The Future of Wholesale Distribution: Trends, Tariffs, and Technology

[00:00:04] Welcome to Around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies, Tom, Kevin, and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain.

[00:00:24] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

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

[00:00:38] I'm good. I'm good. So we got a lot to cover. Let's get into it.

[00:00:42] Let's dive in. Well, let's get started here. So my name is Kevin Brown. This is my lifelong friend and business partner with me, Tom Burton.

[00:00:48] And we get together every Friday morning and barring, what did we say? Hospital stays, vacations, or if someone's on an airplane and can't stream.

[00:00:59] We try and get together each week and discuss the news of the week in mergers and acquisitions, sales and marketing, AI, technology, e-commerce, the economy, supply chain, and all the news that we see throughout the week, both here in the U.S. and internationally.

[00:01:16] But what we try and do is we try and boil that down to the things that matter to wholesale distributors and manufacturers as it relates to our whole global supply chain and getting one product from a factory all the way through distribution to a user.

[00:01:29] So we do this each week by the means of a newsletter that we review that newsletter.

[00:01:36] And we do that. That newsletter goes out on Friday mornings.

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[00:02:20] Today is Friday, October 25th, and we are going to dive into the news today.

[00:02:26] But before we go, we have to do a couple of things here.

[00:02:29] One, we have to thank Lead Smart for the sponsorship of the show.

[00:02:33] There's costs that go on behind the scenes.

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[00:02:44] Lead Smart is a smart CRM, an AI-enabled customer intelligence solution that helps wholesale distributors and manufacturers get deep insights into their customers,

[00:02:55] their teams, and their overall business to make smart decisions to accelerate growth and serve their customers better.

[00:03:01] So if you're in wholesale distribution or manufacturing, you're trying to expand your business, accelerate the growth of your company and serve your customers better,

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[00:04:00] So Tom, that's it.

[00:04:01] Let's dive in, huh?

[00:04:03] Yeah, I want to say good morning to Bob.

[00:04:04] Welcome.

[00:04:05] And if you're listening online, please jump in.

[00:04:08] Let us know you're here, where you're from.

[00:04:11] Jump in and give your opinion because it makes it a lot more fun rather than just your opinion.

[00:04:19] Very good.

[00:04:20] Well, again, we love it when folks share some comments.

[00:04:22] I did run into somebody the other day and I, in fact, I was talking to him while I was in Chicago this week.

[00:04:29] He was a regular listener on the show and he shared some colorful thoughts on his, I'll just say not colorful, but strong opinions on some of the ways that some things are going on with private equity right now.

[00:04:43] And as he was typing those away, he, in his mind, he was just thinking that this was just those that were live that were in the, in the chat, not that it goes live to the platform.

[00:04:55] And so, thank you, Marty.

[00:04:57] Marty just said, I'm going to take this as me, Tom, because I'm the only one that looks at it.

[00:05:01] No, I think it's me in my circle.

[00:05:03] He is much happier to see me spotlighted.

[00:05:06] Our friend Marty says, redefining handsome.

[00:05:08] So, I'm going with my new facial hair.

[00:05:12] Regardless, I'm going to take it.

[00:05:14] Take the win.

[00:05:15] But, but yeah, your comments do go into the live stream on, on LinkedIn live and YouTube live and so forth.

[00:05:22] So, we love comments.

[00:05:24] They're important, but don't say something that you don't want other people to hear.

[00:05:28] So, he said there were some repercussions from one of his comments.

[00:05:32] Oh, really?

[00:05:33] Interesting.

[00:05:34] So, that's strong opinion.

[00:05:36] Okay.

[00:05:36] You know, but you know what?

[00:05:37] Strong opinions are good.

[00:05:39] That's, you know, I'm not short on them.

[00:05:43] All right.

[00:05:43] Well, let's get into some opinions on the news here.

[00:05:45] Yeah.

[00:05:46] So, weakening manufacturing to pan clouds economic outlook from CFO Dive Magazine.

[00:05:55] This similar information was out there in Reuters and a few others.

[00:05:58] Any particular thoughts that hit you with that?

[00:06:02] You know.

[00:06:03] Besides the next rate cut in a few weeks?

[00:06:05] Yeah.

[00:06:06] Which, again, not, I mean, there wasn't a whole lot of, you know, as even it said here,

[00:06:11] it was kind of a small decline.

[00:06:13] It was not a large decline.

[00:06:16] It's really hard to kind of know any one thing that comes out of it.

[00:06:22] But I think at the end of the day, same stuff we've been talking about, right?

[00:06:25] Things are growing.

[00:06:27] Things seem to be moving along.

[00:06:30] Unfortunately, yes, I think we will get the rate cut next week or the week after.

[00:06:35] I guess it's the week after.

[00:06:36] I think the meeting is the 5th and the 6th.

[00:06:38] So, it'll be the 6th, right?

[00:06:39] Yeah.

[00:06:39] So, it'll be the week after.

[00:06:40] Yeah.

[00:06:43] But, you know, there's certainly, it's interesting that, you know, bond yields and everything like that continue to go up, which is not a normal thing when you're cutting rates.

[00:06:54] So, clearly, there is some people out there that don't believe that we're out of the woods as it relates to inflation and price increase.

[00:07:02] I know we're going to talk more about this on tariffs here in a minute.

[00:07:04] Yeah.

[00:07:05] But there's still a lot of things out there that potentially could impact inflation.

[00:07:09] And I know that the worst thing the Fed could do is go, oh, crap, just kidding.

[00:07:14] Now we need to go back and start raising again.

[00:07:16] Well, that's the risk with all of this, right?

[00:07:22] I think that's the challenge that comes with all of this, right, is the balancing act of this.

[00:07:28] Because, I mean, that's one of the things that it said here.

[00:07:31] One of the quotes was, I thought was kind of interesting, was that the concerns have shifted from recession to reacceleration.

[00:07:39] And we don't want to go too fast either, right?

[00:07:41] So, this is a balancing act, you know.

[00:07:44] And I think, you know, you look at the Fed.

[00:07:47] I mean, nobody's talking about the head of the Chicago Fed or the head of this or the head of that.

[00:07:52] They're talking about Powell.

[00:07:54] And this is some defining moments right now.

[00:07:57] But I did want to mention, you know, being on Central Time for the last couple weeks and rolling in the morning, I've been watching, you know, from the hotel room.

[00:08:07] I spent 10 nights in the High Regency on Wacker Drive in Chicago, just getting home last night for a couple of days.

[00:08:15] But I've been paying a little more attention working in the hotel room to CNBC and some Bloomberg stuff.

[00:08:22] But I heard multiple times earlier this week in a couple of interviews that there should be some, and these were just opinions, right?

[00:08:34] But they were either, you know, senior investment type folks, not from the reporters, but senior investment type folks and some economists talking about that, you know,

[00:08:44] we're seeing this time that we've been battling inflation, that we have seen a different set of economic factors, right?

[00:08:55] The market factors have been, you were just talking a moment about the bond market and so forth.

[00:08:59] Those things are reacting differently than they have historically.

[00:09:03] And what we're seeing is we didn't really need to get to 2%, right?

[00:09:07] It's probably 2.5%, 3%.

[00:09:10] And I'm not going to say this vindicates my thought because it's a factor.

[00:09:14] But, you know, I've been saying for a year now probably that we're using, not that we are because I'm certainly not an economist,

[00:09:21] but the question is, were we using the right metrics still based upon the economy that we're in and the world that we live in with electronic trading

[00:09:32] and the things that are going on with that?

[00:09:33] Are we using these right metrics still?

[00:09:34] And I thought it was interesting that them saying that, hey, you know what, we could be in a place where maybe the number becomes 2.5%.

[00:09:43] Yeah, I don't know.

[00:09:44] I think there's a ramification of that, right?

[00:09:47] You end up with is, and Bob's right, right?

[00:09:50] When you have a $36 trillion, I think I mentioned this last week, deficit or debt, things get really weird.

[00:09:57] Weird is the right point, right?

[00:09:59] Right.

[00:09:59] But, you know, you can easily say, oh, make it 2.5%.

[00:10:03] But there's a downstream ramification of that.

[00:10:05] Interest rates will remain higher then, no matter what.

[00:10:09] Inflation will remain higher, no matter what.

[00:10:11] You may say, well, what's a half a point?

[00:10:13] It starts to add up after a while, right?

[00:10:15] Yeah.

[00:10:16] So a lot of models and a lot of things are built around that 2%, whether it's the right number or not.

[00:10:22] There's a lot of other things that are built around that philosophy, if you want to call it that.

[00:10:28] Yeah.

[00:10:29] So it's a lot more to it than saying, well, let's just make it 2.5% or whatever on any given day.

[00:10:35] And I wish I would have saved this yesterday.

[00:10:39] I sent you a link to an interview with Paul Tudor Jones, the hedge fund guy.

[00:10:46] I saw that, yeah.

[00:10:47] And he was making some interesting points.

[00:10:49] And I probably shouldn't even bring it up because I don't have the numbers.

[00:10:52] But he was talking about the deficit.

[00:10:55] And that was to Bob's point here, right?

[00:10:57] You know, as we're thinking about that, I mean, the country is not going to be able to make debt payments on the interest payments on the debt in the near future.

[00:11:08] But he was talking about what Japan is doing right now and the balancing act of interest rates and the stimulus that will do and using that to pay down the debt, I thought was quite interesting.

[00:11:19] We'll have to try and find that.

[00:11:21] Maybe we can use it next week because that was intriguing to me.

[00:11:25] So anyways, interesting timing right now.

[00:11:28] We'll see.

[00:11:29] I didn't put this article in just to talk about the next rate cut in my stake or anything like that.

[00:11:35] But there was some good points in this one about talking about the balancing act.

[00:11:39] And I think that's what everything is right now.

[00:11:41] And maybe that's the title for today's show when it goes on to the podcast platforms is the balancing act between the economy, geopolitics, and supply chain.

[00:11:54] Because all of these things right now.

[00:11:57] While it's the craziest time of the year for me travel-wise, I think I'm gone five of seven weeks or six of eight weeks.

[00:12:06] It's nuts right now.

[00:12:08] But I get, instead of phone calls, I'm face-to-face, or as our friend Mike Marks says, belly-to-belly with wholesale distributors every day, all day.

[00:12:17] And it's just great to have these discussions.

[00:12:20] And I'm asking the questions about supply chain and some of this stuff.

[00:12:24] And people are looking at their businesses differently now than they had before.

[00:12:28] So it's good stuff.

[00:12:29] All right.

[00:12:29] You want to jump ahead to the next article from Global Trade Supply Chain Management in 2025?

[00:12:35] We're talking about some trends.

[00:12:37] You're skipping the tariff one?

[00:12:38] Oh, I skipped the tariffs.

[00:12:39] I didn't mean to do that.

[00:12:40] Thanks for keeping me honest.

[00:12:41] We had talked about that one before.

[00:12:42] Sure.

[00:12:43] So CNBC article, again, when we look at the picture here, it shows us the source of the news.

[00:12:50] But U.S.-China trade tariffs escalating said would be costly for everybody, the International Monetary Fund deputy director says.

[00:12:58] Do you want to start on that one?

[00:13:01] Well, it's like I call it the ping-pong of tariffs, right?

[00:13:06] The ping-pong ball of tariffs.

[00:13:08] What they were talking about, if you read the article, is not so much that, oh, if we levy tariffs on China, it's going to be inflationary.

[00:13:17] What they were talking about is, well, who levies tariffs on who?

[00:13:21] To have tariffs on who?

[00:13:23] Yeah.

[00:13:23] Ping-pong effect.

[00:13:25] God, I can't talk.

[00:13:26] Ping-pong effect.

[00:13:27] Ping-pong effect that can occur as they're moving around.

[00:13:29] And who's going to tariff who on any given day and all this kind of stuff.

[00:13:33] And ultimately, yes, it will be inflationary, right?

[00:13:36] Because there's prices that are being raised.

[00:13:38] So it'll be a global inflationary point along the way as well.

[00:13:44] Yeah.

[00:13:45] So a couple of things hit me on this, right?

[00:13:48] There's this, I mean, the core of the article is about China, right?

[00:13:53] And the reference, if you looked at the picture on the article, right, is in the quote of the article.

[00:13:59] And you can kind of see the bend, right?

[00:14:01] And this is, I think, the sad state of the media in this country is, you know, I've said this in the past.

[00:14:08] I wish we could go back to the news days of Walter Cronkite.

[00:14:12] You know, it's just you feel like there's somebody that you can maybe trust a little bit more because it just depends on where you want to get your news or where the bend is.

[00:14:21] But, you know, this is talking about Trump tariffs.

[00:14:24] But the core of this article is not about Trump tariffs.

[00:14:27] It's about tariffs in general.

[00:14:28] And the EU is slapping some really major tariffs on China right now.

[00:14:33] And the core of this article is talking about the geopolitical issues that go along with all of this.

[00:14:38] And so, you know, China, to your point about the ping pong, right?

[00:14:41] Okay, well, U.S. has tariffs on steel and so forth.

[00:14:45] And then, well, we're going to, you know, change our pricing or a certain amount of allowances of products coming in from the U.S.

[00:14:52] But the EU is playing a big factor in this as well that I hadn't been thinking about before reading this article.

[00:14:59] In fact, it says the U.S. and China are trading with one another less.

[00:15:09] And some parts of their trades is being rerouted to other countries.

[00:15:12] And I want to talk about that more.

[00:15:13] But that's the exact same thing happening in the EU.

[00:15:16] So there's some same, if we were to probably look at today's news in Germany or Italy or France or any other EU country, we're probably seeing the same discussion with the U.S.

[00:15:30] as the secondary component of this China issue, right?

[00:15:33] So in this article here, it's for us as those other countries.

[00:15:37] But I think it's important to see that it's not just the U.S.

[00:15:39] It's just not just one political party in this country that's doing right, wrong or indifferent in that setting.

[00:15:45] It's more of a global pressure.

[00:15:47] So let's see a Bob's comment there real quick about tariffs.

[00:15:51] Well, he's saying talking about tariffs in a vacuum, right?

[00:15:54] Tariffs combined with increased onshore manufacture, labor, domestic energy production, makes it productive.

[00:16:00] You know, the energy thing, which we haven't talked a lot about, I don't think, is a big issue.

[00:16:06] I mean, China is investing in energy, alternative energy production, things at a much faster pace than we're doing here.

[00:16:14] And so it's real great to talk about reshoring all of this manufacturing and all of that.

[00:16:19] But we're not necessarily set up for it infrastructure-wise or energy-wise.

[00:16:24] It's going to take us, they're doing it even more of it now in the energy part of it as well and the EV parts of it and all of that.

[00:16:31] We're probably, again, trying to catch up in this country.

[00:16:35] So interesting piece, though, of this is I think it was one of our guests or a couple of our guests that we've had have said over and over again, watch Mexico, watch Mexico, watch Mexico.

[00:16:47] Boy, that was me.

[00:16:49] Watch Mexico, watch Mexico, watch Mexico.

[00:16:52] Because this is talking about these geopolitical pressures and that China is now moving around and rerouting things because of this to other countries.

[00:17:02] So you want to see raw materials or plastic parts or so forth that, you know, we're slapping tariffs on now.

[00:17:11] They've got to get them from somewhere.

[00:17:12] And when you were just talking about infrastructure setup and if we're going to try and nearshore as much as we should probably be nearshoring in this country,

[00:17:21] and really U.S. Canada should be nearshoring, so much of that's going to, if it's not on short, it's going to be nearshored.

[00:17:28] And so much of that's going to come from Mexico and Latin America.

[00:17:31] And what Mexico chooses to do is all of a sudden China starts throwing a whole lot of money at them and benefits and so forth and pricing reductions and so forth.

[00:17:42] If we've got tariffs, they'll push it through another way.

[00:17:44] And this article is talking about them already doing that.

[00:17:47] So we'll see what comes to that.

[00:17:50] It talks about quite a few things in this article.

[00:17:54] But it goes back to, and again, all things coming back to our core audience, which is manufacturers and wholesale distributors,

[00:18:02] is the days of checking in monthly or quarterly with your key vendors to see how things are going or waiting for your rep to stop by or an email announcement is,

[00:18:14] if I'm in the wholesale distribution game, I'm having almost daily discussions about supply chain.

[00:18:20] So good.

[00:18:21] Which then takes us to this next article about supply chain management in 2025, trends, challenges, and key statistics.

[00:18:31] So what are some of the trends?

[00:18:33] Well, they were talking here, and I think we'll hit a few of them, right, from a trend standpoint.

[00:18:40] They talked a little bit about trends and challenges.

[00:18:42] So the first one that they talked about was the rise of artificial intelligence.

[00:18:47] They said that by 2030, the market for AI and supply chains is expected to reach $41 billion.

[00:18:56] That might be low.

[00:18:57] So, yeah.

[00:18:59] Well, I'm going to hit pause for a second if I can here, Tom.

[00:19:03] And I was talking to a large distributor.

[00:19:13] So I was at the Affiliated Distributors Industrial and Safety Division meeting earlier this week in Chicago.

[00:19:19] And I was talking to a distributor that had mentioned that in one of his – and he wasn't sharing this about bashing anybody or anything.

[00:19:28] He was just sharing that with one of the breakout sessions that he was in, that somebody was – a couple of people were commenting that they've invested a little bit in AI,

[00:19:38] and they're really frustrated because they're not seeing a return on their investment yet.

[00:19:43] And he was pontificating maybe a little bit, but at the same time is he wasn't really looking at it from the standpoint of the lens where we really need to be going.

[00:19:57] And I'm just laughing as we were kind of comments.

[00:19:59] Oh, AI again and again.

[00:20:01] That's funny.

[00:20:02] But the idea in the comment was – and my chat with him was about if you're thinking about AI today as, hey, I just put a couple of bucks into something,

[00:20:16] and I bought a tool over here that maybe is going to give me some visualizations,

[00:20:20] or I bought 20 people in my business a subscription to ChatGPT or whatever it is,

[00:20:28] and I'm not seeing a return on investment yet.

[00:20:30] I told him, I said, you just could not be more off base with your view, right?

[00:20:35] Because if you're looking for a return on investment today, maybe you can pop that full screen for us here, Tom.

[00:20:41] We'll go back to those go points.

[00:20:44] Okay.

[00:20:45] Yeah, in a moment.

[00:20:46] But the core of this, and I think when we look at all of these and specifically talking about artificial intelligence is,

[00:20:53] this is a roadmap for the future and components of AI that are going to come into the overall growth of my company.

[00:21:00] It is not, did I buy a tool and now I'm not seeing enough results right away,

[00:21:06] so I'm probably not going to continue to invest in AI.

[00:21:08] And I was sharing with this gentleman, he runs a close to a quarter billion dollar a year company.

[00:21:14] It wasn't his company that was doing this.

[00:21:15] But my comment to him was, if you're looking for immediate return on investment from a true AI solution that you're bringing into supply chain or manufacturing or warehousing,

[00:21:25] you've got to be thinking full-term, long-term, big game plan versus what you might see today.

[00:21:33] So that number here with, you know, $41 billion is pretty dramatic in looking at that.

[00:21:39] And you said you think it might be low.

[00:21:41] But when you start looking at that and the efficiencies, the managing complex logistics operations,

[00:21:49] it talks about, it said that supply chains equipped with AI have shown to be over 67% more effective than traditional systems in terms of risk reduction and optimization.

[00:21:58] One of the things we're looking at doing is the case studies that we'll be able to do next year with our customers

[00:22:05] that talk about how AI-enabled smart CRM and customer intelligence can drive revenue acceleration within a business.

[00:22:12] And we're already starting to see from some of our customers as we've introduced some of these tools, a rapid revenue growth.

[00:22:19] But again, I would say even from somebody who makes AI-enabled technology is don't look at our solution as a single point and say,

[00:22:29] this is my AI, right?

[00:22:31] The focus has to be is where are we going?

[00:22:35] Yeah, it's so certainly it's not an event.

[00:22:38] It's definitely a journey.

[00:22:40] And it's a long-term journey.

[00:22:43] And it's a journey that is going to have quite a bit of changes and adjustments along the way.

[00:22:50] Yeah.

[00:22:51] Right.

[00:22:53] And it's not, you know, again, I don't know quite who the conversation you had or who it was with, but it's not a function of AI is more a philosophical and a mindset strategy as much as it is a technological strategy.

[00:23:11] And if I just look at it from a technological strategy, but I'm not looking at the mindset or the philosophy and how that's going to be incorporated, and we're going to talk some more about this later on.

[00:23:22] Yeah, you'll struggle.

[00:23:23] And you'll struggle seeing ROI and certainly on the short term.

[00:23:28] Yeah, well, I mean, I think the simplest way to look at this, Tom, is, look, we had in the 80s and early 90s, it was we're moving from walking through our warehouse with a ledger to putting it into a big box that's plugged into the wall that's got little green type on it.

[00:23:47] Right.

[00:23:48] And then later in that decade, all of a sudden there was this thing called the Internet.

[00:23:53] And we then had a big shift to the Internet.

[00:23:56] This is going to be, I mean, everybody that you talk to, whether it's futurists or economists or whoever it is, talk about this being the very much the far bigger shift than those two.

[00:24:12] So that's the that's the key to that one.

[00:24:15] So, Tom, this doesn't go in order with the list that we have.

[00:24:18] So there's no remember we're going to share that one.

[00:24:20] So, yeah.

[00:24:21] So we'll just hit these other ones real quick.

[00:24:22] So data analytics and supply chain intelligence are key.

[00:24:25] We talked about that briefly.

[00:24:27] Sustainability will kind of go.

[00:24:28] We don't tend to talk about that a lot or know a lot about it.

[00:24:32] Cybersecurity and risk management.

[00:24:33] We talk about that every week.

[00:24:36] And then number five was the shift towards digital twins and hyper personalization.

[00:24:40] Had some great conversations this week with some people about, you know, what's the difference between an agent and a copilot.

[00:24:49] And then we start talking about digital twins and had a great discussion with a distributor in Florida.

[00:24:54] And she was kind of trying to figure out the whole idea about digital twins and agents and so forth.

[00:25:01] And at one of the receptions I was at this week, we talked for like 20 minutes about what that would mean to her role as a CEO.

[00:25:08] And it was really exciting and fun to talk about that.

[00:25:10] So number six was investment in skills and workforce development.

[00:25:14] So as we look at what's going to be going on from a supply chain standpoint, as we do more with technology and AI and digital twins, we need to train our people how to use those.

[00:25:24] And then as we talked about earlier, reshoring and nearshoring.

[00:25:28] And then they talked about key statistics and market projections a little bit.

[00:25:33] Global supply chain management application market or tools for that will be a $31 billion market.

[00:25:40] So the technology side is going to be growing even more.

[00:25:42] And then they talked a little bit as their final point about remote work in transforming supply chain management.

[00:25:50] So that's going to be a little interesting thing, too, right?

[00:25:53] We've got some people that are working more and more remote at post pandemic still.

[00:25:57] And you've got a warehouse that they've got to manage your supply chain that they've got to manage.

[00:26:01] And that remote thing versus in-house is going to be interesting to see.

[00:26:05] So I like these points.

[00:26:06] They were really good things to think about.

[00:26:08] Again, I think this is a good point for us, Tom, to mention that if you're listening to the podcast versus with us live on YouTube, Facebook or LinkedIn, you're not seeing the newsletter that we're sharing.

[00:26:19] And this article was from Global Trade Supply Chain Management in 2025.

[00:26:23] And it talks about risks, challenges and statistics.

[00:26:26] I thought the statistics in this were great.

[00:26:29] It really had some good research done.

[00:26:32] And kudos to the people that did that research.

[00:26:36] But if you don't get the newsletter that we're reviewing here, as I mentioned, and you would like to, just reach out to us at hello at leadsmarttech.com.

[00:26:45] Or go to the podcast website, which is www.aroundthehornpod.com.

[00:26:49] So let's bump into our manufacturing distribution segment that we talk about each week, Tom.

[00:26:55] We talked last week about the bankruptcy of true value hardware.

[00:27:02] And, you know, we're going to talk about that in two different spots today a little bit.

[00:27:07] And I think the importance, actually, Bob just made a funny comment there that 68.3% of all statistics are inaccurate.

[00:27:15] But actually, Bob, it's 68.375%.

[00:27:19] I think so.

[00:27:21] Depending upon if you're using AI or not.

[00:27:23] Yeah, right.

[00:27:24] And your decimal place use.

[00:27:26] But we talked a little bit about true value last week.

[00:27:30] And somebody might say, hey, Kevin, you know, you and Tom get together to talk about wholesale distribution each week.

[00:27:35] And isn't true value retail?

[00:27:38] Well, it depends on where you live, right?

[00:27:40] And this article from HBS Dealer, which is a hardware-related magazine.

[00:27:48] It talks about they interviewed a guy in Killingworth, True Value owner Tom Cost in Central Connecticut.

[00:27:56] So I looked up Killingworth True Value.

[00:28:00] Killingworth is a little town in Connecticut with 6,000 people.

[00:28:04] So there is an extremely high likelihood that they're probably 30 minutes minimum to an hour away from a Home Depot or a wholesale building material yard or a Granger location or whoever it might be.

[00:28:21] And so what we see in so many parts of this country in more rural areas, you know, I have True Value, Ace, Do It Best.

[00:28:32] There's multiples of those within a few miles of my home along with I go five miles, three miles either direction and I'm at a Home Depot where I live.

[00:28:41] But in a lot of areas, your lumber yard, your building materials, your home hardware, all of that is all your local do it best true value location.

[00:28:52] So this was talking about this article was talking about what has really gone on there.

[00:28:56] And he said that he had experienced some inventory discrepancies and out of stocks for the last couple of years.

[00:29:03] But the extent of the company's financial problems came as a surprise.

[00:29:07] And he said if the level of debt that is in the court filings is true, he can't believe that they've been able to keep it quiet for so long.

[00:29:14] Now, I'm sure that a lot of their vendors knew they were in a bad spot because they weren't getting paid on time.

[00:29:21] But the rest of their members, you know, or dealer network was not aware of this.

[00:29:27] And this is pretty big stuff into some smaller towns and so forth that's impacting them.

[00:29:32] And these are small businesses.

[00:29:34] I think with Ace Hardware, they have one.

[00:29:39] In fact, I think Ace actually bought them now.

[00:29:42] But there was one in the Midwest group in the Midwest that had like 15 locations.

[00:29:47] But for the most part, it's single store owners or maybe they have two or three.

[00:29:52] It's not a big, big organization.

[00:29:54] So this bankruptcy sale that looks like it's going to go to Do It Best is impacting people quite a bit in this setting.

[00:30:00] But the challenge right now is that what Do It Best has said with all of this is that what the bankruptcy filing is saying is that they've got, I'm trying to remember what the number was exactly.

[00:30:12] They've got between $500 million and a billion in liabilities and debts and assets of somewhere between $100 and $500 million.

[00:30:21] So that's mostly what's sitting in a warehouse somewhere right now.

[00:30:25] But the big challenge is that is those vendors, right, that have that inventory sitting in that warehouse.

[00:30:33] Now that the bankruptcy has been filing, they can't get paid on it.

[00:30:37] Yeah.

[00:30:38] Right.

[00:30:38] So they need to decide, are they going to trust Do It Best paying those bills?

[00:30:45] Or really probably what it would be is Do It Best backstopping True Value's ability to pay anything moving forward and starting to ship again.

[00:30:53] So it's a really unique time there.

[00:30:56] And what is the timeframe for Do It Best to get out for bid?

[00:31:02] So that was the conversation.

[00:31:03] Well, there's an opening to it.

[00:31:04] So when you go through these and, you know, I'm trying to remember the numbers there.

[00:31:09] We talked about them last week.

[00:31:10] It's within, it's before the end of the year.

[00:31:13] It wasn't in this article, but it was before the end of the year.

[00:31:18] And basically, Do It Best has said, they called it, the term is the stalking horse that we talked about last week.

[00:31:24] So that's registered with the bankruptcy court that's saying, it's our intention to do this deal.

[00:31:30] But now it's open for other folks to pop in.

[00:31:33] You know, right, because of the discussions that we have on an ongoing, consistent basis around here, there are, I don't want to say countless, but I'm going to say dozens of private equity firms and our hedge funds right now that are looking at this and saying, well, wait a minute.

[00:31:48] You know, could we do this and do a roll up over here?

[00:31:51] So there's a lot going on with that.

[00:31:53] And I will tell you, there is a piece of this, Tom, that tells me, suggests to me that there's risk in this deal coming to fruition.

[00:32:02] And I think that potential risk comes with that true value notified the Department of Labor.

[00:32:11] They call it the, I'm just looking at my notes here.

[00:32:13] They call it the WARN Act.

[00:32:15] It says the high stakes nature of the process is evidenced by a string of WARN notices that true value has delivered to departments of labor in various states.

[00:32:24] And that's the WARN stands for worker adjustment and retraining notification.

[00:32:29] So they're looking at distribution center shutdowns.

[00:32:32] They're looking at other layoffs and so forth that could come out of this.

[00:32:36] So many states have, if you're going to lay off a certain percentage of people, that you have to notify them and register that.

[00:32:43] And that would suggest that there's some risk.

[00:32:47] And as the article says, high stakes to this getting done.

[00:32:51] Yeah.

[00:32:51] No, I mean, I don't feel like I'm certainly in-depth knowledge of this, but just looking at it from the outside in, it certainly seems a bit fragile.

[00:33:01] Well, and I think that's why you have me here.

[00:33:07] But you did some work, right?

[00:33:10] When you were in your consulting days and I was doing some consulting, you did a lot of work with a company, an Australian company that made point of sale software for this exact market.

[00:33:20] And I know you've been to quite a few shows.

[00:33:22] So you've met many of the types of people that I'm describing, right?

[00:33:26] You get into some small towns and it's just, you know, dad and mom and maybe a couple of their kids.

[00:33:32] We installed point of sale applications in these stores and they were definitely mom and pop hardware stores.

[00:33:40] Yeah.

[00:33:41] So, but mom and pop grocery store, hardware stores that are a cog in a very large economic.

[00:33:49] They had a big impact and it's an important part of the community.

[00:33:52] Well, let's do this, Tom, since we're on this later in one of our articles on the M&A segment.

[00:33:56] We do have another article that's related to this Do It Best thing.

[00:34:00] Let me just hit a couple of points and we'll skip that one, right?

[00:34:03] Okay.

[00:34:05] That what's happening now with all of this is now you've got a couple of much smaller players, Orgel and another group called, what was their name?

[00:34:16] I hadn't heard of them before.

[00:34:17] I had to go look them up.

[00:34:20] I can't remember what it was, but it was there.

[00:34:24] It's another co-op type group and their number of members, when I looked at their map, you know, there's more true value stores within 10 miles of your house than this network has in California.

[00:34:38] So it's not even, and then Orgel is another one that's, you know, much bigger than that one, but, you know, smaller than a true value.

[00:34:44] These guys are out basically talking to every one of the true value members right now and saying, well, wow, that looks really risky.

[00:34:51] Why don't you just come over for us with us?

[00:34:53] We've got the inventory.

[00:34:54] We've got everything you need.

[00:34:56] And so that's the big jockeying that's right now going on, which is a big detriment if you're now on the Do It Best and True Value side, because you need to, and the Do It Best CEO put out a FAQ notice to all of the true value dealers,

[00:35:12] as well as his own, about what's going on and what people can expect.

[00:35:17] So this is a, you know, I guess risky time.

[00:35:19] It's a unique time.

[00:35:20] We're going to continue to watch it here on the show and share more as we go.

[00:35:23] So very good.

[00:35:26] Evidently, there's a strike at Boeing, huh?

[00:35:28] Still.

[00:35:29] Yeah.

[00:35:30] Not going anywhere.

[00:35:32] I mean, I think they had expected that there was a decent chance that the new proposal would have been ratified, which it was.

[00:35:40] They had a tentative agreement beginning of the week.

[00:35:42] And it wasn't.

[00:35:44] And now Boeing is losing $100 million a day as a result of that strike.

[00:35:51] And this is what just, to me, is mind-boggling.

[00:35:54] If you look at, right, a stalwart blue chip company that, you know, has certainly been from the stock and the market perspective for so many years,

[00:36:03] is now in a situation where they have balance sheet problems and could lose their credit rating.

[00:36:08] And their, I mean, there's a lot of...

[00:36:10] It's a junk bond now, right?

[00:36:11] It's a junk bond.

[00:36:12] Yeah.

[00:36:13] Yeah.

[00:36:14] It's just hard to fathom.

[00:36:16] Yeah.

[00:36:16] And, you know, Boeing has been a darling of Wall Street for many, many years for all kinds of reasons that may not have been good, right?

[00:36:24] As we've all heard about, about, you know, stopping and focus, less focus on engineering and more focus on profits and some of the problems they've had.

[00:36:32] But, man, I mean, that's $100 million a day.

[00:36:37] And very quickly, that becomes a problem.

[00:36:40] I was, when the...

[00:36:43] I told you this earlier.

[00:36:45] I was on a Boeing plane last night coming home from Chicago back to California and had, sitting in an exit row window seat, tightened my seatbelt up a little bit more and was looking at connections on the door.

[00:37:01] Sure.

[00:37:03] But, you know, they're...

[00:37:04] We just had a comment coming in that they've kind of lost sight of their competencies.

[00:37:08] And I think that's, you know, could very much be the case.

[00:37:11] But they're just a different company.

[00:37:12] And I've got a friend that...

[00:37:16] From college with different schools, but nearby each other and became friends through a mutual friend that you and I have.

[00:37:22] And he retired four or five years ago from Boeing.

[00:37:25] He literally left Cal State Long Beach and went to work for Boeing.

[00:37:29] And still McDonnell Douglas.

[00:37:30] And then your dad used to work and came across to Boeing.

[00:37:34] And he retired...

[00:37:37] I don't remember the title when you were...

[00:37:39] He was either the top guy or the second to the top in their defense division at Boeing.

[00:37:46] So, and he's living in Long Beach on the water and got a house in the mountains on a lake.

[00:37:52] And I was just texting him and I was like, you got to go back to work and start fixing some of this stuff because this company is not the company.

[00:37:59] And things have just gotten worse.

[00:38:00] But, you know, let's talk about this.

[00:38:03] And this article is from Axios News.

[00:38:05] And I love when we get...

[00:38:07] And it's what we try to do, right?

[00:38:08] Is distilling things.

[00:38:10] This article is why does it matter, right?

[00:38:12] You commented, Tom, about...

[00:38:14] So they broke down a little bit about what's going on here.

[00:38:17] Do you mind if I recap a little bit of that?

[00:38:19] Yep.

[00:38:20] Let's do it real quick.

[00:38:20] So it said, why does it matter?

[00:38:22] You mentioned earlier $100 million lost every day based upon the stoppage.

[00:38:26] The clock is ticking on the company's deteriorating balance sheet.

[00:38:29] You said that.

[00:38:30] Quick catch up there for 64% of union members voted against ratifying the new contract that had been announced.

[00:38:38] That's better than the 95% rejection of the company's earlier offer.

[00:38:43] So they're making progress, I guess.

[00:38:45] The bigger picture, Boeing shares have already fallen off 40% this year from all of the other problems they've been having.

[00:38:52] And they shed 2% yesterday after that news.

[00:38:57] And it says looming larger now is the possibility of the company losing its crucial investment grade credit rating.

[00:39:03] And they said if you zoom on that in a little bit more, it says they fall into junk bond category.

[00:39:11] They call it junk bond territory.

[00:39:13] Category bonds that have a higher risk of default.

[00:39:16] And it says that would be an ominous signal as a highly symbolic fall from grace.

[00:39:20] It would carry practical consequences because it would be harder to get money.

[00:39:25] And it says Boeing is in the plane making business.

[00:39:29] And the longer the strike goes on, the fewer planes it can deliver.

[00:39:32] And while it has all of these other divisions, I would say airline or business probably followed by defense, which is so much of that is aircraft as well.

[00:39:43] It's a big risk.

[00:39:45] And, you know, there's no way, I mean, certainly there's no way the government's going to let Boeing go away.

[00:39:52] Right.

[00:39:53] But the downturn of this is impactful.

[00:39:57] The last piece we'll talk about this and you can add into this is and why we're really talking about this is the trickle down effect.

[00:40:04] We're here to talk about manufacturing, wholesale distribution.

[00:40:08] Boeing's a manufacturer.

[00:40:09] But people that I was talking to this week, I talked to somebody that has, you know, is in the Pacific Northwest because the big part of this is that they're ever at Washington facility, which is where they're, you know, their biggest production facility.

[00:40:21] And if you ever have a chance, I've toured it a number of times, if you ever have a chance, it's pretty amazing.

[00:40:27] Their company has lost a million dollars of revenue already just through this strike.

[00:40:32] Right.

[00:40:32] Sure.

[00:40:32] And then you start looking at it.

[00:40:35] Right.

[00:40:35] And whether it's the janitorial distributor that's putting toilet paper and mop buckets in because nobody's there, they don't need as much or you're selling hard hats or you're selling rivets.

[00:40:46] Right.

[00:40:46] It doesn't matter.

[00:40:47] It's trickle down.

[00:40:49] And then that trickles down into the neighboring economies and so forth.

[00:40:51] So labor stuff right now in this country, there's some big challenges with what we've seen with the port strikes.

[00:40:59] Automakers last year, Boeing this year, it's a challenge.

[00:41:02] So something we'll keep an eye on and keep talking about.

[00:41:05] Yep.

[00:41:06] All right.

[00:41:06] We're going to shift into our e-commerce and marketing segment, B2B marketplaces from niche to mainstream.

[00:41:12] Tom, why don't you pick us off on that one?

[00:41:15] Yeah.

[00:41:15] So B2B marketplaces are looking to surpass or they're going to surpass a thousand within the next few years.

[00:41:22] I think I told you when I read this article, I was like, this seems like an absurd amount of marketplaces.

[00:41:28] There's got to be a lot of specialization and verticalization going on.

[00:41:33] And it turns out that's what the article was really getting into is that the growth in these marketplaces are going to be,

[00:41:40] while it says from niche to mainstream, but as it goes to the mainstream, it's going to be a lot of vertical specific marketplaces and specialty marketplaces,

[00:41:50] which makes a lot of sense.

[00:41:52] Yep.

[00:41:53] Well, I think there's a great comment on this.

[00:41:55] So let's just talk about marketplaces.

[00:41:59] So the first thing that comes in everybody's mind, of course, is Amazon.

[00:42:03] But where we go further with this is when we talk about in wholesale distribution, it's just it's the opportunity to just place online orders.

[00:42:11] Right.

[00:42:11] It doesn't mean that you're in a shopping cart and, you know, prime day or those types of things.

[00:42:16] Right.

[00:42:16] It's just I've got an ability to get lots of data.

[00:42:18] I can see what my business is like and what I'm doing with that company in general in here as well.

[00:42:25] I can build orders that I can send across to ask them to do a special quote for me.

[00:42:30] I can tie them to jobs.

[00:42:32] There's the back end of that.

[00:42:33] We could go on and on about with companies like, you know, we're partnered with Optimizely that does this type of work as well that lead smart connects into and other systems.

[00:42:43] But yeah, now what we're talking about is this trade.

[00:42:45] But what we're starting to see with this is, to your point about verticals, is there are a marketplace for paint additives.

[00:42:53] There are marketplaces for specialty gases.

[00:42:56] There are marketplaces for fasteners.

[00:42:58] And we're going to continue to see that.

[00:43:00] But the unique thing and the most important, I think, part of this article and this overall discussion, and I think this is going to continue as things move ahead for us here, is the number of companies that are tying their growth to what they're doing in e-commerce within their businesses,

[00:43:19] whether they're a marketplace or whether they're just e-commerce is astounding.

[00:43:24] This article talks about companies like Cisco, which is, I think, the largest food service distributor.

[00:43:29] Advanced Spirits, which is a whiskey distillery.

[00:43:33] Wabash Freight Trailers.

[00:43:35] And then they say the Science Exchange, which is laboratory supplies, have all tied their ongoing growth, their growth strategies to industry-specific B2B marketplaces that cater directly to their buyers and sellers.

[00:43:48] Because what some of these larger ones are doing is they're allowing smaller niche players to also either post their items there, much like an Amazon would, or even be bundling my products with somebody else's and them selling in my marketplaces.

[00:44:05] Yeah. So what do you think about Bob's question here? Marketplaces can be a race to the bottom due to price wars.

[00:44:13] How do you drive demand if you don't have synchronous conversations with customers?

[00:44:19] Well, first, let me say that I appreciate Bob's comments and that he comes to the show regularly.

[00:44:23] Yeah.

[00:44:24] We start with that.

[00:44:26] I think part of me wants to push back on Bob, and I'm not going to because I think the jury's out.

[00:44:30] I think we don't know enough yet.

[00:44:34] And so let me hit time out there for a second.

[00:44:38] Philosophically, Bob could not be more correct.

[00:44:40] Everything about marketplaces would point to we're driving costs down.

[00:44:46] I think the jury is out on this from a standpoint of the very vertical marketplaces.

[00:44:54] And if anybody has any statistics that's with us or knows differently, or maybe even Bob, happy to hear on this.

[00:45:01] But I think there is a little bit different.

[00:45:04] And there's two sides to this, right?

[00:45:06] Marketplaces versus e-commerce sites that a wholesale distributor or a large distributor.

[00:45:10] That's what we're talking about here.

[00:45:11] We're talking about apples and oranges there, right?

[00:45:13] Because it's not that case at all in an e-commerce site for someone, right?

[00:45:17] Because they're just managing their pricing with their customers.

[00:45:20] In a marketplace, though, you can also bring your customers into a marketplace and use your pricing and so forth.

[00:45:27] So I think it depends on, to Bob's point, I think it depends on the marketplace.

[00:45:31] It depends on how it's managed.

[00:45:33] And I think it ties to the vertical as well.

[00:45:36] So I think you will see some that, you know, would there be compressed margins perhaps?

[00:45:41] Yes.

[00:45:41] Yes.

[00:45:42] But I don't think it's a marketplace takes all like Amazon, right?

[00:45:48] And to Bob's point, I think that all of our heads, it's just by, you know, human nature right now.

[00:45:54] All of our heads go straight to what's going on at Amazon.

[00:45:57] That is a compressed marketplace.

[00:46:00] Price is driven down.

[00:46:02] The main winner is Amazon.

[00:46:03] And you might be a little bit of a winner if you're a seller there.

[00:46:09] So I wouldn't argue with Bob.

[00:46:10] Bob, I think the jury is out on some of these vertical specific ones still.

[00:46:14] And I think there's, depending upon the products that you're selling and the industry that you're in, there's a land and expand opportunity.

[00:46:22] You can get some of your more commoditized products on a marketplace, get introduced to customers that you wouldn't normally get introduced before.

[00:46:31] And that opens the door to an expansion strategy that could include much more, you know, live conversation sales and so forth.

[00:46:39] So to me, it's a way, another way to just get visibility or maybe you wouldn't get visibility before.

[00:46:45] No, that's, that's good.

[00:46:46] I like that.

[00:46:47] All right.

[00:46:47] We're running short on time.

[00:46:49] So let's get moving, my friend.

[00:46:50] I've been talking too much.

[00:46:52] Forrester, customer obsession.

[00:46:54] This is from Digital Commerce 360.

[00:46:56] Forrester, customer obsession is key to B2B revenue and profits.

[00:47:01] Yeah, we don't need to spend a lot of time on this, but I think it actually ties in to what we were talking about.

[00:47:07] Right.

[00:47:07] Is, you know, the article here was basically saying, take the customer obsessed philosophy in the business.

[00:47:17] Right.

[00:47:17] And it is true if you think about it, if you think even related to sales, the world of sales has always been more, well, what can I get from you versus what can I give to you?

[00:47:28] Yep.

[00:47:28] And you start to switch that around.

[00:47:32] And what they were talking about in here is that customers that are deaf or companies that are more customer focused and quote unquote customers obsessed are seeing much higher revenue and much higher growth.

[00:47:44] I think that's going to continue.

[00:47:46] And I think AI, one of the big benefits of AI is the ability for you to take that to another level with your customer and understanding them.

[00:47:55] But I don't think it has to be entirely face-to-face, right?

[00:48:00] Like customer obsession can carry over into e-commerce.

[00:48:03] It can carry into marketplace.

[00:48:05] But if that's your true north, then everything else starts to emanate out from that.

[00:48:09] Well, there's part of this that ties well to, you know, what we do at LeadSmart, right?

[00:48:15] And how our technology lets you gain deep insights into customers.

[00:48:19] And what I liked about this, I'm just going to hit a couple of bullet points here.

[00:48:23] It talks about the emphasis is on consistently increasing your ability to understand your customer and have an obsession about your customer.

[00:48:34] Not it's the flavor of the month or whatever it might be.

[00:48:37] And so they talk here about customer obsessed companies realize substantial advantage over those that aren't customer obsessed in several performance areas, including 28% faster revenue growth, 33% higher profit growth, 43% higher customer retention, 44% better employee engagement.

[00:48:59] Right?

[00:49:00] It says Forrester says customer obsession is a perpetual business strategy.

[00:49:05] I love this.

[00:49:06] I just, this is, we're saving this.

[00:49:09] I'm going to use some of these statistics internally with some of our discussions with our agencies, Tom.

[00:49:15] But it says the report advises B2B companies to incorporate the following customer obsession strategies.

[00:49:20] Because I think that's the biggest thing for me, right?

[00:49:22] If we just left right now after saying, hey, there's some cool things about what you might achieve.

[00:49:27] But is, this is saying how to get started or how to work with it.

[00:49:30] It says accept change.

[00:49:31] View change is part of the process of improving and maintaining a focus on the customer.

[00:49:36] Use the right tools.

[00:49:37] Combine people, process, and data with the right technologies.

[00:49:41] Lead with courage and humility.

[00:49:43] Adhere to strong convictions but have the self-awareness to avoid rigidity.

[00:49:48] The fourth one here.

[00:49:49] You'll love this.

[00:49:50] Eliminate silos.

[00:49:52] Enable and reward cross-functional and cross-regional collaboration.

[00:49:55] I'll add to that that says eliminate data silos as well in your business.

[00:50:01] Because when you eliminate data silos in your business, you know, here's my lead smart commercial

[00:50:05] for the day, right?

[00:50:06] If you eliminate data silos in your business by bringing ERP and marketing automation and

[00:50:10] e-commerce and all those silo data pieces into a single platform and location to understand

[00:50:16] your customer better, you're going to serve your customer better.

[00:50:18] So they talked about this as being a win-win for the customer and the company.

[00:50:22] And I think what's interesting is when you take a strategy of being customer obsessed, and

[00:50:27] one of the statistics talked about employee engagement, employee satisfaction, everybody

[00:50:35] wins in that setting because the partnership can grow, right?

[00:50:40] It's not how much can I shove into your warehouse?

[00:50:42] It's how do I understand what's going on with you and what your issues are and your needs are?

[00:50:48] And when I'm servicing you versus selling you and supporting you and understanding you,

[00:50:53] everything grows.

[00:50:55] Yeah.

[00:50:55] Good.

[00:50:56] All right.

[00:50:57] Technology, cybersecurity, and AI.

[00:50:59] Honeywell and Google to accelerate autonomous operations with AI agents.

[00:51:05] Tom, AI agents.

[00:51:07] Familiar with those?

[00:51:08] I've heard the term.

[00:51:09] I've heard the term.

[00:51:11] This was a bit of a technical article.

[00:51:13] I don't know how deep we want to go on this right now.

[00:51:16] Well, it was from industrial distribution, which is going to all of our potential listeners

[00:51:24] of wholesale distributors.

[00:51:25] So let's give them an overview of it.

[00:51:27] Yeah.

[00:51:27] So basically, Honeywell is partnering with Google Cloud and the Google, not just Google Cloud,

[00:51:33] but their AI platform and so forth to build what appears to be some form of like a turnkey or somewhat out-of-the-box structure for autonomous operations with AI agents.

[00:51:50] I think the real winner out of this will be the Accentures and the PWCs and the people who would have to come in and implement this stuff at this point.

[00:51:58] Yeah.

[00:52:00] But, again, I think we talked about AI agents last week, what they are.

[00:52:05] And think of them as a little computer program, but it's all based around AI aspects and AI programming and AI aspects versus the traditional sort of deterministic programming that we have out there.

[00:52:22] So, anyway, it certainly sounds like a very aggressive, and I think it sounds like a very – and I think, again, over time, I think it will have a lot of value.

[00:52:31] I just think we talked about early adopters and we talked about what was earlier about getting ROI on stuff like that.

[00:52:38] There's quite a runway to accomplish some of the things that we're talking about.

[00:52:41] Let me recap a little bit about what this says, right?

[00:52:44] Honeywell and Google will co-innovate solutions around purpose-built AI agents, enhanced cybersecurity, and on-the-edge advances they talk about with it as well, which is going to tie to Internet of Things and so forth.

[00:52:59] So, what they're going to do is Honeywell combined with Google will use Google's large language models or LLMs, which is going to help technicians.

[00:53:10] It will help maintenance.

[00:53:11] It will help machinery, processing different video images that they can use about what's going on on the plant floor.

[00:53:19] And then there's a big component of it with cybersecurity.

[00:53:21] So, think about building these agents that are using Google's LLM, right?

[00:53:28] Gemini, is that right, Tom?

[00:53:30] Yeah.

[00:53:31] I think there's a couple of them.

[00:53:32] Using Gemini and other things that they're doing.

[00:53:35] Basically, to analyze videos and text and sensors and all of those things that are using that model to make – using those to make engineering tasks, maintenance tasks, and so forth better around a plant.

[00:53:49] And then enhance their IoT.

[00:53:53] And I just noticed it here.

[00:53:54] It's the Gemini Nano model.

[00:53:57] And that will work in with – to enhance workflows and so forth as well, as well as cybersecurity.

[00:54:03] So, you know what?

[00:54:04] Back to what we talked about 40 minutes or so ago was it's not a flip of a switch and return on investment.

[00:54:11] It's an investment in the future of your organization and your operations.

[00:54:15] So, good.

[00:54:16] All right.

[00:54:17] Four ways AI can impact employees' workflows.

[00:54:20] Any quick points on that?

[00:54:22] The biggest one that jumped out on me there was the organization getting flatter, a flat organization.

[00:54:29] I completely agree.

[00:54:31] And we have another article, I think, coming up here about management.

[00:54:34] And the hierarchies that exist in organizations will be very flattened through AI.

[00:54:41] And they were talking about that here.

[00:54:45] Your organization hierarchy will be more around your AI and your AI agents and the roles that they have versus people.

[00:54:52] So, I thought that was an interesting one.

[00:54:55] One of them that jumped out the most to me on there.

[00:54:59] Yeah.

[00:54:59] So, I think that's good.

[00:55:01] There's upside.

[00:55:03] There's downside.

[00:55:04] Right?

[00:55:04] With this, it talked about by 2027, 70% of employee contracts will include licensing and fair usage clauses for AI representations of their personas.

[00:55:15] Yeah.

[00:55:16] Yeah.

[00:55:16] I'm glad you brought that up.

[00:55:19] I struggle with that because if you look at work for hire agreements, which you have on both, you know, mostly employees and 1099 contractors.

[00:55:29] Right?

[00:55:30] When you're working there and you're paying them, you own everything.

[00:55:33] Right?

[00:55:34] You own any IP they build.

[00:55:36] If you build a patent.

[00:55:37] If you have a bright idea and I patent it, right?

[00:55:40] You don't have the rights to any of that.

[00:55:42] So, why would this be a lot different?

[00:55:45] I don't know.

[00:55:46] It's an interesting...

[00:55:49] I would like...

[00:55:50] I'd be interested to see if this, how this really plays out in practice and if companies really would agree to something like that.

[00:55:55] Well, let's pay close attention to this as we move forward because we're going to see more about that.

[00:55:59] It makes me think of, you know, the big...

[00:56:01] Both the writers and the actors strike in Hollywood.

[00:56:03] Was it last year?

[00:56:04] Right?

[00:56:05] That was a big part of this.

[00:56:06] And it's the same thing.

[00:56:07] It's like, well, I'm paying you to do this.

[00:56:10] Right?

[00:56:11] There's a reward for what you're being asked to do and that includes this.

[00:56:15] So, I like your point, though, about, you know, it's common that you're employed here.

[00:56:20] I pay you as an engineer and I pay you your benefits and I pay you your vacation.

[00:56:25] I pay you all of these things and I pay you to go develop these things.

[00:56:30] Right?

[00:56:30] Which is then I own the outcome and the patent from that because I already compensated you for that.

[00:56:35] So, it'll be interesting to see.

[00:56:37] The kicker of this for me was, you know, we're not a big enough company for this to matter too much,

[00:56:44] but it did get the hair to stand up on the back of my neck.

[00:56:47] It said, number four was, by 2029, one in 10 global boards will use AI guidance to challenge material executive decisions.

[00:56:57] Right?

[00:56:57] Right?

[00:56:58] So, imagine, I mean, think about that, right?

[00:57:00] You send out your agenda and all of the notes and all the financials for, I mean, I hadn't even thought of this.

[00:57:09] I mean, you could already build a GPT in chat GPT or whatever source that you, LLM that you use.

[00:57:15] You'd already do that.

[00:57:18] And say, hey, I want to connect into, you know, this company that I'm on the board into their financials in general.

[00:57:25] And then I get my board meeting packet and I load that PDF right into that GPT.

[00:57:31] And it comes back to me with all my questions for that CEO.

[00:57:35] And I don't like that.

[00:57:37] Do you want to be CEO of LeadSmart?

[00:57:40] Well, I think let's back it up, right?

[00:57:42] I think if you're waiting for the board to do that to you.

[00:57:46] Yeah.

[00:57:46] Great point.

[00:57:47] You're too late.

[00:57:48] Right.

[00:57:49] So, as a CEO and executive, we should be doing that with your side point.

[00:57:56] Right.

[00:57:56] Yeah.

[00:57:57] And so, and you see this more and more is, you know, how do you get better at anything, right?

[00:58:03] Whether you're an athlete or a professional.

[00:58:06] I think we're going to talk about sales professionals here in a minute.

[00:58:09] How you get better is you practice and you perfect your trade.

[00:58:13] And one of the ways you perfect your trade is to get criticisms and to get evaluations and look at how you can improve that and what you're doing.

[00:58:22] Well, you have that opportunity literally right now to do a lot of this stuff.

[00:58:25] So, Tom, that's a great, man, it's almost like I teed you up for that because that was, I mean, that was a real concern when I first thought about it that way.

[00:58:36] Right.

[00:58:36] I mean, not so much for me, but people in general.

[00:58:39] Right.

[00:58:40] But you just, you brought it 360 degrees, you know, or 200 or 180 degrees.

[00:58:46] I should use the opposite view of that is that, wait a minute, it's actually a way to go have much better, in that case, board meetings.

[00:58:54] But whatever your outcome that you're looking for is to go prepare yourself with what am I missing versus getting caught with something.

[00:59:01] Right.

[00:59:02] Great.

[00:59:02] Great.

[00:59:03] You can come back next week.

[00:59:05] Okay, good.

[00:59:06] Yeah, that's really good.

[00:59:07] Yep.

[00:59:07] So let's jump ahead into our sales and M&A section.

[00:59:10] You just brought this up.

[00:59:16] Sales professionalism, and we won't spend a lot of time on that, but I thought it was great.

[00:59:21] The simple, quick analysis is, you know, if you get the newsletter, take a look at this if you're in the sales world or anything related to that.

[00:59:29] Again, if you don't get our newsletter that we're reviewing here today, just reach out to us at hello at leadsmarttech.com or the website for the podcast, aroundthehornpod.com, and we'll get that to you.

[00:59:39] But this talked about comparing a salesperson to a professional athlete.

[00:59:43] Now, you know, I've been on the sales and business development side of things most of my career, so we've seen this before.

[00:59:50] But you know what?

[00:59:52] Every day I talk to people who a big part of their sales team, not all of them, a big part of them, put on a pair of boots.

[00:59:59] They get in their SUV or they get in their truck and they go to job sites or they go to the office for a little bit and they go to a factory, whatever it might be that they, the category or vertical that they sell into.

[01:00:12] And they're just busy.

[01:00:14] Right?

[01:00:15] Joe called and needs a quote on this.

[01:00:17] And Ralph needed me to drop off this box at a job site.

[01:00:21] And we call ourselves sometimes salespeople, but there's a risk in distribution sales that we can, and truly even in manufacturing.

[01:00:32] And even, you know, I'd spent 10 years as a manufacturer's rep as well.

[01:00:36] It's really easy to get yourself to become a, I'll call it logistician.

[01:00:39] Logistician, right?

[01:00:41] You're just making sure somebody's getting some samples or you're running around getting stuff done versus saying, I'm a professional salesperson that's using my time in a very particular way to get very specific things that I need to get done done, which are going to benefit my customer, myself and my company that I work for.

[01:01:01] So this was a nice article touching on quite a few of those types of points.

[01:01:04] Well, I had a call right before we came on here with one of our customers, who's a manufacturer, with a couple of their sales reps.

[01:01:13] This was the actual people on the people with the boots, as you'd like to say.

[01:01:17] Right?

[01:01:18] And they were asking me questions about how they could do some certain things with LeadSmart, but it wasn't about, it was all about how they could provide a better service to their customer.

[01:01:32] Right.

[01:01:33] Right.

[01:01:33] If they're going, you know, they're on the road a lot.

[01:01:35] So if they're going to visit an area, how do I best do the research that I need to do?

[01:01:40] So I'm not just bringing donuts into the customer and saying hi.

[01:01:44] And it was really refreshing to hear that.

[01:01:46] And I think we're seeing, I'm seeing more and more of that.

[01:01:49] I'm seeing more and more where, how are we going to be more proactive?

[01:01:54] How are we going to be?

[01:01:56] And I think that will all start, that culture will all start from the interview process down in these companies on how you hire.

[01:02:03] It's not just who's in your Rolodex or who do you know.

[01:02:06] Yeah.

[01:02:06] It's what is your mentality to doing that?

[01:02:11] And it's pleasantly surprised because I'm seeing more and more of it all the time.

[01:02:14] No, it's, well, and what's happening is, you know, people like us are out banging the drum that we have to change, right?

[01:02:21] And people are seeing it as well.

[01:02:22] And now we have some of the tools and the technologies that are able to help them do that.

[01:02:26] So good.

[01:02:27] Let's dive into, as we wind down today into our people in leadership segment, how to progress in your career without becoming a manager.

[01:02:34] And then we had another article, three ways to supercharge employee reviews.

[01:02:40] Let's kind of maybe recap a few of these things versus diving too deep into those.

[01:02:45] Any thoughts you had on that?

[01:02:48] I mean, being a manager is a pain in the butt, right?

[01:02:51] Right.

[01:02:51] I mean, it's, right.

[01:02:53] It's, I mean, there are people that are really good at it, but there's, it's, it's not an easy job.

[01:02:59] It's not an easy thing to do.

[01:03:01] As we just talked about though, the world is going to become more flat.

[01:03:05] So, or the, or the organization.

[01:03:07] Organization.

[01:03:08] Sure.

[01:03:09] What this was talking about is, there are a couple of points in here.

[01:03:13] And they were talking about work-life balance.

[01:03:15] Some of the things we've hit on before, but really fewer and fewer people are wanting to be.

[01:03:20] A manager.

[01:03:21] Well, the reason a lot of people wanted to be a manager is because they, a manager is a promotion, right?

[01:03:26] It's a raise.

[01:03:27] It's more money.

[01:03:28] But I think there's a lot of other ways that you can make more money and get promoted and have more responsibility.

[01:03:35] Especially as we move forward, other than managing people.

[01:03:38] Yep.

[01:03:38] And anyway, this was kind of talking about some of those angles and articles on there.

[01:03:43] Yeah.

[01:03:43] Well, the, I thought it was interesting that this, this was a poll.

[01:03:47] It didn't say what type.

[01:03:48] This is Yahoo Finance.

[01:03:49] It was a poll of a thousand employees.

[01:03:51] It said only 38% said they were interested in becoming a people manager at their current company.

[01:03:56] And 44% of men were interested in becoming managers and only 32% of women.

[01:04:02] So out of that, that larger group, among the reasons they cited were increased stress and pressure taking on a managerial role.

[01:04:09] So there's two, there's two components that I see that hit me out of this.

[01:04:14] And they're kind of tied into a little bit about what you were saying.

[01:04:16] Part of this, I think, is generational too, is you mentioned work-life balance.

[01:04:21] I think people are looking for different things.

[01:04:24] The younger generations, I need to put a chart up about what's Gen Z, what's boomers, Gen Z, Gen X, Gen Y, whatever it is.

[01:04:32] So I know what to refer to correctly in the shows.

[01:04:36] Maybe we have a static chart that we put up when we have these discussions in the show.

[01:04:41] But the younger workers, they're tying work-life balance.

[01:04:46] Work is a part of their life.

[01:04:48] It's not a focus of their life in so many people.

[01:04:51] And so, yeah, why would I do that?

[01:04:53] You go do that.

[01:04:54] I'm going to do this over here.

[01:04:56] And if you won't pay me enough that I want to make, I'll do a side hustle while I'm working for you even potentially.

[01:05:02] With that, we see a little bit of that.

[01:05:04] But the other side of it is, and I think it's a more important part, and I won't belabor this too much,

[01:05:08] but I've watched this my whole career, is good salesperson, as an example, does not make good sales manager.

[01:05:18] Right?

[01:05:18] And historically, people will say, you know, oh, man, this guy's awesome.

[01:05:22] Let's promote him to sales manager because he's an accomplished salesperson.

[01:05:28] Well, there's a whole other skill set you need to be a manager.

[01:05:31] So it's something to be paying attention to.

[01:05:34] All right.

[01:05:34] Let's dive ahead.

[01:05:36] Industry scuttlebutt, we've got some info there.

[01:05:39] MSC company posted an 8% drop in Q4 sales.

[01:05:44] That obviously is on their calendar year, or their fiscal year, not the calendar year.

[01:05:51] And revenues were off by 4.7% on the full year.

[01:05:58] So interesting times.

[01:05:59] Saw some of the folks from Turner Supply we mentioned here.

[01:06:02] They did an acquisition in Alabama of another company there.

[01:06:06] Good folks at Turner.

[01:06:08] And then Rexel, the large electrical distributor, posted their third quarter results.

[01:06:13] We have sales results we have posted there as well.

[01:06:16] But you know what?

[01:06:17] As we wind down, I wanted to spend a minute.

[01:06:19] We have a section in the newsletter every week.

[01:06:21] It's called a good – I call it a good read and listens because sometimes we will throw a great podcast in there.

[01:06:29] And I wanted to acknowledge that coming up – I can't remember the date.

[01:06:34] Let me go look.

[01:06:35] I have it here.

[01:06:35] It's 30th.

[01:06:36] 30th?

[01:06:37] The 30th this month, our friends at Distribution Strategy Group, Jonathan Bine and Ian Heller,

[01:06:45] who are the founders of that organization and Distribution Strategy Group.

[01:06:49] If you don't follow them, just go to distributionstrategygroup.com.

[01:06:55] Webinars, podcasts, research, surveys.

[01:06:59] They're one of a handful of organizations that are really, really pushing and driving the data and the details to help people across the board in wholesale distribution.

[01:07:13] And I think a big part of their audience is manufacturers listening as well.

[01:07:17] They're having the 100th episode of the series that they do.

[01:07:20] We quote information from them all the time.

[01:07:24] Jonathan's been on the podcast.

[01:07:25] Ian's been on two of our – the two times we've done special episodes when we did it in January, the 2024 – three in review and what's coming in 2024.

[01:07:34] Ian was one of the panelists on that.

[01:07:37] And then our 100th anniversary show that we did in July, Ian was one of the panelists with us or guests that we had.

[01:07:44] So congratulations to them.

[01:07:45] I will be listening to that, and we encourage you to go to their website, distributionstrategygroup.com, and sign up for that webinar as well.

[01:07:56] So good stuff.

[01:07:58] Jeff, hey, you're actually going to get on an airplane on Sunday and head out on the road, aren't you?

[01:08:06] They're going to let me out of the office, yeah.

[01:08:08] So I know it's not your favorite thing to do, but I appreciate you going out.

[01:08:13] I'm heading out tomorrow to San Antonio for our great friends at Net Plus Alliance.

[01:08:20] They're a buying group for the industrial safety and construction industry.

[01:08:25] Great human beings, people that run that organization, happy to call them friends.

[01:08:30] I have an opportunity to speak on a panel discussion on technology with them on Sunday.

[01:08:35] You'll be in later in the day to take advantage of the beautiful buffet that they put out at their reception.

[01:08:41] So I know that will be fun for you.

[01:08:43] I'm going to move on to another event, which will be my third week in a row of being with our friends at Affiliated Distributors.

[01:08:49] We love both of those buying groups, great human beings there, the running organization trying to help wholesale distribution get to the next level.

[01:08:58] So it's that time of year, right?

[01:09:02] You went most of the year without having to travel much, and then you went to see a great customer the other day,

[01:09:08] or the other day, a couple of weeks ago, and you're at this event.

[01:09:11] And then we're off to see a large company that we're trying to support with their digital roadmap and digital transition as well.

[01:09:20] So you've got three trips in, what, a month and a half?

[01:09:24] Yeah, don't know what to do.

[01:09:26] It's going to be like your young days.

[01:09:28] I know, I know.

[01:09:29] All right.

[01:09:30] Well, that gives us a chance because we're two and a half, three hours apart gives us a chance to spend some time together.

[01:09:35] I won't see you this weekend, but I'll see you in a couple weeks.

[01:09:38] So thanks, Tom.

[01:09:40] This was a good day.

[01:09:41] Good articles, great comments.

[01:09:42] Appreciate those of you that have been with us.

[01:09:44] As we wind down the day, if you like what we do each week, click the follow button.

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[01:10:12] That would be greatly appreciated and share what we're doing with our friends.

[01:10:16] So, Tom, thank you for today, everybody.

[01:10:18] Be kind, be safe and do good things.

[01:10:22] Have a good weekend.

[01:10:27] We hope you enjoyed today's episode and our guests.

[01:10:30] Each week, we try our best to dig into the topics that are impacting your business.

[01:10:35] 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.

[01:10:45] 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.

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