Tariffs, Trade, and Tech: How Distributors Can Win in an Era of Uncertainty

[00:00:04] Welcome to Around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies, Tom, Kevin, and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain. Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain, we'll be able to get into the next few weeks.

[00:00:30] With the high chain issues, we peel back the onion with our guests into the topics that impact your business the most. Good morning. Last week it was drums. Today it's piano. Today it's piano. You're a multifaceted, talented individual. Well, you know what? Just a quick note to our editor and producer of our show, John Taylor. We need no other clips from today's show other than what Tom just said. That's right. We'll run with that. Social media. That'll be all over social media.

[00:00:59] It's been a great show. Nice to see everybody and we'll see you next week. Right. Good morning to Bob. It's nice to have you with us, Bob. And we'll see some other folks jumping in hopefully momentarily. So, Tom, how are you today? Been raining a bunch in, there we go, Paul Kennedy, air piano. Yeah. That's exactly where my musical talents lie. You never knew Kevin was so multifaceted and talented, but now you know.

[00:01:26] So my musical talents started in the 70s where I could push the button in dad's car to go to the next radio station. Oh, okay. And now I've accelerated that and expanded that to, I can actually, you know, manage Pandora on my phone and push it out to the Sonos speaker. So there's my musical talents. You're really dating yourself when you're talking about pushing the button and the little thing would move. Yeah. That could cross the thing, right? But that's easy because we've been friends since kindergarten, but you're now a year older than I am because you just had a birthday a couple weeks ago.

[00:01:56] So, you're, you, I've got 11 plus months where you're older. Nothing but air. I like that. Yeah. What's Paul referencing me in general or? I think he's talking about your, your jumping skills, your vertical leap. Right. That's a credit card. That's a credit card leap, right? Arlene is questioning some of the musical talent. So that's my lovely wife. That's good. Well, hey, she's here. You know, that's the morning to Ron as well. Yeah. Very, very good.

[00:02:23] We had his article last week on. Yeah, we did. That was a really good article. That was a great, a great article with that and good. You know, so we're way digressing before we even start, but it's great to have these guests with us. What I was going to mention was. Bob Britton wrote a really cool LinkedIn post. I haven't read all of it yet on earlier in the week about kind of tying to which we're going to talk about in a couple moments here about tariffs and so forth.

[00:02:51] But I it was the part that I read. Bob was insightful and I saved it and I'm going to get to the rest of it. But kind of looking at what we see going on with the style of how things are getting done in Washington right now. And we're going to talk about that in a few minutes and Bob will probably have some comments. But, Tom, we digress a little bit. We should probably do a little bit of our housekeeping and say who we are and what we do and why we're here and so forth for the people that are listening.

[00:03:17] I think last week we were when I looked at some of the statistics, I think last week it was six countries. We had people listening in on and across all the different platforms between Facebook Live, LinkedIn Live, YouTube Live and then Spotify and so forth. So that is the key as we get more and more followers each week and people listening in will describe things a little bit more. So I'm Kevin Brown. This is my lifelong friend and business partner, Tom Burton.

[00:03:44] We get together every Friday morning, as we say, unless someone's on an airplane, on a planned vacation or in the hospital. And we look at the news of the week and we kind of look at things from a standpoint of what's going on in the economy and supply chain, mergers and acquisitions, technology, AI, human resources or people and leadership.

[00:04:06] We look at a series of different topics and we try and kind of, as we say in the bumper music, if you're listening on the on the recorded podcast and the bumper music, you'll in intro, you'll see we say we use the term peel back the onion. What we really try and do is look at the news of the week and talk about how it impacts wholesale distribution and manufacturing. Neither Tom nor I are economists, but we love to have a chat about what's going on in the news.

[00:04:32] We again are live on LinkedIn, live YouTube, live and Facebook live Friday mornings at nine o'clock Pacific. And we get great guests like we have today, people joining us. And then regularly, we also have great guests. In fact, next week, we have David Gordon. And David is a very much a thought leader in the electrical and HVAC distribution world. We're looking forward to having him with us. And then the following week is a pretty exciting guest. We have my friend, Sean Dubrovac.

[00:05:00] Sean is a global thought leader in both retail and wholesale markets, keynote speaker, PhD in economics, and just a good all around guy. And so we're looking forward to having Sean with us as well. So lots of good guests coming. But what we do is we review each week the newsletter that we publish. And it's important that we share that because if you're listening on the podcast, the recorded podcast, you won't see the two handsome faces that are here or the beautiful folks that are responding in with comments.

[00:05:30] You'll just be listening in. But what we have is a copy of the newsletter that we produce every week. It goes out middle of the night on Friday mornings. As I like to say, oh, dark 30. It goes out to 10,000 plus people. And that newsletter is called Around the Horn and Wholesale Distribution and Manufacturing just like our show. If you don't get that and you would like to, three simple ways to get that. You can simply send an email to hello at leadsmarttech.com.

[00:05:59] Or you can very easily go to the LinkedIn page for the Around the Horn and Wholesale Distribution podcast. You can sign up for it there. Or we have a website for the podcast, which is www.aroundthehornpod.com. And all of our past episodes and so forth are available there. So our ask of you is if you like what you see and you hear, share with your friends, comment with us.

[00:06:23] And if you're listening on the podcast on Apple, Spotify, or other platforms, please give a subscription and a review, ideally. And that gets that out to other people. So the last thing we'll talk about quickly, we'll talk about it more at the end of the day. But we couldn't do the show each week if the company that Tom and I work for didn't sponsor the show. We've got multiple people on the backside of this preparing things for us and all the costs of production. Tom and I work for a company called LeadSmart Technologies.

[00:06:49] And LeadSmart has developed an AI-enabled CRM and customer intelligence platform. It really works like no other platform of its type. Very different than historic CRM tools that you might have seen in the past.

[00:07:01] And with that, we are able to help wholesale distributors and manufacturers bring siloed data from across their organization into a single platform using AI tools then to help them make decisions about what we should be selling to who and when we should do it and what quotes are open and what are we missing that's going on there. So probably of all the software tools within a company's organization, the LeadSmart Technologies Channel Cloud is the name of the product.

[00:07:28] And the Channel Cloud product is probably the fastest return on investment that people would have on any software investment ever. So if you're looking to accelerate growth within your company, we would love to talk to you and we hope you can reach out to us with that as well. So, Tom, you want to kind of dive into the news here? That's what we're here for. Yep, let's do it. Very good. Get started. So China challenges Trump tariffs at the World Trade Organization. What are your thoughts to get started on the weekend tariffs?

[00:07:59] Well, I think there's two. This article starting off on the tariff conversation has two points. One is obviously the Canada and the Mexico one was put on hold for a bit, but China was not. But what I found was more interesting here is the, what they called it, what was the word they used? The exempt packages, basically.

[00:08:29] They had a word for that. Yep. De minimis. De minimis. De minimis. De minimis. De minimis. De minimis. De minimis. Small and important. Right. So there are packages that are supposedly low value, less than $800, I believe, worth of stuff. But if you start to peel the onion on that, there were, I'll get you the exact number here.

[00:08:50] I think there were like over 1.2 billion packages that were 1.36 billion shipments that qualified for this, quote unquote, de minimis. De minimis. De minimis. De minimis. Exception. In 2024. Just use small. Small. Yeah. Small exempt. Right. These big words kill me. So. Tom, we're not able to hear you.

[00:09:25] Can you hear me now? Yeah. Okay. Anyway, what was, what was I saying that was, so anyway, the whole point being is these packages are, which come out to be about several million a day. Right. Are being, we're basically being halted as well, which created a bit of chaos on the way. I guess the post office has come back and said, we will continue to handle them. But man, as you really start to under, I never knew about this. I don't know if you knew about this.

[00:09:53] It certainly seems to me like this is a wave to get around a lot of the customer requirements. It may be the way a lot of the fentanyl is getting into the country. It may be where knockoffs are getting into the country because they're just basically sliding through without any sort of oversight. So I think there's something there, but I think there's more to it than just the tariff piece. Well, there's so, we kind of jumped ahead on that. But yeah, I think that's, you're right with that.

[00:10:22] And you know, a big part of that in your, I couldn't agree with you more that there is the absolute potential that that could be where some of these things are coming in. And a big player in those are the Timu, the Shines, and the Amazon even. Well, Amazon even as well, with Amazon orders coming in from drop shippers in that setting. You're absolutely right. But the other side of that is you've got a bunch of startups that are trying to compete with Amazon, specifically Shine and Timu,

[00:10:51] that are super low cost items that they're just shipping direct. And that's a big component of what you're describing there, I think, as well with that. So it is kind of interesting with that. I was looking at a little bit different bend on this and, you know, thinking about when you look at the, in fact, Tom,

[00:11:11] could you bring up that graphic about the U.S. where really all the great graphic that we ran across about top importers of every state? And I thought what was pretty unique about that is we look at that a little deeper is, you know, there's a handful of states that, you know, the dramatic part of it is coming from China. But we've got a lot of other states that are seeing, you know, the largest part of their imports are coming from Canada. We've got, you know, the southern states so much are coming from Mexico.

[00:11:41] I got a kick out of it when I was looking at this map a little closer. And for those of you that are listening in and not seeing what we're sharing here, it's a map of the U.S. And it's got a icon of the flag of each of the countries where the majority of their imports come from. I thought the funny one for me as a side note was in Indiana. Did you see where that one's from? I can't see it, but it looks like Sydney or Ireland. Yes. Ireland. So it's just Irish kids coming to go to Notre Dame, I think. Or lots of beer or something. I don't know.

[00:12:11] Yeah, you know, it's Irish kids going to Notre Dame. But interesting to look at where this is. And obviously, you know, the big number is 20 plus percent in California and Nevada coming from China. But I think as we're starting to look at this and in the current administration's views, and I think this is a bigger picture scenario to look at with this. I think what we're seeing here specifically with Canada and Mexico is you've got a clear threat that China is saying,

[00:12:40] hey, we want to surpass the U.S., right? We want to surpass the U.S. from an economic standpoint and, you know, world dominance, so to speak. Okay. So if that's the stated goal of where they're at, and the U.S. is where they're at, and we're so reliant on China, and we have issues with China right now regarding fentanyl and lots of other things, right?

[00:13:06] We've got the steel that's coming in from Mexico and other things like that. So I think when we start looking at this is like, okay, well, we're going to do, play the geopolitical game of the negotiations with the tariffs back and forth with China. But I think one of the ways to really look at this Canadian and Mexico thing is, you know, those are little brother countries, you know, in theory, when you look at economic production and GDP and so forth, with a lot of leverage that the U.S. has over them.

[00:13:34] I think when we look back on this in history, what we may find in this, Tom, is that this whole scenario with the tariffs on Canada and Mexico, and Mexico is a little bit of an outlier, but a candidate in Mexico is basically saying, hey, fellas, fall in line because what we need to do is the two top priorities are immigration and drugs or fentanyl. And if Canada and Mexico are in lockstep with the U.S. on that,

[00:14:03] and the U.S. can leverage and pressure them, like which is being done right now, then tightening up their borders will tighten up our borders to immigration and the drugs and the fentanyl. So I think there's a broader picture than just say, we're going to slap some imports, some tariffs on Canadian, you know, maple syrup. I'm not sure I'm following. So what you're saying, or let me see if I don't understand what you're saying, by getting Canada and Mexico on board,

[00:14:31] you're saying that that's going to then squeeze China? Well, look exactly what happened in Mexico, right? What if the border and fentanyl are the big issues, right? That this administration has said. Just look at what happened in Mexico. Before they even took place, the day before, President of Mexico sent 10,000 permanent soldiers to the border, right? Sure. To stop drugs and to stop immigration.

[00:14:59] Canada, the expectation of Canada is tighten up your borders for the things that we don't want coming into our country and the leverage to get them to do that. Because, you know, while Trudeau, who's, you know, I was texting earlier this week and talking to some customers and some prospects and some friends in Canada, you know, were a little bit embarrassed with some of the strong stance that some people in their country have taken against the U.S. as well as some of the things that Trudeau have said because Trudeau's on his way out, right?

[00:15:28] Nobody really looks at him as, I think they probably looked better at, you know, the former U.S. president when he was a lame duck there for a period of time. But he tried to push back on this, but now they're caving in on things. So the idea would be North America is lockstep. And the way that this administration is getting them to do that is putting the pressure on them from a tariff standpoint to say, get in lockstep with us. And then if you're in lockstep with us, then we can achieve our goals of immigration

[00:15:58] and the reduction of drugs. Plus, to your point earlier, right, with these small packages, China has been getting around like steel tariffs and so forth for a long, many years by getting stuff coming in through Mexico. And so let's put the squeeze on them with tariffs or whatever other things that we have, whether it be aid or whatever it might be to achieve those overall goals. So I think it's kind of like we were talking about before the show even started today. Tom is like, I think you made a comment is like,

[00:16:29] don't judge anything the current president is saying for 48 to 72 hours to see what comes of it and really what's behind it. So again, I think what I'm maybe hearing you say is that the chess game, right? If you play the chess game, right? With our neighbors, with Canada and Mexico, then therefore that's going to potentially give leverage and influence on what we're trying to accomplish with China. Is that kind of what you're... Yeah. I'm trying to do those the dots

[00:16:58] between Canada, China and Canada, Mexico and China. I'll say it one more time. North America needs to be in alignment with three countries there. Okay. Right? To stop what China's, what the US government is saying they're trying to do. Got leverage over both those other two countries. Leverage has been put in place. They're abiding by what they want to get done to get accomplished. Right? Yep. So it's bigger.

[00:17:27] I think that my point is, and I'm sorry if I'm not articulating this well. Fortunately, no one else is commenting on it but you. But the idea behind it is there's a big picture. The guy that's pulling the strings on this today and the US administration wrote a book called The Art of the Deal and everything is about a deal. Right? Yeah. I agree. And there will be lots of things that look odd along the way while we're getting to the deal. Mm-hmm. So I will...

[00:17:57] I think where I just was somewhere, I think that's what I was understanding you to say. Yeah. I just wanted to... Very good. I did have a chance though, it was interesting, you know, as we talked about the tariffs before we leave from that because it's, you know, potentially a big impact on wholesale distributors and manufacturers. But I had a lengthy conversation earlier this week with a friend that runs a national distribution company. He's a senior operations and purchasing person. And, you know, they've been... He was talking about this, you know, he said at the end of the game,

[00:18:26] it boils down to... At the end of the day, it boils down to how good of a supply chain game you've been playing all along. Because in the commodities that his organization sells a lot of, they've been moving things out of China for a number of years because they found other countries where they even get better margin on those products. Their inventory is managed very well in these things. And there's a big play for the people that have done

[00:18:54] a great job with supply chain to actually start taking some market share. Two key points though that he brought up that I thought were really interesting is that one, is that nobody has been speaking about this is we're just... Either we're in right now or just getting ready to go into Chinese New Year where everything shuts down for pretty much a couple of months anyways. So if you don't have stuff pre-purchased that's on the water already, we'll probably have this whole tariff thing with China

[00:19:23] roughly sorted out by the time things are gearing back up again anyways. Super insightful thought. I wish I had thought of that myself. That's a good point. It makes a lot of sense. The other thing that's probably really valuable to this audience is this gentleman that I was talking to who said he has already been from the business that he does have in China because they have a lot of private label products that they get directly from China. In his particular case, they've done a good job of hedging and protecting

[00:19:52] against these types of risks. But he said two factors. One, he's been getting price reductions already from some Chinese companies, which that's a big deal. Again, this is something I hadn't thought of at all. Stop and think about this. When we've looked at even with inflation with food prices and things like that going up, things go up dramatically and then they come back down a little bit.

[00:20:21] They typically don't come back down to where they were. Now, if you think about the potential leverage that a manufacturer or distributor here in the US has with their Chinese vendors, if they're putting a squeeze on them, if they have enough volume to do so, that they're getting reductions in prices from those Chinese manufacturers in this setting that says, hey, you need to help me offset these tariffs as well because at the end of the day it impacts the manufacturer, distributor, and end user in that setting is

[00:20:52] you've got a lot of leverage going back when they want to try and raise those prices again. So there's a lot of dynamics. It's why we do what we do here in the show is to have some of these discussions. So I thought it was very interesting this particular feedback and comment I got from this large distributor. Yeah, that's a good point. And I think the thing about the Lunar New Year or whatever, you know, even said in this article, right, I don't think Trump has talked to the Chinese president yet or had any discussions yet, but there's time, I guess, to sort this out before it really becomes an issue.

[00:21:22] Well, and again, it's this, as you all often like to say, right, it's a story behind the story. So we see what the news wants to share with us. And then when we unpack it a little bit more, we kind of see a little bit more what's really going on up there. So good. Good. Let's jump ahead. We spent quite a bit of time there, but a couple of other articles. Again, if you're listening in on the podcast and not watching us today, we're reviewing the Around the Horn and Wholesale Distribution newsletter, you can subscribe to that on LinkedIn or at the

[00:21:50] www.aroundthehornpod.com website. Manufacturing orders and shipments and inventories were rising a little bit in December. So a little balancing act going on with that, but, you know, on the manufacturing side, it's good. In the U.S., I think part of that's probably tying back to some folks looking to bolster their supply chain and protect some inventories in the setting of the risk of coming from tariffs. So good piece to have there.

[00:22:20] Tom, what do you say if we jump ahead to a couple articles? There's a quick article from Industrial Supply about year-over-year spending in construction was rising by 4.3%. That's good news, but that ties into the next article, which how California wildfires are affecting supply chain. I kind of enjoyed kind of seeing that while it's saying that, you know, it's not, there's no impact on that today because what we lost was thousands and thousands

[00:22:49] of homes as people that are listening in or watching us today, you know, know if you've been with us in the past, those particular fires that you saw the devastation in the last few weeks here in Southern California where Tom and I, they were happening about an hour south of Tom and about an hour north of me roughly. Tom, where Tom lives, Tom was a block away from evacuations from a major fire in the Ventura County area. About a block away was evacuations

[00:23:19] for you, right? Yeah, back in November, yeah. Yeah, back in November and then in September where I live, we had a 23,000 acre fire, but we, I say we only lost 150 homes. 150 homes is devastating, but when you compare it to thousands and thousands of homes, it's a whole different story. But it's interesting, this article, again, it's from constructiondive.com. It talks about while, you know, we didn't see warehouses or lumber yards or pallet yards or whatever burned down in that setting,

[00:23:48] what we have is this massive rebuilding initiative that needs to take place. So, I think behind the scenes right now what we're seeing is this major adjustment for all types of wholesale distribution, everything from building materials to HVAC to electrical, to plumbing, to safety equipment even, we've got this big boost of now getting, preparing the supply chain to support that rebuilding effort. The balancing, though, and the struggle is, right,

[00:24:17] the article talks about potential shortages of drywall, cabinetry, plumbing, and roofing supplies could impact this. And then, back to our original discussion today was tariffs. If tariffs start having some impact on these things, it will be interesting to watch the supply chain resilience and maintaining that resilience for this rebuilding. Yeah, and it does say, though, that the rebuilding process minimally will take two to three years before you're starting to, you know, break ground

[00:24:47] with this. I think that's what the article said, but I think if you, and I agree with you on that is, but I think what we're seeing now is, and this is more of a probably local news, but what we have is a gentleman in Los Angeles who had run for mayor, a billionaire, a very successful real estate investor, and he had run for mayor, lost, and he is coming back with saying, basically what the president was saying

[00:25:17] when the president visited is, hey, this red tape that you have, you need to push through these things. So I think what we may see in this setting, I don't want to spend too much time on this because it's more of a local issue here, but it can impact, and we've got similar things going on in North Carolina after the hurricanes and so forth, but what you've got now is this business group that's being put together that will probably have the support of the federal administration just based upon party lines and support

[00:25:46] and so forth that's really going to want to push through this, and one of the things that they're doing right now specifically in the Palisades fire because it just happens to be the socioeconomic issues that go with the people living in the Palisades fire, there's people there that are writing to say, I'm going to pay myself, I'll pay the environmental contractor, I'll pay the disposal people, just let me have access to my property, and that's a little bit I think what we're going to see, so I don't think that two to three year thing is going to be reasonable in some instances. Broad scope,

[00:26:16] I think that's a reasonable number. Yeah, there's a whole lot and we can talk about this separately maybe another day, but I have a good friend here in town who's the Ventura fire chief lives next door to him, and like the guy, the head of the entire Ventura fire fire department, yeah, the chief, and he shared some of the stuff about just the percentage of homes that were uninsured in the Palisades area, and that they're obviously not going to be able to be

[00:26:45] reinsured as going forward, so there's a lot of conversation about whole neighborhoods potentially being rezoned to multifamily because people can't rebuild in those areas, and the conspiracy theory is that I think there's a lot of builders and other people that are going to try and swoop in, buy the land for cheap, and then rezone it, and then do multifamily or other types of properties other than single residential here. So that's

[00:27:15] great discussion, so we're having dinner on Monday night in Mississippi, so maybe that can be a broader discussion on our car ride from the airport there because I'd like to hear more about that, but that is interesting. But what is intriguing with that, and I'm digressing, so we'll move on here quickly, but is here in Orange County where I live, is I've been seeing on the local news and news feeds is that there's a huge influx of people from the Palisades

[00:27:44] that are coming down trying to rent and buy the inventory that's available specifically in Newport Beach, some in Irvine, and Laguna Beach. So it's kind of interesting with that because I think what a lot of those people probably seeing is what you are is the Palisades is no longer going to be what the Palisades was. No, no. The important thing to not forget is, and I hate to see this, is we see so much of this where the news seems to be as much or more on the Palisades sometimes versus

[00:28:13] the socioeconomic issues are very different in the Altadena fire, and hopefully we see a balance of aid going to those two places. So, good. Well, let's jump into our manufacturing and distribution segment here. There's an article there from Reuters. A lot of wholesale distributors that tune into our show regularly and get the newsletter have business relationships with Honeywell, and Honeywell has been under major activist investor pressure. In fact,

[00:28:43] just one of the divested, this is talking about a divestiture, or a split, I should say, versus the divestiture. But one of these divisions is a $15 billion division. So, you know, we're talking about all three of these divisions probably being $50, $60 billion is going to be my assumption or guess with those if you combine them. But when you've got an activist investor that takes a $5 billion stake in that, you're going to listen pretty closely with them. So, we had in

[00:29:13] December, I think it was, or early January, they completely sold off their safety and industrial division that is equipment-based and hardware-based to PIP, which is Protective Industrial and Industrial Products. They, I believe, bought the Honeywell brand. And then now we've got them splitting off their materials division, their automation division, their aerospace division. And I think the automation division

[00:29:42] is what really has a big, big play into the distribution world. So, they've got exclusive distribution out there as well in a lot of areas. So, this is going to be a good one to watch to kind of see what happens as they split these off into different companies. Do you see any impact from that? Or is it going to be pretty much business as usual assuming that? I'd love it if we have any listeners that maybe work with them or have

[00:30:12] experience working with them. I don't think there will be a lot of it. You know, I think that the pressure, you know, comes on, I didn't even read deep enough into what that means from a shareholder standpoint. But I would assume, you know, these divisions are all already pretty running, pretty autonomous. I think, Tom, it's probably good. My assumption would be, and time will tell about this, my assumption would be in this setting, Tom, is that the likelihood of

[00:30:42] what we'll see is people won't feel too much of it. Much like, you know, do you realize that, you know, GE, the MRI that you go into in the hospital or the doctor's office, it says GE is no longer part of the refrigerator group, right? Right. It's just, it's just still a great brand that's out there. I'm sure they're doing nothing with the brand. They're going to move those into three separate companies. And I'm sure that's what the activist investor

[00:31:11] is thinking about is we drive shareholder value in three divisions because those numbers are going, because there's more of a focus. So, good article here from Ted, the electrical distributor magazine about Sonopar. Sonopar, I believe now, is the largest wholesale electrical distributor in the world. I've been buying up quite a few brands over the last period of time. But in their Midwest region, they've bought up Echo Electric, Springfield Electric, Richards, Pepco, a few others. And now they're

[00:31:41] aligning those under a brand. And usually what we've seen for a big part of thing is you'll see a Springfield Electric Sonopar company as their title. And now they're starting to put some of these brands together, which is going to be interesting. There's power in brands, right? So having a major brand, I think like that may be a benefit to them. Yeah, I think there's, I mean, I don't know a ton about their company or their market, but

[00:32:11] it would seem like what they're looking at here is a centralized brand can have some leverage and some broader appeal rather than maybe some of these more regional brands that they're under. Yeah, and they're doing this particular one is in a broader region. So rather we've got, I'd say maybe a better term might be localized brands and they're driving this into a large regional brand. So it'll be a good one to watch. We'll pay attention to it as well. But, you know, it's over, it's 1.2 billion in sales of those combined branches. So it's good.

[00:32:40] So Industrial Supply published this, but it was 80 affiliated distributors put it out as well. The owner members of affiliated distributors beat some records with a 6% increase for 2024, which is, you know, good congratulations to them. 83.3 billion of combined sales with this particular buying group. Great news. But you had an interesting take when we were chatting about this earlier. What were your thoughts on this? Well, I mean, 6% is, you know, great.

[00:33:16] Conversations that I think both of us are having, right, with prospects and customers. We are hearing more often than not, they have growth goals of doubling in five years. Right. Well, if you take that... And if I can interrupt you for a second, we have some customers at LeadSmart Technologies that are AD members that have these goals. No, a lot of them are AD members, right? Yep. So, yeah, I would say probably the majority of them are AD members. So, there's aggressive growth goals. Well, if you take

[00:33:45] doubling in five years, that's 15% annual compounded growth, right? Which is significantly higher than 6% growth. So, the question that would be interesting to understand is that on... And granted, I understand that's an average, right? That's the 6% average growth among their members. But... And so, maybe some of them are growing 15% and some of them are not. But that's still pretty a big variant between what we're hearing as the goal. In a lot of cases. And what reality is.

[00:34:15] And, you know, I... We've talked a lot about this, right? I think the real opportunity is we talk to our customers and prospects about is how do you get a lot of that organically, right? So, rather than going out and buying more branches and, you know, potentially, you know, acquiring companies and things like that, can you do it organically using, you know, some of the technology and some of just optimizing what you're doing? I just found it interesting when I saw 6% here and we hear a lot

[00:34:44] this double in five years as a strategic goal that's been coming down from ownership or their board or whatever. I think you're kind of spot on with that. I, you know, I think there are aggressive goals with some and there's some that are trying to keep, I don't want to say keep their head above water, but, you know, this ties into discussions that we've had many times in the past as well is that, you know, there are people that are, have growth goals, but they're maybe a little bit

[00:35:14] comfortable, maybe not working on transforming digitally, maybe not having the same level of the, maybe the focus on, on, on rapid growth, accelerated growth. And we have companies that we work with, you know, within LeadSmart that are looking to, you said, double in size, right? Which takes roughly 15% over five years, right? You've got some aggressive work to do. And, you know, we

[00:35:43] think about investing in a rule of sevens, right? It should take seven years to double your money, but if you're trying to do it in five, we've got to bump those numbers up significantly because of the lack of compounding. And I think there's two mindsets, right? There's mindsets within distribution that says we're going to block and tackle, so to speak, like we've always done, right? We're going to acquire a couple of companies because we've got a great line of credit. We've got a branch growth strategy.

[00:36:13] And then there's others that are saying, well, we want to use historic methods, but we're going to use technology and digitization, so to speak, to really accelerate that. And I think when you put those traditional strategies together with a strong digital strategy, and not just a digital strategy that says I'm going to buy more software, but a digital strategy that says I'm going to buy more technology, whether it's software, it's AI tools, or whatever it might be,

[00:36:42] that says these are a major capacity or major component, I should say, of my overall growth. And I think those are the people that are probably going to win that race of doubling in a certain number of years, right? Yeah. No, and Ron popped in a question here. Do you see a more insight in segments or certain areas growing more than others acquisition? No, I don't have any specific data of segments or areas that

[00:37:12] are growing more than others. This is more anecdotal data that we're getting from our prospects and customers. But I agree with what you're saying, Kevin, is that a lot of them are thinking that growth is going to come either through acquisition or opening of new branches or inorganic growth, right? Right. Whereas I think the low-hanging fruit, as we see over and over, is at least handling a lot of that through organic growth, through optimization of what they are already doing. Right. And there's plenty of room, as we see every

[00:37:41] day, that are whatever. And I agree with Bob's comment here, right? The problem with growing through acquisition is, long story short, it's hard, right? And it's risky, as he's saying here, because the core competencies of your acquirer aren't really the same. You may not have the same. There's a lot of work that goes on, right, in trying to merge those together, get those working properly, all of that kind of stuff. So it can be risky. And the other thing that, boy, we're

[00:38:10] really going off topic, but the other thing that you really got to think about is, growth is great, but what does that do to profits? There's risk in growth in a sense that if it doesn't work quite the way you want to and you're investing in it, it can erode profits and your net income pretty quickly. So I'm not saying that inorganic growth is bad. I'm saying I think there's a balance of organic and inorganic that can potentially achieve that. Well, I would love to Bob's comment I

[00:38:39] agree with in what you're saying. I would love to see some research, although I don't think it could be really could ever, you could get research that would tell the accurate story because I'm not convinced people would tell the accurate story, is what percentage of acquisitions, whether private companies acquiring private companies or public companies are relevant to that, is what percentage of them ever yielded the

[00:39:07] growth and revenues that were anticipated. I would have to guess and there's a whole lot of people on here, a whole lot smarter than I am that have. As I'm looking at the side of my screen with the comments, I see my friend Paul Kennedy there with Dakota Supply Group or DSG. Paul has insight into a lot of this if he feels like commenting, that's great. If not, I'll corner him next time I see him face-to-face over a beer and ask this question again.

[00:39:36] But I think it's a straight, and I'm not trying to throw rocks at anybody in this setting, but I just think at the end of the day, to Bob Britton's point here, is that digestion, I'll call it, integration is hard. And to think that I think you would really, you might get the revenue growth, the top-line revenue growth that you want to get. To talk back to our original point was about whether it's an AD company or somebody else, 6% growth is wonderful, but if you're

[00:40:05] trying to double in a certain, as an example to your point, in five years, you need a lot more than that. And the question is, even if you got to the top-line doubling that you wanted to in that five years, where is your organization at from a cultural standpoint? What does your balance sheet look like? What does your debt look like? All of those things that go with that. Interesting time. So, yeah. What's the profits look like? Have your net profits actually increased? Or, you know, what's your cash flow? Well, there's a lot of

[00:40:35] variables, and I think culture and all that stuff is valuable too, right, to take into account. So, anyway. Well, it's probably the hardest, probably the culture side of it and the people side of it is probably one of the biggest challenges. You know, I would think you could talk to, you know, some veterans out there that have done lots and lots of acquisitions. And, you know, the stuff that the numbers you can make work and the numbers are probably going to stay pretty close in that setting. Well, there we go. Paul just jumped in to

[00:41:04] help us here. He says integration is the key. Preserving the core competencies while also getting synergies is a fine balance. So, art and science, I think, is what he's saying here, right? And it's not easy, right? No. It's not add water and stir, that's for sure. No, that's exactly right. Well, thanks for that. We went completely off the rails with this article. That's so unlike us. Yeah. No, I like it. It's like a general conversation with me. I think we should call instead of around the horn, we should call this off the rails. I think that should

[00:41:34] be, or maybe that's a whole new show. I don't know. Interesting. I like that. I like that. Good. Let's dive into our e-commerce and marketing segment that we talk about each week. The article from Digital Commerce 360, our friend Mark Brohan, who was on the show with us a while back, and we're going to get him on again this year. He's an insightful guy. He penned an article here about digital transformation. Tom, you want to take a stab at that first, and I'll follow up? Well, his point being, right, pretty simply was millennial

[00:42:04] buyers, if you look at the kind of the, I guess, the bookends of millennial buyers now, the oldest ones were 14 years old when Amazon launched, and the youngest were in the year that the iPhone was introduced in 2007. So long story short, they lived in a world of technology and e-commerce and all of that their whole life. They don't know anything other than different. They weren't pushing radio buttons and having the thing move across the radio dial. So, yeah, his point is that's all they know, right?

[00:42:33] And so the transformation and so forth of, you know, this is all stuff that we've talked about over and over and over again. And, you know, I think he has some good statistics and went over some statistics that we've covered in the past about buyers and their mentality and so forth. Well, I think that this is, there's some great graphics that are in this particular article. We need to start kind of showing some of these to our audience. But this is, again, this is Digital Commerce 360.

[00:43:03] January 30th was when Mark wrote this. But I think he updated it as well because some of it is coming from a Santa Commerce survey that they did actually this year of 750 B2B buyers. And they talk about their, what they're targeting is, the advantage of e-commerce is 25% reliability, 25% efficiencies. And then the other 50% is speed, is 23%, and then accessibility and

[00:43:33] ease. So, you know, now they're saying, you know, 72% of B2B buyers now prefer to buy online. And the point being this really ties in even the next article that we have here about, which is also from Digital Commerce 360. And if you don't, if you don't, one, if you're not connected with Mark Brohan on LinkedIn, great guy to follow. And then also, you know, regularly taking a look at Digital Commerce 360, great newsletter that they put out each week. Certainly you can get the tops of their

[00:44:03] articles here on Friday mornings with us, but they do some good stuff. But the second article that we have featured here is about grain-drying growth through data, technology, and AI. And all these things just merge together, right? And what we see is, you know, this article was about what a B2B buyer wants. But we see this convergence now of the ability to, it's the things that are becoming available, right, are influencing what the buyer wants, and now things are becoming that much more available and easy for use of

[00:44:34] wholesale distributors to give people what they want, right? And we talk about it all the time. Maybe this is the next book that you write, Tom, is about the gray area between consumer experience and wholesale experience or B2B experiences. You know, they're getting so intertwined with expectations of the buyers. So I think this is good. Granger is just basically, if you were to even read the headline from this article about what Granger's plan is, is their commitment to

[00:45:03] investing heavily in e-commerce, data, and digital technologies to outpace competitors. Well, guess what? You know, you're never going to outpace Granger's spending ability, but the beauty of technology is, you know, a small local guy, we talked about this two weeks ago, I think, is that, you know, a guy in a Quonset hut, you know, down the dirt road that has a Starlink connection by satellite internet could get a Shopify shop up

[00:45:32] and be selling to Granger customers five states away and be doing that through relationships with wholesalers like ORS, NASCO, if you're in the industrial space or others in other areas. You can be doing that in weeks, right? Yep. So there's a great point. RP talks about this as, you know, a call to action to all distributors to get going on AI and other tools, right? Call to action, I like that. Yeah.

[00:46:01] So good stuff. All right. Any other thoughts on that, Tom, before we jump? No, let's move ahead. Good. So Tech Brew had kind of an interesting article about, you know, we're talking a little bit about marketing and e-commerce, but I dropped this even though it says AI. I dropped it into our marketing segment specifically because we've been talking a lot about and I heard a great comment on another podcast the other day because they were talking about, we're going to talk about DeepSeek, the AI tool in just a moment, but, you know, they were talking about the

[00:46:30] likelihood is that DeepSeek, a lot of its learning came from ChatGPT. Well, then ChatGPT got caught red-handed training its model off of copyrighted things from the New York Times, right? In that case, it's pretty powerful. So now the copyright office says pure AI need to not apply. So if you think you can go write articles and get them copyrighted and or write a book and get it copyrighted by just

[00:47:00] having AI spit things out, you've got another thing coming now. Yeah, it will not and this is not, this is old news, right? They've basically maintained it that they will not allow anything to be copyrighted that is 100% generated from AI. But if you have some, if you can prove that there's some human creative contribution information, then you can, you know, I guess argue or fight that point. So, yeah, so this is, I'm just

[00:47:29] trying to find that article again and bring that up. Where'd that go? Here we go. Yeah, this was just from some updates that they did. This is not necessarily old news. This is updates from earlier in the week that the copyright and trademark is actually last week. A new report about, so they've enhanced what you were mentioning dramatically. And it says the conclusion, they interpreted interpretation of existing copyright law. They did two years of review and thousands

[00:47:59] of public comments. So this was published in these updates last week about, I think, putting some, it says right here, it says, it didn't deviate from its original stance that holy machine-made art is an eligible copyright. But they also determined in their report that there's laws already on the books that covered enough to answer these questions without new legislation. So questions of copyrightability and AI can be resolved pursuant to existing law without the need for legislative change. So it looks like this

[00:48:28] is something that they're just going to continue to stay on top of. Yep. Good. What's next? When do you want to hit? Oh, boy. You know, this was a good, this next article, what's changing in B2B marketing in 2025. I've been very impressed with these marketing profs articles. They're very well thought out, very well put together. We could probably spend, I don't, I don't have time to show a whole bunch on it. Yeah. On that that's there.

[00:48:57] But it's one of the things I found really intriguing. I think it was number nine or whatever on their list. It's like a top ten list of things that are changing and they're pretty innovative things is the synthetic influencer. So basically creating a virtual AI driven influencer that has an identity in your organization, training that synthetic individual to be super knowledgeable about whatever it is that

[00:49:27] you do, right? And then make that synthetic individual available basically 24 by seven to engage with and have conversations about whatever it is that you're doing. I just find it intriguing. I hadn't thought about that angle of it, but I think that it could, you know, it's obviously like saying, well, I have a GPT or I have something that talks about.

[00:49:57] I've got a marketing agent. Right, but I'm having somebody that I'm, you know, verbally having conversations, all of that kind of stuff. It often then crosses the line. Well, it's like that customer service agent, you know, you can see it going in a lot of different directions, but I just found it as an interesting concept that they brought up. Well, I mean, I think, you know, I think I shared this with you in our audience a couple weeks ago. I was doing some work with preparing some things for our

[00:50:25] marketing team and I was, I had developed a fairly simplistic agent using the paid version, of course, at ChetGPT with a lot of marketing data and information about what we do at LeadSmart Technologies with our channel cloud products. And market information, some general marketing stuff, and then a lot about our particular product. And, you know, I had a conversation with that agent for

[00:50:54] 25 minutes while driving without ever looking at my phone. Full conversation back and forth about specific marketing topics. I was working on really identifying and doing more work on our ideal customer profile and the personas of buyers within that. And so I think we're going to be to that stage very, very quickly where it's just as to your point of what this article is describing is that's just an everyday occurrence is, you know, I

[00:51:22] use, I don't think it's been adopted by you or any of the other team, but, you know, you're working on a project right now that I call code, you know, code word Ralph. Right? And I was talking to somebody about this the other day and they said, well, Ralph. And I said, well, every company has a they've been there for 25 years in the company, right? They can tell you every initiative that's happened to the company, what worked, what didn't, what kind of hires worked, what didn't work.

[00:51:52] When the marketing department had these great new ideas and they fell on their face or they did great, they can even tell you in the warehouse that's 20 miles away in the back underneath the pallet rack on the north side of the building is a moving blanket that's covering a file cabin. And they can tell you about a file and that's in there and and what it's about and why it's relevant to what you're talking about today. And that's where we're headed is that we'll have the Ralph or the

[00:52:21] Rhonda that every company already has. Everybody has access to them 24 seven and they also have access to all of the other large language models that are behind that as well. So, you know, I'm not very good with large words, so, but I'll let you try and pronounce that, but anthropomorphism. Right, right. Of AI is not healthy and I mean, that's, I think, a very good example of what this is, is migrating into

[00:52:51] a very different sort of type of relationship. I did want to hit Kelly's comment too before we move on here. And I think her point is, you know, she's saying Google, when they first started, digitized every book, they mapped every library of Congress. Right. Then all of that went into LLMs. LLMs are based on those sources and so forth. Is this whole copyright thing that we're talking about and plagiarizing, is it even practically able to be, does it even have any practical relevance? Great point, Kelly. Yeah. Is the question, and

[00:53:21] I don't know, it may not, because I don't know that everything won't become a copy or a derivative of something else here before too long. Well, you know, it's kind of funny. I'll make this quick comparison. I was just talking to somebody the other day about non-compete clauses, right? And the, that's a good point. I'm going to interrupt myself once you hit Bob's comment. Great, great thought, right? But what Bob's saying is here is that Ralph and Rhonda have

[00:53:50] the discernment and sensibility to know when not to say something. Some Ralphs and Rhondas do. But I think conceptually, I couldn't agree with you more. And the reason that you hear a little excitement in my voice right now is because I think what Bob is just saying is so spot on because this goes back to the idea because based upon this discussion that we've had, and I was just talking about agents and all the things that we can be doing, is, you know, that goes back

[00:54:19] quickly and easily to that, well, oh my God, my job's going to get replaced. But I think what Bob's commenting is, is what Jensen Wong with NVIDIA said a while back that, you know, people were saying, well, like, why would you need a CEO when you just have all of this data? And it was exactly Bob's point was that discernment and sensibility and the ability to take all of that data and not just have a data-driven response, but have a

[00:54:49] sensibility-driven response by somebody that really understands the organization. So great comment, Bob. Love that. And they also, I guess you could take the flip side of that. Still, the challenge we're dealing with with AI right now is it will try and say something even if it doesn't know and it tries to act like it knows. And it's very good at it being, at coming across like it knows, right? It's very convincing of what it knows. Well, and that's, I've been doing some things lately with

[00:55:18] some of the tools that I've been using, whether it's Clot or Perplexity or ChatGPT and literally telling it, I don't believe it. Yeah. And forcing it to come back with defending what it said. Yeah. And I think it's back to Bob's point about discernment is really great. So, and Tom, by the end of the show, you're going to be able to say that word. Okay. That and de minimis. De minimis. I got the de minimis-ness. Anthroporom. No, no, you didn't. I didn't. De minimis?

[00:55:48] There you got it. There you go. An anthropomorphic. Oh, well, forget it. Let's go. Very good. So, but I did, before we go, Tom, and I really want to dive into this and we probably will have some things we don't get covered today. But going back to the, that particular article from, this is marketingprofs.com and started pulling data from them a few months ago. There's two points. They talk about predictive personalization and

[00:56:17] hyper-individualism in marketing. It just makes me think about the call I joined, you and your team were on yesterday with one of our flagship customers. So when I say flagship customers, it's not because of who they are, it's because of what they're doing. And this is a company without going too far into it is they're using data from their ERP system. I should actually have you describe this, Tom. You know what I'm talking about here, right? Yeah, but go ahead. I'm interested to see how you describe it.

[00:56:46] So, I mean, at the end of the day, right, they're taking ERP data, right, about what customers have historically purchased. They're making that available through our platform, LeadSmart Channel Cloud, to their marketing team to slice and dice and dissect all of that data and tie that into promotions that the marketing department is doing either related to specific products or partnerships that they're doing with vendors that they have

[00:57:16] so that their sales team now knows who to go talk to about special promotions that are being marketed. There might be cost savings or discounts for a period of time. But this is that time in life where we're talking about siloed data from across an organization, which is what our specialty is at LeadSmart with our Channel Cloud product, is where we take that ERP data, marketing data, e-commerce data, other siloed data. We bring that into one place and we make decisions about

[00:57:45] how we can accelerate growth in our business from what historically has been siloed data. So now what would have taken days and weeks and months if they ever did it for this particular customer is they're saying, I've got a promotion and something that I really want to specifically do. Let me take financial data or ERP data in this case, look at the people that would be one benefit from this or are most likely to buy in

[00:58:13] this case and drive that data across to the person that needs to go influence it, which is a salesperson, which I can now use AI tools to remind them what they need to go talk to people about. Yeah, they're flanking the marketing process and they're personalizing the marketing process. So as you said here, right, they're personalizing it by sending the right promotions to the right people or where they believe are the most customers and then they're flanking that and making that more

[00:58:42] visible and more relevant by having the salespeople kind of arm-in-arm following up with those key customers. So it's a great way of getting the synergy between sales and marketing improving as well. But yes, it's a good example of personalization as we're talking about here or starting to move in that direction. But these are the two things of what this company is doing is the two things that are talked about here. predictive personalization and hyper-individualism,

[00:59:12] right? So it's very, because people can say forever, well, I ran a report from the ERP system or maybe a data analyst did, sent it to the marketing department and said, these guys have bought this before. And then we're going to send them this email about the sale. This is totally different. This is saying, I've got data from across my organization and behavioral data and then likelihood to purchase. And now I'm arming my salesperson and setting it as even potentially part of their goals and objectives.

[00:59:41] So we're in a great place. All right. Great way to get organic growth. Yeah. So technology, cybersecurity, and AI, we're diving into this section of our newsletter. Again, as a reminder, if you're listening on the recorded podcast and you're not watching us live, you're not seeing the newsletter we have up or any of the charts or graphs that we put up. So if you would like to get this newsletter, again, hello at leadsmarttech.com, the Around the Horn and Wholesale Distribution newsletter. You can just search that,

[01:00:11] Around the Horn and Wholesale Distribution or Around the Horn and Wholesale Distribution podcast on LinkedIn. And that'll take you right to the ability to sign up for the newsletter or the website for the show, aroundthehornpod.com. And we'll get that newsletter out to you. It grows every week and we're getting more countries coming in every week. So Tom, this is from cfodive.com, DeepSeek surge hits companies posing security risks. Do you want to take a first stab at that? Yeah, I won't go. We talked a lot about what

[01:00:41] DeepSeek is a week ago last week, but long story short, right, it's the relatively new Chinese model that came out with a bang a week or so ago now or two weeks. Almost two weeks, yeah. But anyway, there's kind of multiple different versions of this. There is a hosted version that DeepSeek offers that you can use pretty much for free. They also have APIs that you can tie into to their environment.

[01:01:11] And then you can also, it's open source, so you can take the whole thing and run it on your own computers, right? So you can run it on your own thing. So there's lots of different permutations of how DeepSeek could be utilized. The question that comes up a lot is it's safe? And the answer is it depends. If you're using it on their hosted version, I wouldn't use it for business, honestly. And I certainly wouldn't put anything in there that was personal or personal relevant. I wouldn't put it on my

[01:01:41] phone. I wouldn't even download it to my phone. put it on my phone either for reasons because when you have so many different apps on your phone, a lot of times those apps can kind of hack into each other. My banking app is there. My financial data is there. My Schwab account app is there, right? Right. So I agree with you completely. I would certainly not put it on my phone for any purpose. And if I'm using it on a desktop

[01:02:10] on browser, I could ask it how you make pancakes, but I wouldn't do anything that has any real personal information. It's very clear in their terms of service that anything you put in there, they have the right to use and utilize and gets basically back into the big Chinese data warehouse. Now, on the open source side, if you take it and put it on your computer, thank you. For any minute, you didn't notice I

[01:02:40] kind of half cough, half sneeze there. So thanks, Bob. On the open source side, right now, it's not connected into the Chinese world. It's running on your own private server. Microsoft created a version. Perplexity. Perplexity did. I think Amazon did as well. So you're not running into those same security concerns. Maybe. Maybe. Well, I don't believe, I think that

[01:03:10] you're pretty safe as far as the data getting to China. I think the challenge question then becomes what that is, well, should you be using it? Is it biased? Is it biased in the data that it's using? Is it other things like that? Well, all models are biased in one way or another, so it's hard to say on that. I guess my question would be why you would use it, right? If you have other alternatives that are reasonably in the same context. I don't think you might have deeper insight into this,

[01:03:39] but I don't think there's anything unique or that makes it better than the tools that we have that we right now at least believe you are all running on US servers. I mean, I use perplexity a lot. I kind of go back and forth. For me right now, AI tools are probably because we do a lot within our company with OpenAI, so I do a lot with ChatGPT is probably 65%, but I'm

[01:04:10] probably now doing 20% of what I would historically do with Google. I'm using perplexity, and I'm really pleased with that, although Gemini being behind Google Chrome searches is great now as well, but I'm kind of a little bit clod, a little bit more perplexity, and then mostly ChatGPT, but those tools right now, I'm feeling comfortable and, oh my word, that's a great comment. It will not tell you. It will basically

[01:04:39] say we can't comment on that. What we've already seen with DeepSeek, and this was just a comment that came in, was ask about Tiananmen Square, and what we've already seen with that is, it may answer it, but it'll be gone within seconds. No, it won't answer it. It won't answer it. I know what happened the first week it was up, but there was answers that you saw changed because of the negative view it would give of the Chinese government. I've looked at it,

[01:05:09] that, Will says that that's perplexing, Kevin, so it's quite good. Kevin is perplexing, Will. I am perplexing, yeah. I wouldn't argue that either. I look at it being a perplexity user is, I want to watch for a while before I'm willing to use that component within perplexity because it's not automatically used. So my view of it, but Kelly made the good comment, and I'm

[01:05:39] laughing about this, she said that, and then there's TikTok, right? I kind of laugh because each week our team behind us that manages the show for us, they take out little snippets from the show, and one of them that they published on social media, and it's there on LinkedIn if you want to get a look at it, was, I guess I was a little passionate because they made a snippet about my comment about TikTok because as I look at Deep Six, we've just spent, what, a year plus

[01:06:08] with worrying about TikTok and no one loads spreadsheets from their company into TikTok, right? Nobody loads contracts in to get them analyzed and suggestions made into TikTok. We're watching TikTok with the Chinese, you know, and thinking, depending on who's thinking you subscribe to is that, you know, they just like to dumb our society down a little bit if you go with that line of thinking, but the risk is there is, and Tom, I'm really

[01:06:38] appreciative because, you know, we look to you as our so-called science guy here, technology guy with your background in education, being a computer scientist by education, as you brought that up about the apps because I don't think most of us are very careful of what we put on our phone. And, you know, I think about it as the data that just literally our CRM data that's within the LeadSmart app on my phone. My Schwab

[01:07:07] account, our business banking app, my personal banking app, which is different. And the risk that we have is pretty great. Now, there's plenty of bad actors behind China in the world. But when we start thinking about these things where we're putting on our phone, I heard somebody, the comment made, and this goes with Kelly's comment, is, you know, about TikTok is, they relate, and this was a cybersecurity expert that was talking about this. He was on MSNBC. And he said the

[01:07:36] comparison of TikTok and DeepSeek is basically, how did he put it, TikTok's risk was Sesame Street-like in comparison to the magnitude of what the risk is here. Anyway, long story short on this article, a lot of companies are blocking it. I would recommend blocking the hosted version if you're a larger company.

[01:08:05] I would not allow anything to go on to that at this point, and I would question why we would want to use it and how. I mean, there's some logical reasons to, there's some potentially cost-saving reasons to use some of their API-related stuff, but anyway, it's certainly not something you want to have as a free-for-all in the organization. No, I think that's the case where we're actually meeting, have a meeting next week with a large wholesale distributor, and that's

[01:08:35] one of the issues that they're working on right now is what do my people have access to, what could they subscribe to, and so forth, and trying to put some guardrails around all of that. And, you know, RP just made this comment here about how our phones are listening. I've had this happen twice probably in the last 18 months where it's not my phone, it's Alexa, where I'm literally, this happened twice, and it's been on, it's interesting, it's been on

[01:09:03] the device in our bedroom where my wife and I have been just getting ready in the morning and talking about something and it answers something within the conversation, but we never said its name, but all of a sudden it chimes in with something when Alexa has an answer to something. something, you know, and I'm not at all a, I look at that stuff mostly as, hey, if you want to listen to what we're talking about, you're pretty bored. So,

[01:09:32] I mean, I wouldn't, I wouldn't, on my phone, I will not trade crypto or anything like that where there's an opportunity for something like that to be hacked in a way that would be catastrophic, right? And there is some opportunity for those types of things when you're, and I don't have a lot of apps on my phone I don't think compared to a lot of younger people that might have hundreds of running apps on their phone at any given moment. anyway, we'll move ahead. Yep, good. All right, which one of these

[01:10:02] do you want to hit next? Oh, boy. Um, so there's an article here, I'll just kind of hit, there's an article here from Industry Today, Can AI Investments Pay Up Now? And it just kind of talks about, you know, economic uncertainty, geopolitical influences, all the other things that are going on in the business, and give some kind of hints and ideas about trying to get them to pay, you know, get an ROI. And it kind of ties in. I'll be a little self-serving for a minute. It's funny, Tom,

[01:10:32] I say this, we historically have not spent a lot of time talking about the product that we've developed at LeadSmart with our channel cloud and our AI tools related to CRM and customer intelligence. And I've got some, you know, regular listeners who were like, you guys need to talk about what you do more and, you know, and so forth. But this is, and I'm not even just going to say about us, but, you know, as we think about AI investments is most manufacturers and wholesale distributors are just really trying to get their head around what all of this means

[01:11:04] from that standpoint. And there's easy ways to start. And I think there are easy ways to start or certainly as we hear people saying all the time that we want to go get a, what are people use ChatGPT? Maybe we get a company version of ChatGPT and we allow people to, you know, try and get, dip their toes in the water. But there's really great places to start, right? If we start thinking about, you know, well, it's, we're starting to see a little bit of some of

[01:11:34] the more forward-thinking ERP providers that have some AI tools being built in. But, you know, when we start to stop to think about it is you've got, you know, the vast majority of lead smart, whether you're a 25-person company or a 700-person company are making their first leaps into CRM. And I mean, it's astounding to me, the companies that have never taken a leap into that. And one of the great ways to start is not just with CRM, but with AI enabled tools from your

[01:12:04] CRM that bring all that silo data together. Now, there's AI companies out there that are focused on inside sales and maybe what products to recommend, but thinking about what, you know, whether there's companies that do what we do or not or just where we're at is looking at it from a standpoint is what are the ways that I could dip my toes in the water using technology that is going to be, help me accelerate my growth just by having that technology. And, you know, I've said

[01:12:33] for quite some time now, there will be a time very soon where right now our source of truth in our business is our ERP system. Everybody's is, right? It's our single source of truth. But the reality of it is it's not and it never has been. It's just been the single source of truth that's tied to your financial data. But now when we think about all the silo data that we have across an organization and we bring that silo data together in a single platform that includes the financial data, that's where we need to move to be

[01:13:03] our single source of truth, right? Well, look, ERPs are the single source of truth as it relates to financial transactions in the organization. It is not the single source of truth around the customer and the customer relationship and the customer actions that are taking place. It's not designed for that per se. So I think it's important to have a single source of truth for your financial piece. But what we're obviously talking about is how do you use AI to really

[01:13:34] drive growth and growth comes from customers, right? There's no magic. It doesn't come from transactions. It comes from customers who make transactions. So that's really the focus there. It's looking across the business versus at a transaction, right? Hey, Mark, going back to your Alexa thing, he says you can log in and see why it responded. So you should check that out. I don't have Alexa, so you should check that out and see. Okay. Thanks, Mark. Great to have him, Mark, with us. He's been

[01:14:03] with us a few times recently. I met him briefly at an ISA event a while back. He's with Enable and a great resource as well. Enable and happy to have him from the UK. So he's spending his Friday evening with us. I hope that there's a gin and tonic mark in your hand, assuming you're in the UK right now. So if by this time of the evening, there should be a gin and tonic in your hand, if not a Guinness. All right. So let's jump into our sales and M&A segment. There's just one piece I wanted to catch there.

[01:14:34] ORS NASCO this week, which is the large national wholesaler and reseller. They just recently, this week, announced their acquisition of R3. R3 has historically been safety, Jansan, and even some packaging things. It was owned by Bunzel, the large starting in food service, but now Bunzel's as a distributor, but Bunzel's been buying quite a few manufacturers in the industrial safety space over the years. So that was their redistribution arm.

[01:15:04] And so congratulations to the folks at ORS NASCO. So probably less being done with, if you're an electrical and HVAC, certainly outside of the industrial segment, a little bit less with ORS NASCO. And we have listeners that are in the office product space, the food service space, lots of different spaces, but great acquisition there. It does reduce the number of wholesalers that you can turn to, but that was the example I used earlier, right? You could be the guy that's a mile down the dirt road

[01:15:34] with a Starlink account and a Quonset hut and an account with ORS NASCO, and you can be selling online quickly. So let's just kind of jump ahead then, Tom, a little bit past that. I really liked actually this digital sales room. Oh, good. Okay. Let's just take a second and talk about that because love it from sales and marketing management dot com. Yeah. So basically the idea here is having a platform where you can invite customers in to get or prospects in to get much more

[01:16:03] detail about it. Well, I don't know if we talked about it on this show or we talked about it, whatever, but one of the things that is popping up is how much information do you put on your website going forward because historically, especially as a tech company or certainly as a distributor, right? You put a lot of information on your website and what's happening is AI can come and potentially, especially in the tech space, replicate or

[01:16:33] copy, as we've talked about before, whole applications based around information that's on your website. So more and more companies are moving or at least thinking about moving away from their website as being their primary place to share information with customers. And these digital sales rooms now become, because it's firewalled, right? Or it's behind a gate, it's gated. And as Bob says, they've been around for a long time and they've been microsites. I think we're

[01:17:03] going to see a much bigger, that's what I think what this article is saying, is that there is much more broader adoption starting to happen and the capabilities of the digital sales rooms are, I think, becoming more robust, right? With the video and all the things that we're, and it's something I think we should be thinking about, honestly, is really building a robust digital sales room, putting less investment on your website. Your website maybe is, and then really where customers want to go deeper and their legitimate prospects, you have them in a good

[01:17:32] digital sales room. So, we were talking about this a couple weeks ago. I had thought about this and you brought it up and said, you know, we're getting to a place where technology companies, including ours, will probably start putting a whole lot less about all the depth of what it can do because I think what you were describing is the potential that literally you could, an AI tool couldставля up that and say, now I can go write, I know how to write the code to go do these things, right? It's going to need a lot of prompts along the way, but, you know, you could, something else could pop up in that setting.

[01:18:02] But I think, you know, to Bob's point too about some of these have been around for a while, but I think now, and you think about, oh, it's, you know, Sales Loft and there's another one, their executives comes to the show once in a while even, but there's quite a few of these tools that have been around for sales people to use where you can quickly touch a few things on an iPad while you're touring with a customer, show them something and then send them off to him quickly. But I think what we're probably going to do now is see more of this where there's, to your point, there's,

[01:18:34] even talking about what our customer of ours, it's kind of micro-targeting their customers. Right now, imagining that digital sales room where I can quickly and easily and maybe even an AI agent helps me build one is I have one that's like I think you were alluding to this is that's very customer specific based upon the issues that are important to you. So let me illuminate that you want to focus on. I want to close 10% more of my quotes this year. Well, let's feature

[01:19:04] a lead smart channel cloud, you know, microsite for you, so to speak, as Bob was describing, where it's, yeah, all of the things we do are in this gated, you know, or closed environment, but for your organization, we could even drop in, here's what we know about your company, and then you've looked, been looking at these things on our website, so we're going to set this up for you and now this is your microsite for you. I was supposed to back to personalization. Yeah, great point. But I do

[01:19:34] think it goes back to personalization, it goes back to security, what we're talking about. I think we all have to be more aware of things that we put out there can be used for purposes that we never would have thought of five years ago, right? So, all right, let's move ahead. You know, I just thought of something, I'm just going back to that Alexa comment I made, and I was just looking on here on the comment that Mark made about logging. I think what Alexa was doing was just jumping in to help give my wife somebody interesting to talk to. That may be true. He's trying to help you out, or Alexa

[01:20:04] trying to help you out. Darlene out, trying to help Darlene. Both of you, right. Very good. All right, Tom, let's kind of jump ahead. Just we're running short on time. Some good articles in our people in leadership segment about employee engagement surveys. This was interesting one from HR Dive. Both of these were from HR dive.com this week. It said half of US workers say they've used AI to complete workplace training. So I think when I dove into it a little bit further, it's like asking its own questions. You're taking some online training, and then I

[01:20:34] know I'm going to need to take a test. So let's just use chat GPT I had chat GPT on my phone. I was just going through and answering it all the way through. So I think that is probably more the exception than the rule right now. Well, hopefully your neighbor's new employer is not with us here. So we added a new section a while back called Channel Leaders on the Move. There's a couple of good sections in here

[01:21:03] about some people in distribution, both in the electrical, plumbing, and low voltage, electrical space. So there moves. But Tom, the one thing in our industry scuttlebutt section that we have every week, we've got some good topics that go with that. But the one I did want to mention just as we run short on time today is our friends in Canada at EB Horseman. They just opened a new branch in Campbell River. So great article there, some pictures of their new branch, and they're good friends of ours there. So we wanted to promote that

[01:21:33] one. What I love about what Steve and Amy and the IT side and Steve and the CRO they're trying to work on is really do some innovative stuff. Much of what we were talking about earlier where we blend technology, AI, and I guess we'll say they have their Ralph and their Rhonda, and they're blending that with their AI and

[01:22:01] their technology tools to accelerate the growth in their business. Congratulations to them. The last thing is each week we have a second look section as well. There's an article there called AI in distribution and from skepticism strategic advantage in that. And so our good friend Brian Hopkins from Distribution Strategy Group and he used to work for one of our

[01:22:31] customers, he wrote that article and I thought it was nice. He kind of breaks down how people are moving from the skepticism to strategic advantages with that. So very good with that. Anyways, anything else for that, Tom, or want to hit the road? I think we should wrap it up. Very good. So again, I'm Kevin Brown, Tom Burton. We get together every week. We chat with great folks. So I could comments we had today. We're very appreciative of people. Literally, we had multiple countries commenting today and people from all over

[01:23:00] the US and North America. We greatly appreciate that. Again, as we mentioned earlier, as we started today, if you like what you hear each week here, please hit the subscribe button. Forward the invitation you might get from us to your friends. If you're listening on Spotify or Apple Podcasts or wherever it might be, please subscribe and then leave a review. And when you're leaving a review on things like that, that just means their algorithm pushes us out to more people. So we're greatly appreciative of that. Again, we can't do this each

[01:23:30] week if we didn't have the support of the company that Tom and I work for, leads more technologies. We've developed an AI-enabled CRM and customer intelligence tool that brings deep insights into your data that helps you support your customers better, learn more about and support your teams and get great insights into your entire business, all on a single platform that can actually be used across your entire organization. We do that as we bring together siloed data from across your company. We give you actionable insights to help you grow.

[01:23:59] So if that's something that you want to look at in your organization is thinking about trying to accelerate growth, we were talking earlier today about companies that want to, you know, double in size over five years, you need 15% growth per year, that's what our technology tries to help you do, right? So very good. Aloha, Bob. Thank you for that. Tom, anything exciting for the weekend ahead? No, just got to get out of here bright and early Monday morning. Yeah, we're on an early flight. I'll meet you for

[01:24:29] dinner in Mississippi on Monday and then Tuesday night's dinner in Birmingham and home for, well, not a late dinner, home quite late. I think dinner is going to be at the airport, changing planes, trying to get back on Wednesday. But I like, looking forward to traveling with you. We don't get to do it together that often, but that'll be good. Evidently, there's like a football game or something Sunday. I don't know anything about it. Yeah, you know, come on. So who's your pick? Well, I certainly want Philly to win. So.

[01:24:59] Okay. I think everybody in the country, unless you live in Kansas City, wants Philly to win. This is one of those games like that to me this year, football in general, at the end has been disappointing because when I watched Ohio State, you know, play against Notre Dame, I'm like, could just both of them lose? I really wanted Detroit versus Buffalo. Didn't get that, but I thought it would have been a much more interesting game.

[01:25:29] I would have been much more interested in that game. I'm going to throw some ribs on the smoker and enjoy some ribs during the Super Bowl. So I'm going to be more interested in the Bordeaux and the ribs probably than the game. We'll see what happens. We'll talk about it next week. Everybody, hey, thanks for being with us again. Kevin Brown, Tom Burton. And have a good weekend. Yeah, exactly right. Thanks. Be safe, be kind, and do good things. We hope you enjoyed

[01:25:59] today's episode and our guests. Each week, we try our best to dig into the topics that are impacting your business. So please, reach out to us and let us know how you think we can make the show better, or topics you'd like for us to tackle or talk about more often, and even guests you'd like to see join us. We're looking forward to bringing you next week's session and hope that until then, you stay safe, stay focused, and do great things. If you haven't already, please subscribe to the podcast and leave a review to help

[01:26:29] others in wholesale distribution get access to the conversation. And finally, please check out our sponsor, Lead Smart Technologies, and their manufacturing and wholesale distribution industry CRM, customer intelligence, and channel collaboration platform. That's Lead Smart Technologies at LeadSmartTech.com.