What is "The Dark Funnel" and How Does It Affect Economic Volatility in Wholesale?

[00:00:02] We are, what's happening? There you are. Yep. Good morning, good morning, good morning. I assume you're dancing and moving in the chair, but... Yeah, don't worry about that. Just hang on for the day. It's gonna be a good one. Okay. There we go. This show has officially started. There we go. Awesome. Very good. Well, here we are another long, hectic week. Nice to have you in our offices down in Orange County this week for us.

[00:01:12] for a few days. It's good to always good when you're there and come off of that. I always come home four or five pounds heavier, though. So... Gotta have the salad. Yeah, I'm gonna... We need more salads and... And... Our last... Our last meal together, I looked across the table at fish and chips and fried calamari and... That's right. And I had a salad with some salmon, which I've, I guess I've become famous for in some circles. So... That... That... There's you and a few other visitors.

[00:01:42] I've got a business associates and my wife point out, look, they have a salmon salad, which tends to get served to me, typically. So... But that's all right. You got a workout, weekend of workouts ahead of you. That's true. That's true. That is true. So... That'll be good. Well, it's been a busy week. We've got a president in China. We've got all kinds of events that went on here this week, a trade association event and software conferences next week. All kinds of good stuff happening. So...

[00:02:09] That's good. You were... Yeah, well, you were here a couple of days this week. I'm gone all next week. So it's gonna... Gonna be good. Next week, I'm gonna hit real quick before I go. So... If... If you're in wholesale distribution and you're interested in kind of keeping track of what's going on with the buy side and supply side of distribution and technology and some of the changes that are going on, I've been given the opportunity to join the good folks at Infor.

[00:02:37] For the ERP and warehouse management and other technology solutions that the good folks at Infor handle and provide for the marketplace, they've invited me to moderate a panel with some great executives from both the consulting side as well as distribution. We're gonna talk about margins and supply side technology and so forth. That's at the TUG, the user group Infor event in Nashville next week.

[00:03:03] But you don't need to be in Nashville to go. If you check with the folks at Infor on their website or web page or likely their LinkedIn posts and or follow me or send me a direct message, I'll get you a link to that because Infor and the National Association of Electrical Distributors are co-sponsoring this event that I'm gonna moderate.

[00:03:22] And there will be on my LinkedIn profile later in the day, a link to that session because it's not only a session there, it is also a live webcast that'll be available for people to watch. Is that public or do you have to be part of NAED? No, you just have to get that link that they sent to me and asked me to share. So we'll have that share. I'll have to put that on my calendar. When is that? It is 12 o'clock central on Wednesday, the 20th.

[00:03:52] Okay, that means that means 10 o'clock Pacific on Wednesday, the 20th. Okay. Cancel everything and be available. I was gonna say, Bob, good morning. Let's you and I jump on and let's heckle the hell out of Kevin. Yeah. Wednesday at 10. I don't think there will be an opportunity for that. No, you don't think there'll be comments or anything like that? Okay. Well, part of it is I have already asked them to make sure that you're blocked even if they do. Okay. All right.

[00:04:20] How's that? But yeah, it's gonna be a good event. Great, great panel. My job is to just not screw it up. But we're appreciative of that. Steve Levy, Daniel Mangan, James Mumford, Dylan, ask you over there. All a great team that's super supportive in our partnership with them as well. So you have quite an agenda when you're there. Oh, man. Yeah, I got a bunch of executive meetings and some bunch of customers that are there.

[00:04:48] And so it's gonna be good, good event. So anyways, Infor, NAED, doing this great, great webcast. So I'm privileged to be part of that. And I thank them again. So Tom, let's kind of get ready to dive in. And we'll talk about the news. A lot happening this week. And so Bob says he's in with you to heckle me. That'll be fine. That'd be no different than just being here on a normal show. So, well, that really gets to you, huh? You like that idea? You and Bob are sitting together. Yeah. I've never really had a comment inside of heckling.

[00:05:17] Yeah. Well, you know what you should do is just send Bob a Teams or a Zoom invite. And you get together and then you screen share. And then you'll both be chatting in the background while you're mocking me. Okay. Well, we'll set up this whole infrastructure. Yeah. Well, the interesting part of that, right, is having me as a moderator. A moderator's job is to tee things up and not talk. Right? But I think you don't, you get to give your point of view too. Yeah. But I have a tendency to overshare sometimes. So.

[00:05:47] Share. Okay. How's that? Hashtag overshare. I think that's a new one for you. Yeah. So that will be the caution. I've got a feeling Steve Levy, our good friend and my buddy that is with us on the show a few weeks back, he might be at the side of the panel with a, remember those old vaudeville things where they had the sheep thing where they could hook you by the neck and pull you off the stage? Yeah.

[00:06:13] Or the gong show. So, all right. Hey, I'm Kevin Brown. This is Tom Burton. We get together every Friday morning at nine o'clock Pacific time. And we chat about the news of the week and what's going on in the world related to the economy and supply chain and mergers and acquisitions and technology and AI and robotics and everything else that's going on out there.

[00:06:39] And we talk about that and we try and bring that together and look at how that impacts wholesale distribution and manufacturing. It's titled our show Around the Horn and Wholesale Distribution Manufacturing. We do that by means of the newsletter that we share. That newsletter is called as well Around the Horn and Wholesale Distribution Manufacturing that goes out to thousands and thousands of people every week.

[00:06:59] It was out early Friday morning. So if you're listening to us on the recorded podcast, Apple, Spotify, Odyssey, wherever it might be, you won't be seeing that newsletter, but we would love to share that with you. So if you'd like to get that newsletter, please let us know. You can just send a quick, simple email to hello at leadsmarttech.com and we'll get that out to you.

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[00:07:45] And so off we go with that. So anyways, if you're able to do that, we would love to get you that newsletter. And if you're with us live, we appreciate it. We always ask one favor is if you're listening on any of the podcast formats, hit the subscribe button and most importantly, leave a review. Because if you like what you're hearing, that'll help us get this message out to other people.

[00:08:06] If you're on YouTube, click the subscribe button and certainly as well, if you're with us on LinkedIn or Facebook Live, feel free to comment and join us in your thoughts for the day. The last thing we'll share is we couldn't do this show every week. We didn't have the support of the company that Tom and I work for, that company's Lead Smart Technologies. Lead Smart has developed what we describe as an enterprise growth platform. And what that growth platform does is it looks across all of the journeys that your customer takes with you.

[00:08:33] So often we get wrapped up in the data that's in our ERP system, looking at that as the only source of record for really what's happening in our business. But we start taking the silo data from other parts of our business, the marketing automation data, the e-commerce data, the sales enablement data that potentially is there, data that's in our CRM about conversations that have had issues that are going on with the customers. We bring all that data into a unified platform.

[00:08:59] We get rid of the silos and the fragments, and now we can use AI and other technologies against that data to make smart business decisions that help us accelerate growth in our business and identify risks and really gain deep insights to both our customers, our teams, and our overall business. So if you're ready to move beyond just a single source of truth in your business and fragmented data, we'd love to chat with you and share more about what we do. So, Tom, anything to add to that? Are you ready to dive into the news?

[00:09:27] I think we should get on with it. Good. We just saw a comment there that I wasn't even aware of, that today is Goodbye Powell Day. So Monday starts with Kevin Warsh, don't we? Don't we have an article about Kevin Warsh? Yep. That's right. So, yes, I guess today is the official takeover day. Yep. That's it. I don't think interest rates have been reduced yet, though. What's going on? Yeah. Well, I wish they would. Yeah. I wish they would. I'd like gas prices to go down, too.

[00:09:56] You know, what I identified is that a couple of my credit cards have a cap of $125 for fuel stations. So that's the approved. And maybe it's maybe it's maybe it's maybe it's cost. $75. It's gone up to $125. Yeah. Yeah. So anyways, maybe it's just what the authorization request is from the Costco fuels. I'd get you by three or four gallons. You're good.

[00:10:23] I tell you, I'm for the first time I've been like anti, not anti. Let me read. That's a complete misstatement. I have been EV is not for me for a long time. And I'm not looking at EVs as you're looking at EVs. So yeah. And it'd be interesting if you're listening, jump in. We're now paying. I paid $639, I think a couple days ago. And that's finding it inexpensive.

[00:10:53] If it's kind of the normal shell Chevron, it's more like $675. But if you go find one of the cheap stations, you might get it for $639, $635, something like that. I think I paid $649 or $659 at Costco for a premium the other day. I went to the Costco buyer office. And in fact, when I was out getting you lunched because you were so busy. Yeah. I mean, it's nuts.

[00:11:22] I want to see an end in sight. But I also would prefer not to have nuclear warheads from Iran coming this way. So I think that leads right into this first article, right? What I did there? I just brought you right in. That's right. So producer price index ups 1.4% for the month, which is why they're saying 6.6% overall on an annual basis. Looking at the annual basis there.

[00:11:53] Again, most of that driven by what we just talked about from what they said is higher energy and fuel prices along the way. But even some of the – and I did a little research on this. That's what they call the core index. It was up 1%.

[00:12:09] And if you start to look at what that's made of, transportation costs and sort of other indirect things that are related either to the fuel situation or the war, the problems with the shipping and all those types of things. Right? There's sort of an indirect effect that's trickling down other than the direct cost of the fuel that was on it. So I don't know what your take is.

[00:12:38] The war seems to be at a stalemate. I don't even know if you call it a war anymore. I'm not sure if there's – It's a conflict again. It's a conflict again. Yeah. Remember when we went through that? When it first started, I called it a conflict. And you're like – I can't remember who was with us as a guest. You're like, you're an idiot. So it's a war. Okay. I think we're back to a conflict. Well, I think when you're shooting missiles and things like that, I'd call that a war. I don't know what's actually occurring from what I can really read into.

[00:13:09] The quote-unquote ceasefire is – what was the word that Trump used? It's fragile or whatever. And there aren't really ships going through the strait. So I'm not really sure how this all gets broken open. There was no real movement in the China – Well, that's – I'm glad you brought that up because, right, that just looks to me to be maybe a nothing burger coming out of that. Right? Yeah.

[00:13:37] I mean, there was sort of like, yeah, we – you know, I think we should open the strait. Okay. Well – And you should help us. Yeah. Well, yeah. We agree. We agree that there should be a diplomatic resolution to it. Okay? So how are we going to actually accomplish that? So, yeah, I don't know. It's – I actually – you know, when we talked about this a few weeks ago, I thought this would get resolved much faster. I need to.

[00:14:02] I don't know how this gets sort of this – what do you call it in sailing? Irons when you're in irons or whatever? Wow. Yes. Anywhere? What causes that, Tom? I don't know where the wind comes from at this point. Right. If you're pointing a sailboat directly into the wind, you cannot sail. So you're stuck in irons. Yeah. That's impressive. Yeah. Well, you know, I'm a – quite a broad, broad, broad set of skills. Yeah. You're a mariner, I guess. I wasn't aware. You want to go sailing? Let's go sailing. Let's do it.

[00:14:33] Could lead some more charter of boat? Yeah. As long as I get to just ride along and not have to do anything, that's good. That's fine. But you're the money guy. So as long as you're – so it's okay if I'm outspending money if you're there, right? You're there and having a good time? We could probably get somebody to give us a deal. Okay. Perfect. Perfect. No, I mean, I think to your point is this is – and this is the struggle, right?

[00:14:55] It's – this is just what I say maybe this quarter's simmering or vacillating of the economy, right? It's like we've had interest rate impacts. We've had all of these other things. And now we've just added to the top of this where now we've got this impact of this – I don't know, back to whatever you want to call it, right? It's neither side's really doing anything. And at the end of the day, it's scary.

[00:15:23] I heard somebody say the other day, it's like, well, this is just going to have to go – you have to – it's going to have to go back to a armed conflict and bombings and so forth because, you know, neither side seems to budge.

[00:15:44] Because right now what it clearly appears – and I haven't looked deep into what the last proposal from the Iranians was, but it's like they're not ready to give everything up there. And they want to be able to continue to keep their uranium enrichment going on. And they think that they've got the stranglehold on the world right now from that standpoint. And they kind of do with the – I'm going to call it the elbow of Hormuz, right?

[00:16:12] And what we learned this week that I had been reading the opposite of this is that while Europe is in a pickle right now, right? Ryanair and other airlines in Europe are already canceling a lot of lower used routes because of fuel pressures. But China has been building up reserves that I had heard the opposite of it, that China was going to be in a little bit of a pickle sooner rather than later.

[00:16:39] But it sounds this week that they've got some strong reserves there. So, you know, this is – it's ugly right now for the whole world of what's going on there. And it may take that – I hate to say it, but the negotiations are not getting anything done. No. And there's a lot of finger pointing and threats and other things, but nothing really happening.

[00:17:05] So I expect that the Trump administration may have expected more out of the China meeting or hoped for more out of the China meeting. Right. I was hoping maybe that could be a lever to break some of this open. But again, based on what we know, it doesn't appear that is going to be a catalyst to – Well, it sounds like too what they were saying was we can talk about anything you want, but if you're going to support Taiwan, when we go take Taiwan, all bets are off. Right. Right. Right.

[00:17:31] And that's a pretty big issue out there as well right now too, right? You've got that – the potential of that conflict. And it's kind of interesting with that standpoint because you've got so many of the U.S. military assets out floating around in – near the Persian Gulf. So an interesting time. So anyways, looking at this, we've got producer price increase rose, as you were talking about earlier.

[00:17:58] We've got a stock market that's kind of been up and down a little bit this week, and they talked earlier in the same article about services index accelerating. I think what we're going to see, though, a lot of this is going to go on is we've got this persistent inflation component that's happening here, is that these fuel prices are just going to start having so much more of an impact.

[00:18:23] I mean, and it's – I told Darlene this morning when we were talking, he said, I went to a new place not far from our office yesterday just because I was over there running an errand that I hadn't – it's not new. I just hadn't been there before. It looked really good and went in, got a tri-tip beef sandwich and a bag of chips and a soda, and it was $21. Yeah, sounds right.

[00:18:49] But it's just like, you know, how's that sustainable, right, for the average Joe? Yeah, I don't know. Credit cards, I guess. But then how does that – what happens there, right? And because that's just – I mean, it's an interesting thing you say there, right? Then that just pushes the pressure on consumer spending and confidence levels and so forth out there. So it's an interesting time. Why don't we kind of jump to the next article? Bob brings up a good point here.

[00:19:17] I agree, and I think this is now more than ever, because the nuances of geopolitics and international negotiations are huge. Yes. And more impactful than most people give them credit for. And I think maybe more than – I mean, certainly in many years, if not my lifetime, I think some of the things that are going on here with geopolitics and international negotiations are affecting a whole lot of broad – there's a broad impact. Mm-hmm.

[00:19:45] Much broader than I think – at least I remember. Yeah. But, you know, I'm a young guy, so I haven't been around as others, but – I'm happy to say I'm the youngest guy here. Yeah. Yeah. Yeah. The – but, you know, before you jump from that, let's talk about that, because I think it's an interesting thought. Is it that different?

[00:20:10] You know, and I'm glad Bob made that comment that he did here in our chat, is I wonder about so much of this stuff, Tom, and I think about this off and on, you know, we're coming up in – where are we at? 190 today. 10 weeks, we've got to – in fact, we need to meet about that later today, about what we're going to do for our 200th episode. But I think we only have – so it'll be 11 weeks probably, because I think there's a week in between. We don't have a show. There might be two, actually.

[00:20:41] But I wonder about this sometimes, and even the things that we talk about on the show and the news that we have. Think about the access to information that we have now that we didn't have years ago. And it's, you know – certainly we've had the internet for, you know, 20 – what, 28 years, something like that now.

[00:21:02] But just the access to the amount that's coming and it's coming firing at us through social media and X or Twitter and LinkedIn and the access that we have to data or to information right now is just – it's astounding. It's overwhelming, right? I mean, I can never keep up on all the stuff that I want to read, both personally and secularly.

[00:21:25] So I wonder if – sometimes I wonder if things are so different or we just have a better lens into what's really happening than we've had in the past. Well, I think we certainly get more information and bombarded by stuff. But what we're talking about here is impact, right? So I think there's the noise, if you want to call it, with all of the information and comments and opinions and everything like that.

[00:21:52] But the question really is the impact, right, that is there. And I think there's kind of a number of things, obviously, right now that are impacting. But this situation here, obviously, with – I mean, we've had impact with fuel costs before and fuel situations and all that. But there's just a lot of overall – these international negotiations are not siloed, right?

[00:22:18] There's definitely an interrelationship between some of this. Hence why I believe there was more hope of what was coming out of the China thing, right? You say, well, what does China have to do with Iran? But there was potentially a lot of leverage that could have come out of that with Iran.

[00:22:37] And, you know, I think literally some people believe with one phone call from the Chinese president to Iran on here's what you need to do and make this happen, things could actually have gotten – or could get done. I haven't heard that. Again, I don't – Why is that? Why does he have that level of leverage? You know, they buy a lot of oil. They've done a lot of support for Iran over many years, that kind of stuff, right?

[00:23:06] So, again, I don't know all the ins and outs. But supposedly there was a lot more hope around the, you know, the hardline impact that could have been taken as a result of these – You might have a little more leverage in the crown prince of Liechtenstein. Maybe, yes. Yeah. Okay. You know, it's interesting. We've never talked about this too, though, is where things are at from the Russians. Because early on it looked like there was support of Iran from Russia.

[00:23:33] And China and Russia are certainly tied so closely together on so many things. So, listen, the economy needs this to be taken care of. And this is what's sad, right? And we don't talk about the impact of the – I have a friend of mine that's a retired electrical engineer, but he's also having fun in retirement as an Uber driver. So, he's my airport guy. And I'll talk to him Monday morning.

[00:24:02] He's Iranian. He's Persian. And, you know, I talk to him. I go to one of my doctors. Acupuncturist is – she's Persian as well. And, you know, listening to them and the passion that they have about changing the regime there and the Khomeini's that they have there is astounding. And when you have the discussion with those people, you look a little bit deeper about the tragedy of what's really going on for the average person there.

[00:24:31] Not necessarily about what's going on since the conflict war, whatever it is going on, but all of the last 30, 40 years, what's ever been going on. And now they see a light at the end of the tunnel. And we're talking about how it impacts us at the gas station or at the sandwich shop. And they're looking at it as their culture, their people, their family, then their friends. Then you boil it down to what's probably going to make something happen here, the midterm elections.

[00:25:04] The Republicans, the administration has got to get this scored away fast. Yeah, but the question is how? Yeah, no, I don't disagree with that. I don't disagree that there's an impending event, and the impending event is earlier than November. I would say the risk of someone backing down right now might be higher on the U.S. needing to back down. Yeah. Well, Iran doesn't have really a reason to back down. Because there's no bombs coming in. Right. So anyways, let's jump ahead.

[00:25:34] Otherwise, we're going to spend the entire day on the economy again. We keep doing that. So I would say this next article from CNBC that we're going to talk about here is Secretary Besson says substantial disinflation ahead as Warsh takes over the Fed. Talk about pressure for the first day on the job. Yeah, I don't. Yeah, that's, you know, Besson's not a dumb guy. No, no, no.

[00:26:01] I mean, I think he's like, could be one of the main voices of reason in the administration. And he's very much a numbers guy, markets and all of that. So I'm a little surprised at that remark of substantial disinflation, unless he knows something a lot more than we do, which he may. I just couldn't believe because I would think we would have the ultimate knowledge. But anyway, he may know more.

[00:26:26] But no, Warsh or the Fed is not going to be responsible for disinflation. Right. And if you look at the poly market, the chance of a Fed, the chance of a change in June is basically nil, 98%, no change. Big difference, actually.

[00:26:50] This moved quite a bit in the last, you can see here, look how much it changed and moved from here was significant. So for those of you that are listening and not watching, Tom has up on his screen here, he has a poly market, the prediction market. And we're looking at a Fed decision in June. So we're looking at the chart for that about how it's moved. Yeah. I mean, in March, there was a, it went from about a 30% chance of a decrease in June.

[00:27:18] So now there's an 80%, no, basically no chance of a decrease in June. Same with July, very little, 4% chance in September, 9% chance, which is still very low. Yeah. So anyway, the, even with Warsh in and Powell out, at least the poly market view of the world is not expecting any significant interest rate cuts.

[00:27:47] So are we going to get one this year? I say yes, but only if we get something resolved here on the conflict, quote unquote, sooner than later. If this conflict situation drags out, even I'll say if this is not resolved, substantially resolved by the end of June, then no. End of June? End of June, which is what, six weeks. Yeah. Yeah.

[00:28:15] Not substantially resolved by the, by the middle of the year. So Tom, when you have poly market there, why don't you look at poly market real quick and see what is, what is, what is the poly market saying about an increase? Well, it. Oh, just to just do a new search. No, but here, here it shows right here, a 14% chance of an increase in September. Be interesting to do a full new search versus just the. It won't be different.

[00:28:44] No increase. So September is the only time that's showing an increase. And there's what percentage of people? 14%. 14%. Which is higher than the decrease, which is 9%. Yeah. Right. I don't see that either. But. You got the wrong, you got the wrong Fed chair. Well, it doesn't fix anything. Right. An increase in interest rates does not fix the problem that we have with fuel costs and rising costs and other things. Right. So.

[00:29:14] Yeah. It's not like money going into the system. It's rising costs. And people, you know, confuse inflation with more money in the system versus rising costs, which is what we have here due to a scarcity of something that, you know, we use every day. Yep. Yep. Well, and where are we at? I was just looking a minute ago where 3.8 compared to 3.3% last year and.

[00:29:42] 2.3% inflation about a year ago. So, you know, that number has got to come down. I'm going to go back to the thinking that I think there's a lot of other wise business people that think that the 2% and it'll be, I'm really interested to see if we see if Warsh has some opinions on this is what is the correct rate?

[00:30:02] Because 2%, we've got a, we've got a stock market that has just giggled, you know, on its way up at the, at, in the inflation rates for the last, you know, what, three years, something like that. Right. Right. The stock market hasn't cared. And there's probably some, we're probably don't have the right number.

[00:30:23] And again, as I say, over and over again, we might not be using all of the right parameters to look at because we just, it's just such a rear view mirror look versus what's really happening live. So, um, on market doesn't agree with any of this. It was a 10 year is now at 4.58. 10 year was back down below three just a few months ago. Yeah. So it is, um, it was up substantially today.

[00:30:49] So, so what do you do if you're, uh, if you're the fed chairman that's coming in, that's got the president that's pushing, pushing hard on him for, for, uh, interest rate reduction. You've got, um, uh, a mixed bag, I'll say of indicators, right? Cause normally you'd be looking at a certain set of indicators, but those indicators. And then I guess maybe there's sub indicators that might go with that. Um, right.

[00:31:18] That, that there's indicators that impact the main indicators. Um, well, you know, what do you do right now coming in right now? Cause it's just, you don't, there's nothing to, I guess, truly take a strong position on. Certainly you don't change the first month in right. You come in the first month. Oh yeah. There, nothing will happen in June, which will be their first meeting. Like I said, if there's some meaningful resolution in the month of June,

[00:31:47] then I think the chance of a cut in July or August go up significantly. There's a legitimate reason to support that, right? If you're the fed, right. So if nothing changes, it's very hard to support a cut without any sort of data. That's what's going to change the situation that we have. Right.

[00:32:10] So that's, that's my summary, but the big million dollar question or billion dollar question is, is something going to get resolved here? And I think even the market today, the market's down is down fairly significantly is okay. Now what? Yeah. It's kind of best in saying in this, right. Is that where we're sitting right now with that three, eight number in the bump up is like, it's transient, right? It's transient. Right. But transient for until when? Yeah. Right.

[00:32:39] That's the, that it's now is the question until when? Yeah. Yeah. And all these people are in the spot says, Hey, Mr. President, we can back you up on all of this. But you've got to make something happen here. So anyways, let's, let's slide ahead. And what do you want to catch? Real quick. Cause I think we need to get out of economy before 10 o'clock. So, Hey, did you notice here that companies have started to get tariff refunds? They did. Yeah. How many?

[00:33:10] Do you know what that means? Tell me. That means I won the bet. I thought it had to be substantial, not just. No, there was no substantial. I said money would start flowing by September. Yeah. Nick said November and you said sometime next year. Yeah. So there's actually reasonable money coming out already. I mean, I don't know if it's billions of dollars, but money is coming out. The refunds are being processed.

[00:33:38] Obviously there's still a lot of finger pointing and everything like that, that goes along with it. I'm not suggesting that it's simple and easy resolution, but money is getting out and, you know, Trump. They haven't said a number. They just said Oshkosh Corporation and a few others have said they've started receiving some funds as of Tuesday. Yes. Right. I would suspect there's going to be millions of dollars coming out here, certainly this month. Millions. Millions. Yeah.

[00:34:07] I mean, did you see how much, how many, how much has been filed? I think it was. I didn't catch that. Hold on. My computer's frozen up, but it's coming back. It's supposed to be 35 billion. Yeah. 127 billion have been requested. Okay.

[00:34:30] Which is 75% of the total potentially eligible of 1.66, 166 billion. So of the 166 billion of tariffs that were collected, 127 billion have been requested to be refunded. So the key thing is. PS and DHL have pledged to return these refunds to their customers, but retailers like Amazon

[00:34:57] and Costco have remained silent on whether they will share the windfall with customers. Trump and the, and the administration warned that these business, these refunds will be considered taxable income for 2026. Mm-hmm. Well, and he, uh, he came out this week and said, this is going to be damaging to us. And I can't remember the exact thing he said, but it was, I was expecting this, his response to push back on this. I was expecting this two months ago.

[00:35:27] Right. I was expecting it the day after. So it'll be interesting. Um, and he's pushing back, but I don't know if it's, I mean, what is he going to do other than, you know, I think he's kind of saying this is un-American to, for you to ask for the money back. And, you know, we took these, this money from people that are file another lawsuit and go to the Supreme court. Yeah. Hit pause. Yeah. So, so if, if he does that and they hit pause and they stopped doing it, you still win just because some money's gone out. That was the bet. Yes.

[00:35:56] Got to go back and listen to exactly what the bet was. Yeah. We'll have to go back and listen. Yeah. It's sweet. We have the recording. Okay. But money is going to continue to flow. I don't think people are going to go, Oh yeah, you're right. I'm not going to take my refund. People are going to take their refund and push for their refund. And, you know, maybe there are going to be some companies that will acquiesce, but I think those are going to be the exceptions, not the rule. Well, I think there's going to be some people that are going to, that are just going to get

[00:36:25] behind on the whole process, but you know, we'll, we'll see there's, if there's money flowing, there's money flowing. I've got a feeling that this isn't the last that we've heard of this and it's just not going to see all of this money that's supposed to go out really get truly refunded. So I can, I can see some lawsuits or something else coming, but heck, I already owe tacos, I guess. So we got to get with Nick though, cause Nick's in on this. I was texting with Nick the other day. I guess we'll see him at the show in July, right? Probably.

[00:36:55] Probably not. No, no, no, he wouldn't have a reason to be there. Um, I can double check, but I don't believe so. So, but if, if he is Nick, if you're listening, I think Nick said he was coming to the show today. Send me a text. Cause I guess if you're going to be, uh, in Orlando with affiliated distributors, big event, uh, functional success summit in July, then I guess we need to buy Tom a taco, uh, which might just be me. It might be a taco at that place we went to last time. Uh, what was that place called?

[00:37:25] The, the, the steak place. Oh, Vito's chop house in Orlando. They had good, good tacos there. I'm going to go to Vito's. I'm going to have, I'll have a Chipotle delivered your hotel room. I'll be at Vito's house. Actually, what I was thinking was, um, I'll just have my Uber stop at a seven 11 and I'll get a pack of hot dogs and, and you know what? I'll get some of those. I'll get, well, I'm going to bring you to Kitos instead of tacos from seven 11, the ones

[00:37:55] that they just have, you know, rolling on the little thing all day long. I'll just bring you some of those from a tier hotel. I'll deliver it to your hotel room. Okay. Okay. I think I can get a taco at Vito's. They could probably make a filet taco or something for me. It'd be fine. I was, what I thought you were talking about is that you wanted to go to Kalo's, the Mexican place by my house. That's a, that's good too. Right. Yeah. Yeah. Tacos and a couple of margaritas is a hundred dollars a person.

[00:38:22] So I don't think anybody came here to hear us talking about you getting tacos though. Well, let's, let's move on. Um, so, um, lots more pressure there. There's a couple of good articles here about, um, the, on the supply chain side of things for us, right. Talking about getting, uh, there's an article here from, um, supply chain, supply and demand chain executive about how to navigate ocean freight disruptions in today's shipping.

[00:38:49] Um, I mean, this is just a mess, right? You've got people that are wanting to get, not just, you know, in, we haven't talked about this in a few weeks, but, you know, we think about really all we talk about, uh, related to the Strait of Hormuz and so forth. And this conflict we've talked about throughout the day is oil. But what we're not talking about is the urea and the nitrogen and the helium and the other things that are coming out of that are so critical, right?

[00:39:19] Listen, we're all those farmers out there are planning right now. And there's farmers that are planting different crops because of their access to, to, uh, fertilizers that come from those, those, uh, components. So there's a much bigger issue here besides just what, uh, you know, we, we were whining and complaining about what we're paying at the pump, but there's going to be potentially, you know, lack of availability of other things. Um, Tom likes any taco.

[00:39:47] The question just came up, Tom, do you like a soft shell or a good hard shell with shredded beef? Tom will eat any taco that you provide him though. So, right. Right. So it's, uh, it's the answer to that question is yes. Right. The question was, does he like hard shell or soft shell tacos? And the answer is yes. So how's that? Uh, the, um, no, but I, I think we, we sometimes miss that.

[00:40:15] We, we trigger on the news points that are really focused on, on this issue right now being about, uh, about oil, but there are all of those other components that we need to be thinking about as well. So anyways, that's the, the, the article, other article there. Let's just kind of look into briefly into our, uh, the, um, our manufacturing distribution segment. Um, there's a couple of articles there.

[00:40:41] There's the main article that I thought was really good was, um, we have talked a lot about the impact, right? The last, uh, 18 months, what we've seen in the distribution world is a handful of very big moves. You've got, um, QXO who we've talked to number of times, um, about a number of times with this, what they had their big, uh, purchase, which was, uh, I don't want to say hostile takeover,

[00:41:09] but it was a big fight of the boards of beacon roofing, uh, and QXO from their, uh, the, um, publicly traded group that is, uh, shipping warehousing supply chain of their, they have a number of different companies under the Q, uh, banner starting with Q and, uh, they ended up achieving that. Then they bought top build. We've seen now, uh, Lowe's do an acquisition in the building material space, and we've seen

[00:41:39] a number of them from HD, uh, Home Depot. And so through, uh, HD's acquisition of SRS distribution, um, it's about 18 months or so ago, maybe two years ago now, which was a big, uh, that just, I mean, rattled a lot of cages. People felt the earth move. It was just, Hey, what's happening with these retailers coming in now? And then SRS distribution last month, uh, has been now part of Home Depot.

[00:42:05] SRS just went and bought Mingeldorf's a large, uh, HVC and plumbing distributor in this, uh, Southeast family owned company out of the blue that popped up. So we're seeing a lot more of this going on. So now as we're watching this happening, this is an article from hardware and building supply dealer magazine. There was a great Q and a that, and the reason that I published this particular one, by the

[00:42:28] way, I missed that, uh, Beacon also bought, uh, Kodiak, uh, which is, uh, uh, which basically was an equity firm that had bought a lot of smaller and mid-sized, uh, mostly in the, uh, uh, Rockies and the Midwest, um, building materials, uh, companies as well, smaller and mid-sized companies, but Kodiak had done a really nice job with that. And, uh, QXO bought them as well.

[00:42:53] But Brad Jacobs, the, the CEO of QXO did a nice Q and a, uh, and I published in our newsletter, uh, the one from HBS dealer.com because it has a link specifically to that document. And if I had the time, there was enough stuff in there that I was thought was kind of meaty that thinking about writing a little post about it. So I might still get to that, but, um, nice article there. So if you get a chance, just take a look at our newsletter around, around the horn and

[00:43:21] wholesale distribution, and you can see that on, um, LinkedIn. You can see it on our website around the horn pod.com, or you can pop us a note, uh, either here in the comments, if you're with us live that you'd like that, but it's good article. I don't know if you got a chance to look at that, Tom. You know, I thought it was a good overview of what you just went through. Yep. Hey, before we leave here though, I don't, we shouldn't just skip. I don't think this ACE one. Sure. Yeah. Good.

[00:43:48] Um, so this article, basically a class action suit has been filed in the state of Illinois against ACE Hardware, against ACE Hardware and Epicor. Epicor is named in the suit as well for taking data from multiple stores, point of sale data. Um, and Epicor, Epicor is the ERP and POS software company. Right.

[00:44:16] And then we, we know from a previous, uh, life of a previous project we worked on about Epicor, POS and, and the, and the thing that was how they're set up there. But anyway, there was a lawsuit that is, they've taken data from all of these different stores and have used that data to, I guess, come up with consistent pricing from store to store, rather than having each store set their own prices that is there. Yep.

[00:44:45] So they say that they've abandoned the commitment to a local ownership favoring, you know, multi-store chains, private equity firms, owning stores, and then ACEs company owned stores. Right. So, and this is being a federal lawsuit, right? That they're filing. Um, I think they said over 5 million member, people had signed on to the class action suit, which seems like a lot. Started by an individual. It's Sean, Sean Twomey. Yeah.

[00:45:15] Um, I just don't see how this gets legs. Right. I mean, what, what, what law legally, right. Stops ACE from using data and analytics to help drive their, their pricing. I don't, I don't, I don't quite see how this, and this is a slippery slope, right. As we start to use more and more data in our businesses to make decisions and so forth. But I don't see how it can get legs legally.

[00:45:46] Um, I tried to do a little more research on it. Couldn't find too much from a legal perspective on that, but I find it something that we should keep our eye on. That's good. Well, I'm glad you brought that up. It's, um, you know, one of the recap notes that I had here is that looking at, they're using data as a weapon. Right. Um, so, but is it collusion? Is it, what is it? Because really what they're saying is, Hey, you don't live up to who you say you are. Right.

[00:46:14] Uh, you're, you're not, you know, that's not legal. I mean, I agree with you. Right. Right. You could, you could argue from a PR perspective or a brand perspective. They're not living up to, but how does that turn into a class action suit? Right. Yeah. And is there some contract that I've signed with ACE that says the pricing you have here is local and is not dependent upon what other stores are doing. So, um, I just don't know. Yeah.

[00:46:44] Um, I, this is, I'm glad you brought it up. It's a good one to watch. Right. Um, from that standpoint, the fact that they named Epicor in there, right? Right. I mean, look, I, I'm sure Epicor worked with them on the strategy for this, but why wouldn't they? Right. I mean, again, that I don't, I just don't see the legality of it. Hey, I was just looking at this a little closer and I, I just, uh, I have a, you know, I, I guess I'll give a little look behind the kimono here, right?

[00:47:14] Is, uh, Tom and I both have all of these articles up on our screens, as you can imagine. And, uh, I run a little prompt through Gemini to, to, for each article. So I can ask it some questions as we talk about these articles. So, um, they said, um, uh, I just kind of asked it about what, you know, really what kind of case this is. And it says, um, it says, unlike a standard slip and fall or employment suits, this is an antitrust case.

[00:47:41] It's being led by elite legal teams that do antitrust work. And the core of them is it's talks about an algorithm price fixing, right? And price fixing is illegal. Um, and, uh, it says the explosive company. What's that? They're not the same company though. They're different companies, right? Right. So ACE hardware is a brand and what they're, what they're looking at here is you've got, you know, historically the brand has been ma and pa, right?

[00:48:10] You knew, you knew, you know, you, you knew that Mr. and Mrs. Burton owned the neighborhood ACE, right? And now what they've moved towards is you've got corporate owned stores, right? You've got independently owned stores, but what you really have now is, and I, uh, even before a couple of years before you and I did a project with a technology company that, that sold into them, um, I had been a vendor to them, uh, on a product side.

[00:48:37] And you know, what used to be that ma and pa thing is very much. Now you're seeing, you know, groups of people that own 20, 30, 50 ACE hardware stores. And now private equity has come in and those are all separate organizations operating under the banner of ACE. So this lawsuit is saying these guys, you know, Tom and Kevin's 27 ACE stores is colluding

[00:49:04] with Joe and Judy's 10 stores along with the ACE corporate owned stores. And that the center of all of that is what they're saying is that, uh, Epicor is a big part of that. So, um, I mean, if you remember, if you remember this individual stores, the franchises are, they're not franchises or are they? No, they're a co-op. They're all part of their, they're members of a bigger organization as well. They're forced to use Epicor.

[00:49:33] If you remember correctly, right? They could not go choice, they could not go choose their own point of sale. Right. And though they were, I think that's the prime, I didn't remember it that way. I remember it being as the primary vendor. Well, yeah. I mean, I don't know what they, but it was, I don't think there's forced to do anything in that. There's, there's, but it was pretty much, you know, Hey, you're, you're, this is the deal. You're going to use Epicor. Right. And everybody did use Epicor.

[00:50:02] So I would assume across the co-op, there is all kinds of things that are standardized between them and so forth. Anyway. Well, I mean, if that's the, you know, the whole thing behind this, right, is antitrust. That, that, that's the core behind this. So put it this way, if there wasn't a case to be had, these law firms would have. No, I don't think so. I just, it just feels. Anyway, we'll keep an eye on it. We'll see what happens. Yeah. Well, it's, I mean, this is a big impact on the folks at Epicor potentially. Right.

[00:50:33] I mean, it can just, just being named in something like that's not, not good for your brand. No, but I mean, they named obviously two big companies that have, you know, potentially the ability to pay something. Yep. Good. Hey, this was also an interesting article about, um, that we had in here from the chief executive magazine. Uh, magazine says how us manufacturers can compete in a global market so that they just had some nice bullet points about their, you know, talking about offshore competition and, and so forth.

[00:51:02] So I don't know if you got to look at that, but I thought it was worth just mentioning to people that, you know, anytime we can, we can point out ways that, uh, people are, are given some, some checkpoints and some, some advice to how to operate better or manage supply chain better for both manufacturers and distributors. We want to bring that up. Okay. Oh, good. We'll talk a little bit about, uh, AI. Um, sure. If we must, I know we hate, I know how you hate that. It's, you know, it's not, not a big part.

[00:51:31] It's not a big part of your life or anything. No. So I'm sorry. Don't even know what it means. It's astounding the impact it has on our lives. And, you know, it's funny. It just, I was thinking about this yesterday. They, um, this has been a, uh, just a crazy, crazy week for me. It'd been at my desk every night till 11 or later. And, um, you were in town for a couple of days. We accomplished a ton.

[00:51:58] Um, and I, I think about, look at this and I think about this and from a standpoint of, um, Stephanie, that's one of our customer service or customer success managers. And I were talking about this week or so ago about, you know, are we going to lose our brains because we rely on so much of the AI tools? And I look at the things for me this week that I've been able to achieve because of having

[00:52:25] AI supporting the effort, not doing the work, but supporting the work and, and accelerating the work. You and I were doing some work this week with a marketing manager and looking at some positioning of, of things within lead smart and some of the new products that we're getting ready to offer. And, you know, AI is, you know, become in that setting, right? Claude was just another seat at the table. And I was really kind of looking at it from that standpoint. It was just like, it's not that we were just looking at AI.

[00:52:51] It's like, really, if you think about it, the project that we were, we worked on together, two different projects this week sitting in a conference room. And really Claude was just a team member would be, I think I had, it just, that just hit me that, uh, epiphany for that is that that's really kind of a way that to look at that is that Claude was just another seat at the table of a person that was supporting the entire initiative. Right.

[00:53:17] But, and, and I think had we just said to Claude, figure this all out for us. And then we went and had tacos, right. And let Claude do all the thinking. I think that's where things break down. And I do think that unfortunately we see that. Yes. Right. Where people just let the. And that's where you get the slop. Right. And slop and the hallucinations and, and everything else that's associated with it. I think this is, you know, this relates to this first article here, right?

[00:53:45] Culture is critical for AI project success. Mm-hmm. I think there's two things that I've noticed. We've just talked about one of them. Um, because it's talking about here. One in five workers are operating within an artificial intelligence, sweet spot of skills and proper infrastructure. Mm-hmm. That are there. What I, what I see, not so much with our customers, but just with other people I know and friends and family.

[00:54:15] Do you have friends besides me? Um, maybe, I don't know, one other somewhere. Okay. Longtime college friend. Um, but, uh, the, what I'm seeing. You're cheating on me. Sorry. You're cheating on me. Yeah. What I'm seeing is there's kind of two things. One is I'm not technical quote unquote. I'm not a technical person. And so I'm not, I, I don't like AI. I don't want to do anything with AI.

[00:54:43] I don't understand it because I'm not technical. I think that's a very dangerous viewpoint to take for people. I think, especially for younger people, right? I think most younger people are technical no matter what. And I think even older people, whether they know it or not are technical because they're using technology all the time, whether it's their phone, word or Excel or whatever the case may be. Um, the second is, is what you said is, well, I just, you know, it's going to replace me

[00:55:13] or it's going to, I'm not going to have to think anymore, but you could use it that way to a degree. Right. But you're not going to get any, you're certainly not going to get any results. So the real value is to use it. As you said, as another seat at the table, having whether it's for yourself or for with a team or whatever, I'm not even talking about agents. I'm just talking about using the conversational asphalt, the chat bots, the things like that,

[00:55:40] the most basic use of, of AI and then helping it create the deliverables and things along those lines that need to get created. I mean, even AI coding is not set it and forget it by any means. I've been doing a lot of AI coding recently and it requires a lot of thought on, on my part and a lot of decisions and a lot of direction. And let's go back over here, but having that other... To be successful. To be successful. Yes.

[00:56:09] If I just put in a prompt and said, write a bunch of code, I'd end up with a bunch of code, but it wouldn't be, you know, certainly very valuable or useful. Yeah. You know, I think we'll probably continue the discussion ongoing about the seat at the table. I think that's a really good way to look at it, not just because I said it, but I want

[00:56:35] to, I guess I want to rethink how I look at some of these things, right? It's, it's a teammate if you, if it's used correctly, right? You know, it really can become a teammate and that's, that's the way to look at it. You know, there's a couple of comments earlier about, you know, being obsessed with speed and so forth that came in on, on the chat here, but I kind of look at it as, I have, and maybe it's, I'm later in my career.

[00:57:03] I have some very, very significant and specific goals that I'm trying to achieve in multiple facets of my life, both in my career at LeadSmart and other, other parts of my life as well. There's some very, very significant things I'm trying to achieve in a, in a compressed timeframe. And I want to have a life at the same time as well. Now, my wife might suggest, you know, I don't have much of one right now just because got a lot going on.

[00:57:33] But if there's a way to accelerate what I need to accomplish that benefits me and those around me and my company, and I get a better work product from it. And I just, I'll give you an example. You know, um, I spent a few hours last night. I mentioned earlier today that, you know, participating in this event with, with, um, our friends at Infor next week, right?

[00:58:02] Uh, I got done in a couple of hours, what normally would probably take five to six hours of research and preparation and so forth and moderating this event. And I'll be it, my outcome from it will be better than had I spent, because I never would have allotted the amount of time that I should. So my work product is substantially better. And I achieved it in a very short period of time in comparison.

[00:58:31] Same thing to looking at what, you know, some of the work you and I did this week and, uh, for our company and both product and positioning and what's next on the, on the roadmap. And when you bring in another tool that can do research, you know, on a, you know, in seconds to bring you things, to help you make better decisions. The idea is not to pile more work on yourself is how do I set some reasonable parameters,

[00:58:58] get it done in a shorter period of time with a better output, and then use that available time to not just load more work on myself as I think the, the, the, the point that's being made here. And I think going back to this article, right? If you, as a worker, right, kind of take that viewpoint, right? If I'm there 40 hours a week, how do I use AI to get more out of those 40 hours a week? Yep.

[00:59:25] More quality, not just even quantity, but quality of what I'm doing. And you will be a valuable asset in the business. Right. Right. Well, and let's, let's take a look at that and unpack that a little bit as well. I think to go with that, Tom, is that, you know, people talk all the time, right? About, oh, well, AI is going to take jobs and AI is going to do this and AI is going to do that.

[00:59:49] Well, you know, I always go back to Jensen Huang from, from NVIDIA saying that, you know, AI is not going to take your job. Somebody using AI is going to take your job. And I, if I translate that back to, you know, why we're here in our audience in wholesale distribution and manufacturers, think about a distributor. If, if you're a customer service person that is using the technology that the company's given you with maybe products like ours, right.

[01:00:18] That has AI built into it to help you, you know, do your job better, give you alerts, give you reminders and so forth about risks and opportunities within the business. If you're the person that's the star person that's taking advantage of that and maybe says, well, Hey, I'm going to take a report that I can get out of lead smart channel cloud or out of my info or whoever ERP system. And I'm going to load that data into cloud and I'm going to find a way to be much more efficient at my job.

[01:00:48] Guess who gets the promotion or guess who, guess who gets to go take those tools to start a new division of the company, right? It's those opportunities to really excel at, at our job. Yeah, I agree. But I think it has to start with what I talked about. You can't go in with an attitude. I'm not technical. Sure. No, no. Therefore, I'm not going to do this. I think we all have to become quote unquote technical to the degree of being able to use

[01:01:16] the tools that we have at our disposal, right? Whether that's Word or Excel or, yeah, no, I think you're a good example of that, right? You're not technical, right? Or, but you. I'm a hard hat salesman and a hammer salesman. Right. So, and I agree, you know, I, this is the question that came up, you know, Bob saying, is a person's worth and value really dependent on their being able to manipulate a software program? No, I don't. I have a strong thought on that. Pardon?

[01:01:46] I have a strong thought on that. Go ahead. No, I don't think at all is dependent upon that. But I do believe their worth and value as their role in the company and what they're responsible for producing and what they're responsible for, you know, helping that company and that team or whatever the case may be to do, their worth and value will go up because they are able to manipulate that software program. I would suggest that worth and value is the wrong framing and the wrong lens to look at that in.

[01:02:14] No, you know, and maybe that's not what was meant by this comment, but no, it doesn't make you bad and it doesn't make you bad if you choose to not do this or you don't excel at it. It doesn't change whether you have good values or whether you're a good person or not. What you can achieve in your career or your support and value to the company can grow exponentially.

[01:02:40] You might have one person that's inside salesperson that chooses to, I mean, let's even boil this down to, you know, basic, plain, old school, run of the mill CRM of yesteryear, right? There were people in a business that took full advantage of planning, scheduling, right? And using the tools available to them. And there's other people that avoided it.

[01:03:06] Do those, are those people any different in who they are as good people or bad people? Absolutely not. One of them probably made more money than the other one. And his employer was much more happy with his performance. It's all boils down to, right? Then there may be a point in time where people are going to look at this from a hiring standpoint, which there's another segue into our next article in just a minute of who do I hire and what their skill sets are, right?

[01:03:32] No different than in 1955, you know, or 1947, whatever it might've been is if you can type 102 words a minute at with zero errors versus 75, you hadn't, you had a leg up in the marketplace. It's nothing new from this. It's true. But I think that worth and value, a lot of people at least consider part of their worth and value based on the, on their career and their job and their role, right?

[01:04:00] It's a major part of their life, right? It's a big part of their life. Yeah. So I do think that you can really improve that worth and value and your confidence and your, you know, and the enjoyment of what you're doing. And, you know, people like their job when they're, when they're creating outcomes and results and making changes and things like that happen. At least a lot of people do. Yeah. Not everybody. So it's, I think it's a real enabler, right?

[01:04:31] If you lean into it and embrace it. Yep. I don't, I agree that by itself, it's not going to just being able to use AI isn't going to change anything. It's what you do with it. Yeah. And, and, and how you make it, you know, as we just said, kind of be all you can be. Yep. So, yep. So let's slide from that. And it's very good conversation right into that article. I love, I love the comments. I love the pushback on it.

[01:04:58] Cause I think this is, unfortunately AI does not have really good reputation right now in the general population, right? The PR of AI is not good with the gen, with our, you know, there's, that's why we're seeing a lot of the data centers being protested and stopped and we don't want AI in our community. And there's a lot of negative sentiment around AI in general. And I think we, as a, as a, as a company and an industry, not as a company, but as an industry,

[01:05:27] not just us, certainly, but we have not done a good job of really helping people understand the value and the positive part of it, letting them get sucked into all the potential doom and gloom that they, you know, that the media and everybody wants to talk about. Yep. Um, I think that's, yeah, it's like anything, right? It's what you make of it, you know?

[01:05:52] And it's, if, if, if someone back to the, you know, the value of a person, if they tie their value to their, their work, right. Then yes, it, it could have an impact of the ability, your ability to do that. But let's kind of move on though, Tom, there's an interesting article that I think, you know, if, if you're a, a business owner, a business leader, something, you gotta be thinking as

[01:06:14] you put, start putting guardrails and, and, um, and AI use cases and policies in place within the business. Uh, Colorado is passing a bill right now. Colorado as a reminder, Colorado is also the state that wanted to do all of their own AI framework and, and the legalities behind what you'll do and what companies are required to do with data and so forth, which, uh, the federal government came out earlier this year and said, no, no, we're going to handle all of that.

[01:06:43] So, uh, that's not necessary, but they came out in the same setting here and they've passed the bill outlawing wage setting based upon AI surveillance. And so this is kind of an interesting thing, right? It makes me think back. We did some work together a number of years ago with a company that had, uh, everybody's keyboard, you know, a keystroke monitor on all of their computers. And, uh, something that was taking screenshots every 10 seconds or something to see what URL

[01:07:13] your, your computer screen was on or, uh, and how you were working. And I just, I just hate that, even that concept, but this is starting to say, Hey, doing these types of things and then setting how you're going to pay people is, um, the, uh, is going to be illegal. So how the, how AI is going to be used in businesses is going to be an interesting component as well from a legal standpoint.

[01:07:39] I mean, we've, there's been surveillance and maybe not AI surveillance, but surveillance. So people, you know, are they on their computer? Are they working? Are they making keystrokes? All that kind of stuff for a long time. It'll be interesting to see kind of, okay, well, what's considered AI surveillance versus just surveillance. Right. And is there a line between those or whatever? It's, it's why I think I'm not a big fan of these types of things.

[01:08:06] I think that almost possible to enforce, they're full of ambiguities. Right. And I don't know. It just seems like it's, um, it's, it's a lot of noise without a lot of potential value or outcome. Yeah. Uh, well, I mean, the issue here is a law, right? Yeah. About how you're going to do that. How do you enforce that law? How do you even interpret the law? What do you, you know, I mean, remember those tools that were on the company? I'll tell you exactly what happens in that setting, right?

[01:08:36] There's a law here and a worker thinks that they didn't get the job that they were supposed to get. Right. And, and, and you will find, you know, I, it's not to the magnitude, but the first thing comes to my mind is, you know, the billboard that pops up that says, have you been discriminated against because of AI in your workplace? I mean, that's, that's the risk. I don't see the billboards like car accidents, but you know, along that way, there's that, that's that component. But remember the stuff that we had at that other company that they had on the computers

[01:09:05] that was tracked keystrokes or whatever. There was no AI involved in that. Would that be considered AI surveillance now in this world or? Or what? I guess the, that's a good question. I guess part of that is does, um, um, from that is, was there laws in Colorado about that being illegal as well? So I think the issue is, um, what, what this is trying to do.

[01:09:35] And this is, you know, there's been other articles that we've had in the past and other discussions about this is the idea that says, don't make, don't, don't use AI solely to make HR decisions because there's discriminatory things that could happen from that. And I think that's where people are trying to get with this. Do we want to hit any, the last one here? Don't you want to say that's not, that's right. That's great. I totally agree. Something like that.

[01:10:00] Um, I'm, my, my opinion is still out on this. I just, but, um, I, but I think that's what it boils down to is, and we're going to see more of this as people saying, don't make HR decisions solely based upon an algorithm. Not saying it's right or wrong. I'm just saying that's what I believe what they're saying. I just don't think it should be a law. That's my point. I tend to agree with you, right? I think making HR decisions solely on an algorithm is just dumb, right?

[01:10:31] But I don't think it should be a law. It's just like, okay, what are we, what are we letting legal and building laws for versus using common sense or, or the competitive marketplace, right? You're not going to get good employees overall at scale if you're using an algorithm to make all of your decisions. So you're going to already basically shoot yourself in the foot. And if I'm going to, if I'm an employee, then I don't want to work there anyway. Right. It's like, why do I want to work at that place anyway?

[01:10:59] Oh, I mean, look at that company we were referencing earlier, right? Nobody was happy that worked there, right? We have people working in our company now that used to work at that company. Nobody liked working there. Nobody liked the mindset of the person that put that in place. Right. So, you know, um, it's good. Hey, let's, uh, with the time we have left today, Tom, let's roll into our technology, um, um, cyber security section. Um, interesting, right? This, uh, article, this is, uh, from Mark Brohan with distribution strategy group wrote

[01:11:27] this, uh, AI cyber criminals are targeting distributors and damages are mounting. And they, they referenced to, um, Henry Schein company and, uh, another company, UNFI, Henry Schein being the big, uh, dental distribution company and other medical products as well that had a major cyber attack and talking about how this is impacting, you know, just distribution as well. And they're, they're talking about, um, you know, criminal syndicates using AI to automate

[01:11:57] target research, clone executive voices, bypassing, uh, district traditional security. And they're talking about a million dollars in documented losses so far this year in that setting. And it just makes me think as how simplistic this is, as the things that we're talking about is, you know, you, you've talked about it on the show, a bunch of different times is the emails that you get with invoices that have my email address in there and my title in the company saying that you're supposed to pay this invoice because it can't, you get

[01:12:26] the accounting at, you're one of the people, I guess, to get the accounting at, uh, lead smart emails and, um, ask you to pay. What is it? My executive coaching. Yes. And those are pretty substantial. Well, I guess they're reasonable amounts for what it would take to coach me, right? They're all around $50,000, give or take. Are they really? Yeah. That's probably what it would take to have. It's always, always right around that number. That's probably what it would take for executive coaching to actually make change with me.

[01:12:56] Probably. Yes. Um, but that's, I mean, that's literally, they're using my email address. They could get in theory, right. Be, uh, cloning, cloning my voice, uh, through that whole thing. And that's the kind of stuff. And it's that, it's the easy entrance stuff that could come in, right? That. And I think Ian mentioned this on one of our shows way back or when he was talking about, you know, can someone come in and order a bunch of copper wire? Right. Whatever.

[01:13:23] I mean, think about now, you know, here's where to me, AI is being used kind of in some way, maybe sloppily, I guess, for lack of a better word. Yep. All these AI tools that are out there that are, you know, going to read your, your text message or your drywall that you've written your, your quote on or your order on, and then processes that turns out into an order, sends you the stuff, right. All automatically. Right.

[01:13:49] I mean, to me, that just opens the door to this sort of cybersecurity. It's a different cybersecurity type of attack, but it's now using, you know, fraudulent methods for getting goods or, or buying things that you wouldn't, you know, aren't going to pay for. Yep. Well, I mean, I think that if you're, if you're referencing the same thing, this was, might've been on our hundredth episode show that Ian Heller from distribution strategy group

[01:14:19] brought this up and he was talking about a cloned voice calling a branch, right. Using AI and AI can answer the questions very easily. That might come from the person that answers the phone and ordering, you know, a hundred thousand dollars worth of copper to be dropped off at a job site. And the job site is actually there. Um, and the truck just goes and delivers it because it was Tom Burton on the other end of the phone. We, Tom calls all the time, right.

[01:14:46] And, and then somebody stops by and they pick up the a hundred thousand dollars of copper wire and put it in their truck and go away. And Tom's company gets billed for it because it was delivered to a job site. Right. And, um, off go the bad guys. So I think the, the other phone call is just one way, right. It come through a, one of these AI, you know, tools or auto order things or whatever, right. It's just, there's a lot of ways for that too.

[01:15:12] Are you, are you saying maybe one of the AI tools that, uh, scan emails, turn email requests into orders that, that company could get hacked. Yeah. And if that company, that service provider was hacked and now they could manipulate that with that, that data. Yeah. Yeah. It's interesting. Well, it does, I mean, you know, it's funny. I was talking to a couple of our prospects earlier this week about the importance of understanding

[01:15:39] the security layer behind your software providers, right? There's, we were in fact, you joined me on a call yesterday where we talked about that as well. Um, so always note, note of the day, take away if you're any business, but certainly wholesale distribution and manufacturing that we cater to here on our, our show each week is, you know, ask hard questions of your software vendor, not just about where your data is, but what are they doing with it? How are they protecting it?

[01:16:06] And then the protecting it component of it is just makes me think about a company that we bump into and some deals here and there. They put out a press release a year or so ago saying neither only company in our space that serves wholesale distribution that has sock two type two. And, uh, I just kind of like, really, what about sock two type one and sock one and the 20 other things you should be thinking about, right?

[01:16:32] That our company has, but, uh, it was just funny to, to think about somebody's view of that, but it's a, it's a question that people should be asking is not just, you know, what are you doing? We, we hear every day, right? With prospects and customers asking us questions about where are you hosting? Not know where you're hosting my data. What are you going to do with AI with my data? Are you going to use my data to train models? Really good question. But the question that should have come long before AI was how are you securing my data

[01:17:02] once you have it? And I don't think people ask enough of that question. Look, it's not sexy, but to me, that would be almost before I get into all the features and functions and everything like that with a vendor. Yeah. I would, I would vet that from the standpoint of the security infrastructure and the governance infrastructure that is under the table. Then you can say, okay, if it's acceptable, then look at the features and functions. Yeah. That's good.

[01:17:29] Everyone gets caught up in the features and functions and then forgets about potentially the, uh, underpinnings that are at risk. Yep. Yep. The, um, so the interesting component is before we move on from this, we have a couple of other articles there about in this session about, um, cybersecurity and so forth. Before we kind of move from that is what's interesting right now is you've got both, um,

[01:17:53] open AI who earlier this week announced their big cybersecurity tool and, uh, through chat GPT and Anthropic with Claude. They had their mythos model that they pulled the plug on of not releasing right away last month, because while it can do amazing things to protect you from cyber attacks, it could also be used for cyber attacks within the wrong hands. So there's more work to be done on that.

[01:18:21] So it's an interesting place, right? Right now, looking at things from a standpoint of saying, um, we've got people using AI to do cyber attacks. We need to get the anti-cyber attack AI to work better for the good guys than for the bad guys and the bad guys not to have access to enough of the things to offset what the good guys are trying to do. Okay. How's that for a boiling it down?

[01:18:50] That's, that's distilling it. Well, yes. Yeah. I mean, at the end of the day, right, you've got to make, and what, and I think this is a very big thing that I'm sure is very much on the mind of the, the, the anthropics and open AIs and perplexities and, and, uh, meta with their llama model and other people building models is how do we keep the bad guys at bay and keep doing the right thing where our technology is not used for bad.

[01:19:20] Well, and the challenge with mythos and some of the other ones, right. Is it can uncover holes and issues with your software and your technology, right? It could be used for defensive purposes or it could be used for offset offensive purposes. You just have to fix, you have to fix that hole before somebody else is using mythos to find your hole. Right. Right. That's what it comes down to. Good. Uh, let's just hit with the last few minutes we have. Let's kind of maybe roll.

[01:19:49] By the way, just as a side note, um, we're in our section about, um, um, the, uh, technology and, uh, and robotics and so forth and, and cybersecurity. And, uh, we're going to talk more. In fact, it's just funny. Side note. Uh, we've talked a lot about, you know, my, my plans for having a humanoid robot here in our house, doing so much work.

[01:20:14] I was talking with, uh, uh, our friend Pierre Barbeau from, um, Moblico yesterday, the technology company and mobile messaging company and partner of us as a lead sport. We do a regular catch-up call. And, uh, I mentioned on the show a while back about a month or so ago that Moblico was, or, um, uh, Pierre had was looking at, uh, he had actually placed an order for a humanoid robot. Uh, uh, Pierre lives in, uh, in South Florida.

[01:20:42] And, uh, he was, he had placed an order for one, had some paperwork left to do, I guess. And then was looking at another, another company's, um, humanoid robot. One of them he's in, hasn't, um, signed the agreement for. He said he had some digging to do actually found out and looking at some online forums that this particular humanoid robot actually, it does a lot of what it does, but it does

[01:21:08] it with a human monitoring it from where China, wherever I'm sure this one was coming from China, that there's actually a human behind pulling some of the strings and levers behind each one of the robots that are out there. So it's not fully autonomous and it's not doing its own thing. So on an individual robot level. Yeah. So, I mean, I, the robot be sending sight and sound and all that kind of stuff back to this human that's seen somewhere in a room in China.

[01:21:37] That's what it appears to be. So he was going to get back to me after he finished researching it all, but that's what it was looking like. I like that. I'd like to have somebody in China monitoring what I'm doing in my. Imagine that. Right. Um, you know, and, um, yeah. So, uh, but anyways, the article that we posted, I put in this week is that, uh, it's, um, Tesla patents, detailed optimist hand and knee designs.

[01:22:03] And the reason behind that is, you know, and there's an, an image that's there about all of the joints and they're there in this patent, uh, mimicking the real joints that are within our fingers and so forth. And I just, I, I just always go back to this. I just remember that, uh, listening and it was just, I just remember exactly where I was. I was driving in Houston to see our friends at Lone Star Electric and, um, uh, the listening to the all in podcast.

[01:22:30] And they were talking about the, the, uh, um, robots that Tesla's building and his comment for the optimist that they're building is he said, the biggest challenges that they, we weren't having, they're having other people are having is the elbow to the fingertips. Right. And if you think about it, most of the autonomous robots that we're seeing the humanoid robots, their, their fingers are, have less dexterity with the joints.

[01:22:59] And this one's covering that. So I think, you know, you think about a robot making your bed or cleaning your kitchen or making food for you, right? If it doesn't have the dexterity you have, it's going to be slow at a lot of things. You can wash a wine glass without it crushing the wine. Yeah. Perfect example. Heaven forbid we break a wine glass and, uh, we don't want that. So anyways, I thought that was just an interesting one to share. So Tom, with our last few minutes of the day, why don't you pick something in our marketing and sales category?

[01:23:30] You know, I think we should just kind of wrap up, maybe do a quick summary of what's left here and then we can wrap up because it's just, we're, uh, we're running out of time. Well, we got time. We got six minutes. I liked the article here about, uh, from Harvard business review and we're in our sales and marketing segment and talking about a redesigning your marketing organization for the agentic age. I thought that was, uh, pretty good. That's a nice quick conversation. Well, we don't have to cover every second of it, you know?

[01:24:00] Uh, but the, uh, they just, they went through a handful of piece. About the risk of marketing becoming a bottleneck while AI has accelerated so many other components of the business marketing departments are typically stuck with silos and, you know, um, heavy manual processes. And, uh, and there's a lot that goes on with this related to how a brand's being used and so forth. So I thought it was just a, it was a good article in talking about, you know, some of the paradoxes that are going on on the marketing side related to how AI is being used.

[01:24:29] Well, I'll give an example that ties back to kind of what we were just talking about a minute ago related to marketing. Probably when you think of marketing, what is one of the most common tools that a marketing team uses, right? Is marketing automation or email tools. I mean, you know, constant contact or MailChimp or active campaign HubSpot, whatever it might be, right? Or whatever the case may be. Right.

[01:24:55] And marketing automation and email marketing has been a staple of marketing for many, many years. But think about what these tools do, right? You have to go in, you have to define what your email is. You have to create an email. You have to figure out your audience, why you're sending it, all of that kind of stuff. That will be, it is being replaced by agents. Right. So, and we just, you know, we've had some conversations about this with our own technology

[01:25:25] is, you know, looking at what people are buying or what companies are buying or not buying, using that information to then work on a campaign and have that campaign selectively send, you know, email. Now you could have reviews of course, along the way. So I'm not suggesting it's entirely autonomous, but the process is very different than me saying, okay, I'm going to sit down in a marketing automation tool and create an email. And then I'm going to go send that to the email and go from, from there.

[01:25:53] So I think that's what this article is really pointing out is that, and marketing is just an example. I mean, you could take this and apply it to other areas of the business, but when you start thinking about how you're going about things and how you're doing things, it's going to be very different organizationally and technologically. And I think you will, if you've done properly, it'll, we always talk about revenue, you know, sales and marketing working tighter together and kind of a revenue organization.

[01:26:22] It certainly enables that revenue organization to come together much better, much better and much more efficiently. It's good. Good. But let's, as we, as we wind down on the day here, the last thing I'll mention is there's a good article that we have in the newsletter here from sales and marketing management.com. Why AI makes the strategic salesperson more indispensable than ever. We could spend about an hour on that.

[01:26:50] We won't, but they talked about, I'll just give you this hierarchy. They said, historically, we've had people looking at being order takers, right? A transactional fulfillment. You want 50, this or that. I'll, I'll get it over to you. Then the product expert, right? The guy that wants to be, I know more about, you know, this type of cutting tool than anybody else out there ever. And then we know that the next pace that we pushed people towards over the years was the idea of being a solution consultant, right?

[01:27:20] I can bring all the components of that together. But now what they're really saying and talking about is we have this opportunity for somebody to truly be a strategic advisor to their customers. And it just makes me think about a meeting that we were in earlier in the week about, you know, a customer health scoring that we can help somebody see with using LeadSmart Channel Cloud is the idea of somebody being in a position where they can, before walking in, can see one, you know, a couple of quick clicks on their mobile app and see exactly

[01:27:49] what's going on with that customer. What are they buying? What are they not buying? Where's the white space they should be at? Where's my margin at with this customer? But the other component of it is what are the things that I can do to help my customer understand our business relationship and the value that I bring and so forth. So this was a good article talking about, you know, moving into that using AI related tools to become in an advisory role where somebody needs you to be working with them and coming into their business, right? So it's good stuff there.

[01:28:19] Good. All right, my friend, let's wind this down for the day. We've come to the conclusion of our time. We've talked more than enough probably for our audience. I just got a note a moment ago from somebody that just said, hey, great show. Sorry, I couldn't stay for the whole thing. And a couple of requests to get the newsletter have come in already today. So it's a good show today. We thank everybody for being with us. Busy day ahead, busy weekend ahead for me. What about you? Anything exciting?

[01:28:50] Not too exciting, no. Just going to try and work off my five pounds that I gained from this week. You're just waiting for your next door neighbor to fire up his smoker tomorrow morning and wonder what's going to be on there. There'll be no. He's in New Zealand. What are you going to do? I don't know. I'll have to figure out something to eat. Do you need me to door dash some tacos? Yeah. Well, yeah, you own. So yeah. I own. Yeah. Did we say tacos or taco? Semantics. Semantics. No.

[01:29:20] I think that's fairly. I'll have one good filet mignon taco at Vito's Chop House. How about that? Perfect. Very good. You got it. All right. Well, thanks, Tom. Appreciate it again. I'm Kevin Brown. This is Tom Burton. We do this every week. We get together. We've got a bunch of great guests coming up again soon as well. In fact, I heard from Scott Costa this morning from NAED. He's going to join us in July. Hi. We've got e-commerce experts coming on.

[01:29:48] We've got Mark Gillum from Enable coming on with us. We've got a bunch of good guests coming over the next couple months to stick around. And then we've got to plan out this 200th episode anniversary show coming up, Tom. So anybody out there has ideas about what you think we should do for that particular show, we're going to get a series of guests together to come like we did our 100th show, but don't know exactly how this will play out yet. If you have ideas or suggestions about what we should do, maybe we do it live from Tom's

[01:30:16] yacht or something like that. We're going to have some fun with that one. But again, we thank you for being with us. We appreciate our sponsor, Lead Smart Technologies. It helps us get this done each week. One last question that we always ask as we close the show out, if you enjoy what you're hearing, whether you're listening on LinkedIn, YouTube Live, Facebook Live, or on a recorded podcast, please subscribe. Follow if you're on LinkedIn, follow the show as well as follow us at Lead Smart Technologies there on LinkedIn.

[01:30:46] If you're on YouTube Live or YouTube in general, please hit the subscribe button. But if you're on Apple in particular or Spotify, hit that subscribe button and leave a review. And that's the best favor you could do us to help us keep going because that gets this message out in front of others. So that's it. Looking forward to, again, seeing our friends from Infor next week at their big event. Pay attention to my LinkedIn profile. I'll have a link to that show that we're going to be doing there, the webcast and live show that we'll be doing next Wednesday from Nashville.

[01:31:15] So Tom, I wish you a good weekend. Everybody else, have a great weekend. Be kind, be safe, do good things.