to this.

[00:20:45] And I think it really, it really ties across,

[00:20:48] and we're going to talk about this some more in a couple of the other articles today.

[00:20:51] I really think it, I'm going to be really careful how I say this,

[00:20:56] but I used the term earlier, you know, hype cycle,

[00:20:58] but that's just, that's a standard industry trend

[00:21:01] of what we've seen with new technology introductions,

[00:21:04] and we go through a series of phases of that.

[00:21:08] I don't want to for one second think that,

[00:21:13] I've read a couple articles related to this this week as well.

[00:21:16] I don't for one second want to minimize the impact that AI is going to have.

[00:21:20] One of the comments I heard at a conference last year was

[00:21:24] from one of the original employees, early employees at OpenAI

[00:21:28] was that AI might be the most important development in mankind's history since fire.

[00:21:36] I don't know the answer to that, but what I do know is

[00:21:39] embryonic might be even a little bit of an overstatement,

[00:21:44] an understatement I should say of where we are right now.

[00:21:47] And the idea that distributors and manufacturers are getting on their roadmap is one thing.

[00:21:55] I do think there is a little bit of a push right now from some organizations across the board,

[00:22:02] whether it's one of the magazines or even companies

[00:22:05] or even companies that are in the space that we're in as service providers,

[00:22:11] you're going to be out of business next week if you don't do this.

[00:22:15] You need a focused, leveraged approach,

[00:22:19] working with existing partners that can help you down that path

[00:22:23] and planning for the future.

[00:22:25] But I do think there's a little bit of a push that this all has to happen next month.

[00:22:30] Well, I think there's two parts of the equation,

[00:22:33] and we're going to talk about this.

[00:22:35] I think there's using AI itself, and then there's readiness for AI.

[00:22:41] I think you have to separate those two out very clearly.

[00:22:45] So I think that there should absolutely be a sense of urgency on the readiness part

[00:22:52] and readiness starting with data, looking at your data,

[00:22:57] understanding the data that you're going to be able to utilize to drive AI.

[00:23:03] I think they even touched on this in this article that was here.

[00:23:06] Part of the problems and the challenges was just not having the data.

[00:23:10] I think you have to look at data.

[00:23:11] I think you have to look at use cases,

[00:23:13] and this is talking about manufacturing, but if you're looking at more operational use cases,

[00:23:17] sales, marketing, front office type of things,

[00:23:21] looking at the use cases that are there and the data that's there,

[00:23:24] and then starting to be ready and moving in that direction from a readiness perspective,

[00:23:30] from an actual application perspective.

[00:23:32] So there's two sides.

[00:23:33] There's readiness and there's application.

[00:23:35] From the application side of it, as we know, we are in a very early stage.

[00:23:41] As a result of being in an early stage, it's hard to implement.

[00:23:44] We're going to talk about this later about some marketing-related things.

[00:23:47] It's hard to implement, and the talent is not there.

[00:23:51] And there's a lot of other things that make it difficult from the application perspective,

[00:23:56] but the readiness stuff should be absolutely like right now,

[00:24:02] because you're not going to just snap your finger and be ready.

[00:24:06] That's the key thing.

[00:24:08] I'm glad you described things that way because I think that's extremely valuable.

[00:24:14] Two components.

[00:24:15] Yes, I should be focused in my organization about the readiness part of it

[00:24:19] while I'm evaluating things, and I think there's a risk right now of diving in.

[00:24:25] I don't want to say risk, but there's a caution of trying to do everything all at once

[00:24:31] when you're not ready because of FOMO that may be going with that.

[00:24:36] So anyway, some good points, a good article that was there as well.

[00:24:40] So this is we move ahead today.

[00:24:43] Industrial Supply Magazine had an article about wholesale trade being

[00:24:47] among the 13 growth industries in May.

[00:24:49] So it's nice to see the side of the business.

[00:24:51] I would be interested in any of our listeners here that were with us

[00:24:56] that chose to maybe share with us to see how their business was in May,

[00:24:59] but across the board, the results from May were tracking wholesale

[00:25:04] as one of the growth categories.

[00:25:06] And there was quite a few declines as well in the last month.

[00:25:09] So good to keep you know, I sometimes look at this stuff, Tom,

[00:25:13] and then I think about this from a standpoint of what would I say?

[00:25:22] Data overload, right?

[00:25:24] I mean, there is just so many statistics out there.

[00:25:29] And I think it's healthy to have an overview of them

[00:25:33] and understand and pay attention to what's going on across the board,

[00:25:36] but that we could also get too wrapped up in economic data and so forth.

[00:25:42] Yeah, and it's probably as long as I can remember in my lifetime is

[00:25:48] the data is numerous and confusing.

[00:25:51] So it's not really telling a whole lot as we've talked about before, but

[00:25:58] all right, should we move ahead?

[00:26:02] Let's do it.

[00:26:02] So e-commerce and marketing, we're moving into our next section here

[00:26:05] that we have in the newsletter each week,

[00:26:07] rethinking B2B marketing moving beyond the MQL vortex.

[00:26:12] Now that's a mouthful, right?

[00:26:14] But unpacking that a little bit just to start with is

[00:26:19] MQL, marketing qualified lead.

[00:26:22] It's just a term that's been used forever.

[00:26:25] And people have very, very different metrics of what's a marketing qualified lead.

[00:26:29] And marketing departments are thinking about what an MQL is

[00:26:33] and how can they turn an MQL into a sales qualified lead

[00:26:36] to drop it in the sales team's bucket.

[00:26:38] But this article dives in and has some good thoughts about rethinking that concept.

[00:26:43] We've talked about that a lot already on the show historically

[00:26:46] about rethinking all of that.

[00:26:47] So you want to take that away, Tom?

[00:26:51] Yeah.

[00:26:51] Well, I mean, to me, the whole concept of MQLs,

[00:26:57] and let's just define what an MQL is if somebody's not sure.

[00:27:01] A lot of times, like let's say you go to a trade show

[00:27:04] and you're out scanning badges, you're giving away candy

[00:27:06] or somebody's out scanning a badge and they come back and they say,

[00:27:10] oh, look at all these leads that we have.

[00:27:13] And we've seen this over and over, right?

[00:27:16] That most of those people don't even remember

[00:27:18] getting their badge scanned and who you were.

[00:27:20] They just came by and got a badge scan for one reason or another,

[00:27:23] got some swag about something that's there, right?

[00:27:26] Or somebody who just is downloading something off your website

[00:27:30] and they fill out a form or whatever.

[00:27:32] Those are what have traditionally been called marketing qualified leads.

[00:27:36] The challenge with those is that, and this all started in the tech industry.

[00:27:41] So as tech people, we're sort of the guilty ones for starting with the bankers.

[00:27:50] When you're in the tech thing is, okay, then somehow that translates to,

[00:27:55] hey, that guy wants to buy or that guy wants to buy right now.

[00:27:59] Or I'll throw it over to sales and wonder why they didn't do anything with it.

[00:28:02] Right, right, right.

[00:28:04] So it's a model that I think did have some validity in the early 2010s, the early 2011s,

[00:28:15] mainly because people couldn't do their own research.

[00:28:18] So you would fill out a form or you'd get scanned at a show

[00:28:22] and you didn't have all the data online that you have today.

[00:28:26] Today, a buyer, and especially in distribution,

[00:28:30] right, has all kinds of information they can find about the products, the suppliers,

[00:28:34] the distributor, what they're doing.

[00:28:36] There's no shortage of places to find information about what's going on.

[00:28:41] And so as buyers, as we talked about, we just want to do our own research.

[00:28:45] And if we need something, we don't want to be bombarded by a salesperson

[00:28:51] because we're looking for some data or putting those things into place.

[00:28:54] So not only is it ineffective from a sales perspective, but the whole MQL

[00:28:59] philosophy is a horrible customer experience.

[00:29:02] You take those two things together, it's kind of a lose-lose, right?

[00:29:06] It's not creating the outcome that you're achieving and at the same time,

[00:29:10] you're pissing off your prospect or your customer along the way.

[00:29:14] So again, long story short, and this is what they go through in the article is,

[00:29:18] except the fact that the buyers are doing the journey, right?

[00:29:21] I've written a lot about this.

[00:29:22] I've talked a lot about this is now what do you do to actually help influence

[00:29:27] and help that buyer journey?

[00:29:29] But that's a different thing than trying to jump on every

[00:29:33] web form that actually comes in in the business.

[00:29:35] Well, I think this is the core of the challenge that you've seen historically

[00:29:41] of the push and pull in sales and marketing, right?

[00:29:44] Marketing says sales sucks because they don't close leads.

[00:29:48] Sales says marketing sucks because marketing doesn't give me good leads.

[00:29:52] And part of it is, historically, we've not understood our buyer

[00:29:56] and organizationally, there's not been a view of what is our ideal customer profile?

[00:30:04] What types of customers are we looking for?

[00:30:06] What is their engagement level that really means that they're ready to buy?

[00:30:11] Who is our buyer?

[00:30:12] As I said, we're the ICP, but really understanding what are their needs.

[00:30:16] And we talk about this all the time.

[00:30:18] You talk about it in your book, right?

[00:30:20] Changing buyers, it's different.

[00:30:23] And Joe on the plant floor that we, and I hate to beat this drum too much,

[00:30:29] but we talk about it regularly, right?

[00:30:31] Joe on the purchasing guy at the construction site or on the factory floor or whatever,

[00:30:37] that you show up at the job site on Tuesdays with donuts.

[00:30:40] Guess what?

[00:30:41] Joe's counting the days to retirement probably.

[00:30:44] He's got that number on a calendar.

[00:30:46] He's checking them off.

[00:30:47] And the guy behind him that's coming in is a millennial.

[00:30:51] We know now I think it was 62% or something like that of B2B buyers or millennials,

[00:30:57] and they have different thoughts and different expectations.

[00:31:00] So we've got to be addressing that.

[00:31:03] There was 11 points that this article, I'm going to hit them quickly.

[00:31:07] And if you want to, if we want to narrow in on any of these, Tom, just stop me.

[00:31:11] But the first one they talk about is ungating content, right?

[00:31:16] So what does that mean?

[00:31:18] Companies have web form.

[00:31:20] You might have a white paper on your website and you can't get to it without putting your

[00:31:25] email address, right?

[00:31:27] There are times when gated content is reasonable, but it is not the standard anymore for how we

[00:31:33] want to gather names and information.

[00:31:36] Just because somebody put their name in on your website to enter a contest or to register

[00:31:42] for your lunch and learn or your barbecue or whatever it might be does not mean

[00:31:48] they're a marketing qualified link in that setting.

[00:31:51] So what does Mike say here?

[00:31:53] I call it the five by five connection.

[00:31:55] Five of my folks.

[00:31:57] Okay, there you go.

[00:31:58] I like that, Mike.

[00:31:59] That's great.

[00:31:59] That's a new definition of MQL.

[00:32:01] Yeah, there you go.

[00:32:02] So the next thing they talked about being upfront about pricing packages directly

[00:32:08] on their website, finding ways to make reference customers freely available.

[00:32:12] Sometimes customers, their references, they're kind of hidden.

[00:32:15] They don't like to bring them out.

[00:32:18] But this is some of the stuff that's important, right?

[00:32:21] Talks about educating on industry problems rather than their own products.

[00:32:25] And this is probably one of the biggest takeaways that I think people could get from

[00:32:31] this article or this discussion is people aren't interested in how many years you've

[00:32:37] been in business.

[00:32:38] That might be a factor, but what they really are interested in is solving challenges

[00:32:45] and problems that they have, right?

[00:32:47] There's a whole story brand concept and marketing right of creating heroes

[00:32:54] and you being the guide.

[00:32:55] So I think those are powerful in this setting that we can.

[00:32:58] So I'll just hit a couple of other these things.

[00:33:00] They talk about post regular expert podcasts and live learning sessions.

[00:33:05] So there's one, but talk about nurturing employee advocacy,

[00:33:10] investing in brand development, high intent customers over cold sales calls.

[00:33:15] So prioritizing where we're spending our time.

[00:33:18] And I'll put a little shameless plug in.

[00:33:21] That's a tool that you have built in with what we call genius feed within Leeds

[00:33:25] more channel cloud, the CRM and customer intelligence solution that we have is

[00:33:29] there's an AI tool that tells you who are the best customers that you need to

[00:33:33] be spending time with today based upon lots of different factors.

[00:33:36] So these are just a handful of them.

[00:33:39] It talks about collaborating industry influencers and opinion leaders.

[00:33:44] The world is different, right?

[00:33:46] The people that we need to talk with are different.

[00:33:48] So a big change out there right now we need to pay attention to.

[00:33:52] Yeah.

[00:33:53] And I think just to wrap this up, because I'm seeing more and more as I work

[00:33:58] was we work with our customers.

[00:34:00] I'm seeing more and more of emphasis being put on the marketing front of things

[00:34:06] in particular, not just marketing to existing customers,

[00:34:09] but how do you go get new customer?

[00:34:11] Yeah.

[00:34:12] And I think that unfortunately though, I'm seeing the playbook that's being adopted

[00:34:18] as what we've done in the tech world for years, which is this MQL playbook.

[00:34:24] And okay, we're going to send some emails and we're going to see who opens

[00:34:27] the emails, we're going to lead score them.

[00:34:29] And if they open five emails, which is not reliable at all,

[00:34:32] now we're going to consider them an MQL and send them off or whatever.

[00:34:37] Right?

[00:34:37] So I think we have to be, I hope we don't as an industry, don't start adopting

[00:34:43] the bad habits that is the tech industry we came across with.

[00:34:48] And I think a lot of the things that come up in this article allows us

[00:34:52] to look at things philosophically a little bit different than the

[00:34:56] traditional things that really are just outdated.

[00:35:01] Tom, check your mic plug.

[00:35:04] You were a little bit verbally underwater there for a second.

[00:35:08] How about now?

[00:35:09] Perfect.

[00:35:10] Okay.

[00:35:10] Perfect.

[00:35:11] Well, let me rephrase that.

[00:35:13] Can't tell you you're perfect.

[00:35:14] It sounds much better.

[00:35:16] So all right, moving on.

[00:35:18] What do we have next here?

[00:35:19] Despite this article from demand gen report says despite 75% integration rate,

[00:35:26] just 21% of marketers are actively utilizing AI.

[00:35:31] So it ties right into what we've just been talking about previously

[00:35:35] about changing trends and marketing.

[00:35:37] Any thoughts initially on this one?

[00:35:39] Well, I think the answer to this or behind this is an article that we have coming up later.

[00:35:46] I think it's in the Goodreads or whatever about prompt management.

[00:35:51] Basically, what this article is saying is hey, a lot of marketing organizations

[00:35:55] are saying yeah, we're incorporating AI into what we do.

[00:35:58] The problem is a lot of marketers are not using it actually day to day.

[00:36:02] Now, the reason is because currently AI, I can go and say we'll create an email or create a blog

[00:36:09] post but if I don't give it good prompts and good training and good all of that,

[00:36:13] I'm going to get something really bland, really generic, a whole bunch of emojis in it

[00:36:18] and obviously clearly content that was created from AI.

[00:36:23] It's not high quality content that's coming out the other end.

[00:36:26] And unfortunately, where we are right now to really use this well, you have to know how to do

[00:36:31] the prompts. You have to know how to train what you're doing. You have to really give it a lot

[00:36:36] to work with and for a lot of marketers, that's not either they don't know how to do that or

[00:36:40] they don't have the time or the ability to make it happen so then it becomes I might as

[00:36:44] well just write it myself or I might as well just do it myself. So I think unfortunately,

[00:36:50] and then there were mentioning in there but then people get worried like oh, am I falling

[00:36:54] behind because I'm not using AI. The reason you should be concerned necessarily is not so much

[00:37:00] that you're not using AI but how are you using AI and that even comes back to what we were

[00:37:05] talking about readiness and some of the stuff before. I think it also ties dramatically to

[00:37:13] having a plan, right? And putting a plan in place of how that's going to be used. There's

[00:37:18] a big difference between a couple of people in the marketing department that have a $20 a month

[00:37:25] chat GPT account and they can go use that to help with some blank page syndrome or whatever

[00:37:32] it might be and pumping some things out versus saying we have a plan for AI adoption

[00:37:38] within our organization, specifically in this setting within marketing that says

[00:37:43] we're going to use it for these things. And back to our conversation about MQLs, right? Is

[00:37:49] you can just be using AI tools to go out and finding your ideal customers through one

[00:37:55] establishing you can use AI to help yourself establish an ideal customer profile, great AI

[00:38:01] use, right? To help do that. You can push literally you can, you know, we're getting

[00:38:07] going to be in a place very soon, hint hint, where you can be in your CRM and you could ask

[00:38:14] your CRM to help you identify your ideal customer profile in that setting to say who are the right

[00:38:20] people at the right types of organizations that I should be talking to and that are much more

[00:38:27] efficient with how we're using our time. So it's having that plan I think that becomes a

[00:38:32] big piece of it. Yeah, and I think, you know, I'll touch on Kelly's comment here real quick.

[00:38:37] You know, she's talking a little bit about what we were just talking about, which is

[00:38:41] you have kind of the old school marketing mindset, and then you have the newer

[00:38:44] approach to looking things and there's sometimes a mismatch between those

[00:38:48] types of people and that types of philosophy. But I think that if you

[00:38:53] it's believe it or not, I actually believe that what we've been we're talking about with

[00:38:57] MQL and the old school marketing approach, and in looking at that looking at the,

[00:39:04] you know, at a more modern marketing buyer centric approach, combining with AI and AI,

[00:39:09] those two together actually go arm and arm really well. If you use them together,

[00:39:14] if you try and shove in AI with the old school MQL stuff, it's, it's actually a bit more clumsy.

[00:39:21] So if you start looking at it, yeah, right. So if you look at the two together,

[00:39:26] one plus one is actually three or five. Whereas if you try and shoehorn them in the other way,

[00:39:33] you're actually going backwards. Yeah. And because yes, by taking the time to know your customer,

[00:39:39] build out your ICP, then you can use that data to train your, your AI capabilities as well

[00:39:45] and then incorporate that into your marketing and then you're able then to provide higher

[00:39:49] quality content. That's based on that. So yeah, we could do a whole hour on this discussion.

[00:39:56] Well, it completely ties right into the next article, right? Talking about you,

[00:40:03] you transfer. This is our marketing e-commerce segment, right? And we're now we're going to

[00:40:08] go in and talking about from Morningstar with a survey about B2B web store woes

[00:40:15] drive manufacturing buyers elsewhere. And I think you could take that word manufacture,

[00:40:20] manufacturing buyers and substitute construction, building materials, whatever you want in there

[00:40:26] is because one of the things that we have to be looking at doing is that overall ecosystem,

[00:40:35] lack of a better term of what are we using for tools to touch and reach our customer.

[00:40:41] Right? So we hear the term omni channel all the time and it's, it's, it takes more than

[00:40:46] just having a website. It takes more than just sending out emails. It's a broad scope

[00:40:52] review across an organization of who am I selling to? What are the methods that they use to buy?

[00:40:59] How do I follow their journey? Right? And there's, you know, we, we as a company,

[00:41:04] we're partnered with optimise Lee, one of the top e-commerce solutions in the world

[00:41:09] and optimise Lee and others do a great job of following customer journey. Now,

[00:41:14] when you take customer journey online and you take that data and bring it into a technology

[00:41:21] tool, like an advanced modern smart CRM solution with AI enabled capabilities.

[00:41:27] And I can watch my customer journey from what he does at the branch to what he does online

[00:41:33] to what they do with their interaction with customer service or inside sales versus outside

[00:41:38] sales versus how many quotes do we have open? Now we have this amazing level of intelligence

[00:41:44] that we can pull together with all of this, but our online experience has to match that

[00:41:50] wonderful experience that we might create at a branch or how we're meeting with people

[00:41:57] in the field. These things all have to be a cohesive piece to get to that highest level

[00:42:03] that we all want to get to over time. Well, it boils down to me three things,

[00:42:08] right? As far as customer, customer acquisition and customer retention, which is what we want

[00:42:14] in customer growth. You have to be relevant, you have to provide confidence and you have

[00:42:19] to be trusted. We're losing you again. Am I under water or am I losing the...

[00:42:25] No, this time you're under water. Sometimes you go away. Because the microphone won't be,

[00:42:28] it's not a mic. So that's an internet thing if I'm under water. But anyway,

[00:42:34] what I was saying is there's really three parts, right? To customer retention and

[00:42:37] acquisition. There's relevance, there's confidence and there's trust. And if you can build,

[00:42:43] if you have relevant offerings, right? Relevant things for your customer, that's good. That's

[00:42:48] great. That's a good first step. If they have confidence in you and your business,

[00:42:52] then that's good as well. And then the third obviously is building that trust.

[00:42:56] So the problem with this article, as I was saying here, is that if your website's not

[00:43:01] working or your B2B e-commerce experience is a little bit clumsy or incorrect or whatever,

[00:43:08] what does that do? That drops confidence. So you may have great relevance and you may even

[00:43:13] have some trust, but it reduces confidence along the way that's there. So I think all

[00:43:18] of those things have to come together. Yeah, it's systemic, right? There's not a single

[00:43:25] answer, right? And that's what we've historically done in manufacturing distribution

[00:43:30] is we've had one of the comments Kelly made earlier here today was about patch works.

[00:43:36] We did a webinar a couple weeks ago, we've got another one coming up later in July with

[00:43:40] one of the large bind groups about smart CRM and we talked about AI in that,

[00:43:45] about the patch work solution where we buy one-off, one-off, one-off pieces of software

[00:43:51] and they're the silos of data. So Tom, we need to kind of move ahead. We got some

[00:43:56] other things to cover here today. So we're going to dive into our technology and cybersecurity

[00:44:01] and AI segment. Kind of a cool article in here. You know, when we first read this,

[00:44:05] it's from Fast Company magazine. It's talking about generative AI is now scanning your Amazon

[00:44:10] packages for defects before they get shipped. We don't need to spend a lot of time on this.

[00:44:15] The reason I was, as I was reading it earlier in the week, this article and decided to

[00:44:19] include it today was really tied to the idea of back to AI in warehousing and distribution.

[00:44:28] There are so many tools that are going to come in and this they call a project,

[00:44:33] PI that they refer to this as and it's looking for defects or problems or damaged

[00:44:40] goods before they even leave their facility. And these are things I think we should be

[00:44:44] thinking about. It doesn't matter if you're, you know, a one branch location that's got a

[00:44:49] nice e-commerce solution or even you're just taking orders over the phone, but there's

[00:44:54] going to be more and more tools that we can be using to augment the teams that we have

[00:45:00] to make sure that what's going out the door is the right thing because I would assume

[00:45:05] if Amazon can look at things and say if we could reduce one half of 1% of mis-shipments,

[00:45:13] damaged goods, shipments, what it does not just to profits but the environmental impact

[00:45:18] of boxes getting thrown away and things getting shipped back major impact. And that can translate

[00:45:25] right over to the mindset and thought process that goes into wholesale distributors and

[00:45:30] manufacturers in the same setting. And it's a great example of the whole multimodal

[00:45:34] capabilities of AI where they're using obviously photos and things like that to

[00:45:40] identify things that are... Yeah, you know one of the things before we move on from this,

[00:45:44] because the next topic is going to take us a little bit of time, but one of the interesting

[00:45:49] things that might take away in reading that article right is we hear so often the discussion

[00:45:55] about people thinking about, you know, AI eliminating jobs. There wasn't one mention about

[00:46:02] anything in here about reducing labor or anything like that. In fact, they talked about

[00:46:07] it. They're using this system so that once those items are identified, they can go to a human

[00:46:14] to be evaluated could they be resold or not. And so I think this is not about getting rid

[00:46:19] of jobs. It's augmenting human roles to make them more efficient and better. So I love it

[00:46:26] when we kind of read and see these things that are kind of more tied to the, hey,

[00:46:31] we're on the right track and we're not going to be getting rid of all these jobs

[00:46:34] that people are worried about. No, it's optimization. All right. Very good. So let's

[00:46:42] get our geeky propeller heads on. Everybody take a moment and stop and get ready to do a deep dive

[00:46:51] on some technology terms. And the reason I say that is we talk pretty much every week,

[00:46:57] we have stuff and we talk about AI, right? And it's just what's in the news, right? We've got

[00:47:04] around the horn and wholesale distribution is the newsletter we're reviewing and we talk about

[00:47:08] technology. But as we're diving more and more into a new world of AI, and we're starting to see

[00:47:18] solutions that we might be looking at buying with different vendors. We talk regularly about

[00:47:23] what's happening with Gemini and Google or Lama with Meta and OpenAI's chat GPT.

[00:47:31] We start talking more and more about open versus closed AI. And ran across this article,

[00:47:38] it's actually from LinkedIn. It was a great article that kind of describes the two. And

[00:47:44] Tom, I'm going to ask you to unpack this a little bit for us today. But I think let's

[00:47:48] start with why does an executive, if I'm a president or CEO or a VP of sales or

[00:47:56] a marketing person and a distributor or manufacturer, why does understanding the

[00:48:02] difference between open or closed AI solutions matter to me?

[00:48:06] Tom Fisk Well, it's philosophically a very

[00:48:13] different way to go about solving the same problem or solving a problem, right? Or

[00:48:18] accomplishing something that are there. It's very different in the types of skills that you need,

[00:48:24] the things that you have to be aware of and so forth. But let's explain, I think before,

[00:48:31] and I know we could easily spend another half hour on this. So I'm going to go through this

[00:48:35] as quick as I can. What is open source? Basically, open source is, hey, I have a product

[00:48:42] or something that's been developed. Somebody, and the code for that is out there openly so

[00:48:47] that you can take it and multiple people are developing at the same time, and you can add to it

[00:48:53] and people are continuing. It's open, right? It's an open environment for updating the source

[00:48:58] code, the actual development code around what's there. So if you remember Linux back in the day,

[00:49:04] Linux was an offshoot of Unix. Linux was an open source operating system, still exists to

[00:49:09] this day, that people continually have thousands of developers working on. You can bring it in

[00:49:16] house and you can get updates through literally opens thousands of developers doing that.

[00:49:22] Closed is where it's owned by a company like a vendor or a provider, and they do all that work.

[00:49:29] They do the development, they do all of that. You don't get to have your people come in and

[00:49:34] do the code so you're buying or you're accessing something that's a finished product

[00:49:39] between those two things that are there. The reason that this has been a big conversation

[00:49:45] and almost debate in the AI world is that there are models, large language models,

[00:49:50] that are open source. Like Facebook released Wama, which is a large language model with an open

[00:49:57] source. Sorry? There we go, we're back. Okay, it's a large language model that is open source

[00:50:05] so that you can download it and start playing with it and changing it and so forth. A lot of

[00:50:10] companies have used that. There's tons of other open source models that are out there in AI.

[00:50:17] Then there's open AI, for example, which is closed source. You don't get to get the

[00:50:21] code from open AI and start modifying it along the way. Same with Gemini. Gemini is a closed

[00:50:26] source model. I think there's two things that you philosophically have to look at

[00:50:33] when you're making this decision. If I'm a CTO or a CAIO, we talked about that last week,

[00:50:39] Chik Stife, you have the model and then you have the applications. What you want to be able to

[00:50:44] decide is do I want to be able to have it closed? Do I want to build my business around

[00:50:48] a closed source model or do I want to build it around an open source model? Then the

[00:50:53] applications that exist that run with the different models, those could also be open

[00:50:57] source or closed source. You could have closed source applications or open source applications.

[00:51:03] You don't have to do both. They don't have to be the same.

[00:51:08] Those are the things that you're really trying to take into consideration. This article went into,

[00:51:13] well, what are the pros and cons? I won't go into all the pros and cons of the things there,

[00:51:18] but philosophically you're saying kind of a matrix. I've got my model that I want to

[00:51:23] work with and I want to have applications that are working with those models or models

[00:51:27] plural and then do I want those to be open source on the applications, closed source on

[00:51:33] the applications, open source on the model, closed source on the model? That really determines

[00:51:38] the talent you're going to need, what you need to be thinking about. There's just a whole

[00:51:42] bunch of strategic ramifications that come out of those decisions that are there.

[00:51:49] Yeah, it's pretty geeky, but there's no way around it on this.

[00:51:53] So if I'm Joe Smith and I run a distribution company in Montana with seven locations

[00:52:04] and I'm looking into these things, top three reasons maybe, I don't know what the fair

[00:52:11] question is, but a couple of key reasons why one or the other might be better for my

[00:52:16] organization and it sounds like what you were describing is you could have a mix of the two

[00:52:26] within your organization. You might have an open source model, but using some tools related to

[00:52:31] that that are closed source. Pluses and minuses of those if I'm Joe Smith and run a distribution

[00:52:38] company that I should be in. Tom, before you go ahead, the reason I say that is we talk to

[00:52:42] companies every day that are 100 million plus dollar a year companies that have

[00:52:50] a half a person or one person in an IT department and they're listening to this show or

[00:52:55] they're reading articles or they're relying on their trade association or buying group to kind

[00:52:59] of what should I even be thinking about? So let's try and boil this down a little bit

[00:53:04] to replace some good takeaways. So the majority of the distributors that I certainly have worked

[00:53:12] with or I'm working with, I would absolutely say stay away from an open source model

[00:53:17] and stay on a closed source model. They're not prepared or ready to be in an open source

[00:53:22] environment for the model because you have to have the skill set to be able to deal with

[00:53:28] that. You have to have the skill set too right? Right, I mean and it's attractive

[00:53:33] because it's less costly in some cases or at least perceived as less costly. You have

[00:53:38] flexibility. It looks good on paper sometimes but there's just a lot of talent that you have to

[00:53:47] have especially in today's world to be able to do that. On the application side I would say it

[00:53:52] depends. I think that there are going to be some open source applications that even

[00:53:57] distributors and manufacturers that are not heavy on IT might find because they could

[00:54:03] outsource or work with somebody to actually get them. I think there will be some really

[00:54:08] good open source applications that should be considered over time but right now I think more

[00:54:14] of the closed source thing is the right way to go just because of the resources that are there

[00:54:18] and the talent that's there. So what we see today Tom most often in these discussions just

[00:54:25] because of you know what's out there and who broke the eggshell so to speak for

[00:54:33] AI to come out and become popular was OpenAI and ChatGPT. Currently still closed source correct?

[00:54:41] Completely yes. With some though discussions even though they're called OpenAI they were

[00:54:45] originally discussing to be an open source but they think they're under pressure now by

[00:54:49] some as well to be open in that setting so good example is that's a closed set

[00:54:56] and there are others that are very open and so maybe the takeaway on this is that

[00:55:03] if you don't have a high level of tech resources not just knowledge but people and knowledge

[00:55:10] and or third parties that you trust that you work with following maybe two components of that

[00:55:16] is down that path is one is a closed source model that you don't need to worry about overseeing

[00:55:23] managing the cautions that go with the security and and or did they somebody do the right thing

[00:55:30] or not is best and then two is from the application side is work with a partner that

[00:55:38] really understands the difference in these settings and can be your truly your partner

[00:55:44] in your guide not just a product provider that can help you along that way. Kelly made

[00:55:48] the comment about data lakes and isolating data and so forth which is you know a kind of key and

[00:55:53] kind of important for us to think about this and it's I think I use an example of a hiccup I

[00:56:00] almost made about a year ago with with chat GPTF sometimes we can load documents in and not

[00:56:07] think about if we haven't protected ourselves or clicked a couple of the right buttons that

[00:56:13] we could be sending sensitive data out to the world and to Kelly's comment here that's

[00:56:17] where data lakes really help us on isolating our own data. Yeah so I think anyway that may be

[00:56:25] enough to talk about right now about I want to I'm like one last thing and I know we're

[00:56:30] we're kind of running up on time here but it just I know we have had a couple of comments

[00:56:35] from some distributors today that are with us and that are in different buying groups is

[00:56:40] there and this is you know we both work for a technology company but I'm a distribution guy

[00:56:48] and I know more than most about technology but nowhere near what you do obviously as a

[00:56:52] computer scientist and developer but is there a setting in a set and I know the answer to this

[00:57:01] is yes but is there a setting that's reasonable to think about could be done where if you had

[00:57:10] 25 people from a buying group or a trade association that they could have their own

[00:57:17] models in their own systems but maybe use open source to support and share

[00:57:23] benefits that they're developing on their own in that setting. That's a really good question I

[00:57:28] actually believe that there's a real opportunity for us and the buying group community is an

[00:57:34] interesting one or even like an AW who we were out on our site right is I think there's

[00:57:40] a real opportunity to share because if you invest in building forget the model for a

[00:57:45] minute but if you invest in building applications on top of the model having those and making those

[00:57:50] open source and shareable within a community is a very powerful concept very foreign but I think

[00:57:57] very powerful. I do think if that was supported through an association or through a buying group

[00:58:03] or whatever so it wasn't just a big wide open piece there I think that there's again it comes

[00:58:08] back still it comes back to the talent issue that's there but I do think that open source

[00:58:14] in a finite community especially at the application level not at the model level at the application

[00:58:19] level could make a lot of sense because there's a lot of applications that will make sense

[00:58:24] for wholesale distribution that you would want that in theory multiple people multiple companies

[00:58:29] would want access to. Yeah and then you allow you can you share the wealth right or you

[00:58:34] share the cost too on building those out but you still have to understand how to do open

[00:58:37] source and manage that there's a lot of things that comes with that. The reason I was

[00:58:41] thinking about that Tom and the kind of the light bulb I thought about yesterday and then

[00:58:45] the light bulb kind of went off as we've talked further today with this is you know there's

[00:58:50] and there's a number of phenomenal buying groups and trade associations here in North America

[00:58:55] and internationally and if you just look at some of them here in the U.S. that we work

[00:59:00] with and are partnered with they've done a phenomenal job of helping their members go down

[00:59:05] the e-commerce path right with product information systems and so forth and so

[00:59:13] you know maybe that's that next level and that next place to be so good. Well hopefully there

[00:59:18] was some value to that of open source versus closed source. I'm happy to talk about that

[00:59:23] further with anybody if they want to get geeky with us further but we're going to dive into

[00:59:27] our sales and M&A segment today as we kind of bend into the last the bottom of the night

[00:59:33] so to speak and of today's show. Great news this week affiliated distributors and the iMark

[00:59:41] buying group the electrical portion of that have come together in a merger that was announced

[00:59:47] pretty exciting you know you've got now 725 independent electrical distributors coming

[00:59:55] together now when you've got that combined so that good news I had a discussion with

[01:00:00] a couple of folks that were very close to this deal earlier this week in fact one of the

[01:00:07] comments one of the gentlemen that was intimately involved with the process was shared with me is

[01:00:12] said it was phenomenal that in this article talks about you know that it was the negotiations

[01:00:17] and discussions were going on for seven months and the fact that we're in this day and age with

[01:00:22] texts and emails and stuff is that none of it got leaked and so

[01:00:27] congratulations to both not just the board but for the entire organization.

[01:00:32] I think there's a lot of buzz out there about this right now and I think

[01:00:36] everything that I've read so far the electrical distributor Scott Costa and his team with Ted

[01:00:43] magazine the electrical distributor magazine posted quite a few quotes this week from large

[01:00:48] electrical distributors from both organizations talking about the value that they saw with it

[01:00:54] as well I think what really comes out of that is you've probably got some manufacturers

[01:01:00] squirming right now because both of these organizations probably had you know those

[01:01:05] favored nation status agreements with their vendor agreements and you probably got some

[01:01:10] manufacturers in the electrical space scratching their head right now that says oh I hope we're

[01:01:16] complying with our agreements because now we've got these two groups together so should be

[01:01:21] interesting important to note that that did not include iMark Canada or iMark Plumbing and a

[01:01:27] couple of the other iMark groups it's just the iMark Electrical group merging with that

[01:01:31] and joining with ADs so I'm excited to see that one I think for us is you know as a company

[01:01:37] that Leedsmart is we're partnered with affiliated distributors we weren't partnered

[01:01:41] with iMark Electrical and there's a whole lot of people that we get to meet and make new

[01:01:45] friends so good stuff. So back here we're back in our sales and M&A segment modern distribution

[01:01:53] magazine posted this week some great news about May's M&A activity a big bump ahead

[01:02:01] in activity I think there was over 40 deals done 44 total M&A news items that they covered

[01:02:07] you know as I was going to mention with that we cover a handful of those each week we

[01:02:12] kind of pick and choose in our industry scuttlebutt section we don't talk about

[01:02:17] a fraction of what's really going on each week we pick some select ones but

[01:02:21] great article the folks in modern distribution management now part of national association

[01:02:25] wholesalers great piece there so worth a worth a look if you haven't checked on that

[01:02:30] about M&A activity and the last piece on that article I don't know if you've looked at it

[01:02:34] closely Tom we see consistently right there's some marquee names in the marketplace in

[01:02:43] building materials and electrical and that are out they're just they've got big M&A teams

[01:02:49] and they're out on the hunt for deals regularly there's some listed in there that

[01:02:53] are smaller one-off type deals that I like seeing those two when you see you know Joe

[01:02:58] Smith that's buying you know Ralph Jones and Judy's business down the road as opposed

[01:03:03] to a multinational coming in and doing that so people in leadership segment our I call

[01:03:10] owed to dirt beverage segment dirt call this out on this friendly lovingly earlier this year

[01:03:17] that we needed to talk more about this two articles we have this week one of them is

[01:03:23] why CEOs need to check their blind spots and their judgment any quick thoughts on that one Tom

[01:03:30] no I mean I think it's you know don't judge the book by the cover right and I remember

[01:03:36] or I was reading this I remember when I was in college and I worked at a liquor store

[01:03:40] I remember that and we had this motorcycle gang show up there and I was like holy crap you

[01:03:46] know I was like you know just shaking practically and turned out they were the most nicest was

[01:03:53] courteous respectful group of people that we have and they came in all the time and they

[01:03:57] were just like so respectful and so courteous and and so whatever and I think that was a

[01:04:02] lifelong lesson of not judging the book by the cover you know well I think that's a great point

[01:04:08] there's a lot of really neat pieces in here they talk about prejudgments in our life and

[01:04:12] our work and I think what's interesting is I look at this as you know later stages of my

[01:04:17] career is you know having been in distribution manufacturing for I guess 35 years now is

[01:04:26] when you think about it from a leadership standpoint not even a CEO but just director

[01:04:30] VP leadership role is you can't have achieved the skill set to get to that place

[01:04:38] without having developed some biases along it's forget about what we were raised with in our

[01:04:44] life and in our personal life but we have business biases that we get to in that in

[01:04:49] that setting as well and so I think this this article was really good kind of a pulse check

[01:04:54] for me is is our company is growing as well you know but developing cultures where you know

[01:05:00] there's and it's it's so much different we want to be cautious too it's so much different than just

[01:05:05] the you know diversity and inclusion stuff that we read in the you know the pressures that are

[01:05:11] out there in in the world right now about about inclusion and so forth it's more about just

[01:05:18] being open and honest and evaluating your own judgments because I will tell you it you know

[01:05:24] someone in their late 50s is that I can look at someone and prejudge them like that

[01:05:30] now I have to stop myself consistently from that because it goes back to your example of

[01:05:35] the biker game right great people and how many times can we reflect back in our lives or we

[01:05:42] prejudged someone and they weren't what we thought and so I think this was just a solid

[01:05:48] kind of gut check for people in leadership on that from that standpoint so the the last article

[01:05:55] that we're going to talk about today when we get there has a relationship to it we'll do that

[01:05:59] quickly but kind of jumping ahead to our industry scuttlebutt section border states

[01:06:06] announced a large distributor now really national distributor have put together

[01:06:14] a whole new plan for some of their warehousing some of their operating models and leadership

[01:06:19] changes another employee owned company that's doing great things out there really great

[01:06:24] leadership team there so some announcements there that came out of that that came from

[01:06:28] the distribution strategy group national association excuse me national association

[01:06:33] of wholesalers we had their ceo eric hoplin with us last week as what a fantastic guest

[01:06:39] I was looking through john our producer and editor of the podcast as he and his team made

[01:06:45] some clips from last week and posted them to social media and I was listening to a few of

[01:06:49] those clips and it was really appreciative and in a message earlier this week we've got

[01:06:55] probably two more people from NAW coming on with us later in the year as guests so

[01:06:59] happy to see now with them having acquired modern distribution management they've got

[01:07:04] their management team kind of some adjustments that they've made and some promotion so that

[01:07:08] was good good to see Tom in the newsletter as we kind of wind and close down today there's a link

[01:07:14] in there to uh what is smart crm and why does it matter your business there's a link there to an

[01:07:20] on-demand uh recording back to marketing every time that earlier it's not gated you don't have

[01:07:26] to know you don't have to put your email in to go watch the recording of what is smart crm

[01:07:31] why does it matter uh that's there so um the marketing people at uh at lead smart have gone

[01:07:38] away from gating but um we have a segment each week and we'll talk about this as we close

[01:07:44] today briefly uh and it is about uh we call it a good read and it might be about health and

[01:07:51] wellness it might be about leadership it might be about you know personal development it's

[01:07:58] different every week um i liked it this week and it ties into the last article that we were

[01:08:04] talking about ceos and it's uh it's from ink magazine it says three words to make you a

[01:08:09] smarter leader any thoughts on that or any takeaways on that no i just i agree i think

[01:08:15] it just ties into you know the i don't know right and that it ties into maybe humility

[01:08:21] a bit on things and it ties into the other article i think really well yeah i think

[01:08:27] leadership no different right leadership is going to change as well you know how we lead

[01:08:31] and how we go about it and how we work with people is going to be very different than it was

[01:08:38] 30 years ago or even five years ago right so well i think go ahead i'm sorry no it's just

[01:08:44] it's all part of the change right it's all part of the shift of whether it's marketing

[01:08:48] ai leadership it's all kind of coming together at the same time i like that the the way you

[01:08:54] put that in these two articles they kind of maybe i should have even popped this into the lead the

[01:08:59] leadership and people uh segment but it was i think it's really powerful from that standpoint

[01:09:04] is you know one of the comments this article makes and the statement the articles title three

[01:09:09] words to make you a smarter leader and the three words are i don't know right and what i

[01:09:15] left here is it says pretending pretending doesn't make you know it it does not build

[01:09:20] trust in your organization right so people come to us as leaders looking for answers and solutions

[01:09:26] it actually triggered for me in the previous article we talked about with cdos it says you

[01:09:31] know they were quoting um one of the founders of home depot and his comment about you know what

[01:09:38] would you do right how would you handle this and are very valuable in that setting because

[01:09:44] sometimes we might not know the answer but as leaders if we can coach someone to or burp them

[01:09:50] even to get the answer from them because they probably might have the knowledge that's right

[01:09:54] there and available so powerful stuff i like that kelly made a comment about a big project

[01:09:59] working with people from all over the world and talks about it being one of the most

[01:10:03] fulfilling projects of her career i think that's great right you get people in multiple countries

[01:10:09] we've just had some work done for us by a foreign company and good people solid people

[01:10:17] so i think it's great so anyways that's a little soapbox for me from a leadership standpoint today

[01:10:24] but good week great articles good discussion great comments tom anything before we wind down

[01:10:30] today yeah i hope we didn't go too geeky and there was a few of these articles today that

[01:10:35] seemed like a bit deeper than usual so um but i will say if you are trying to sort out your

[01:10:42] readiness we're happy to chat with you about that we do a lot of that and really has nothing

[01:10:48] to do with selling our product or it's just helping people understand what are some of the

[01:10:53] things to be thinking about on that ai readiness journey is um it's pretty important

[01:11:00] yep these are good discussions i very appreciate the comments that came in today

[01:11:04] yeah people are working on and projects that they're doing and and and then you know slippery

[01:11:11] fish gets the worm tom on that note on that note i think let's go now i'm gonna ask you any

[01:11:19] exciting weekend plans are you just going to be working on on making our product better

[01:11:23] uh no i'm working on figuring out how i'm gonna move my house so that's right you're moving

[01:11:27] in a couple weeks that's right forgot about that yeah i'm gonna disconnect my phone uh and i

[01:11:33] don't have a truck but um that's good exciting stuff and around our house um youngest the

[01:11:41] baby of the house is 25 and he's getting married a week from sunday so what's going on around here

[01:11:47] if you know our family you know my kids and certainly you know my wife and there's a pretty

[01:11:51] pretty exciting buzz around the brown house with that yesterday i was working from home and

[01:11:57] went out and looked out the window out back and austin and his fiance were out there with

[01:12:02] darlene and austin and darlene were practicing their their mother son dance in the

[01:12:08] backyard is pretty cool to see so anyways last final comment from rp our good friend ron paulson

[01:12:16] appreciate the compliments he was at the applied ai show this week in chicago he had a great

[01:12:21] show there rpi will probably be calling you catching up a little bit shortly tom before we

[01:12:26] leave next week on our broadcast is something we've never done before with guests we have an

[01:12:34] international guest joining us for the first time which i'm super excited about we have max

[01:12:41] meister joining us max is the co-ceo of ludwig meister which uh is a large power transmission

[01:12:50] and industrial distributor and hydraulic distributor based in dafau germany which

[01:12:56] is in bavaria max has a podcast as well a super sharp gentleman if you enjoy it when we

[01:13:03] have guests join us next week because uh we've got max is going to be live from bavaria with

[01:13:10] us and i've been kind of messaging with him off and on um with him and it should be a super guest

[01:13:18] so looking forward to it yeah all right everybody have a wonderful weekend tom we'll talk more

[01:13:23] later today be kind do good things and stay safe thanks everyone

[01:13:33] we hope you enjoyed today's episode and our guests each week we try our best to dig into

[01:13:39] the topics that are impacting your business so please reach out to us and let us know

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