What Is The "Silver Tsunami" and What Does It Mean For Wholesale Distribution?

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

[00:00:24] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most. Our producer didn't take me off mute. Yeah, well, your producer, I think he's done. I think we're going to bring a new one in next week. Okay. Right? Next week we're going back to the future. So welcome everybody to episode 202.

[00:00:50] But next week we'll be doing a 200 episode thing. So we're going to be going back. It's today is today is 200 B dot B. Right? 200 dot two. Yes. So it was an interesting discussion this week between our marketing team and us about, and the pre-production team about the numbering of our newsletter and our show, right?

[00:01:15] They get a little off because last week I was trying to take a day off and we didn't do a show, but we did do a newsletter that we were able to get out. So we got a lot, but to your point, right? And the topic for those that might not be clear on all of this is that today is episode 202 and coincides more with our newsletter, but we did do our 200th show the week before last. Correct? I think I've got it. That's right.

[00:01:44] But next week we're bringing kind of a exciting group together. I'll call it the almost the who's who, but the problem is, you know, I look at the, I look at the audience that's coming in. And if you're on LinkedIn following the show or following Tom and I, you'll, you'll see it all next week as the emails start to go out, but, or the posts start to go out. But we've just got just a great group of people.

[00:02:11] And I was thinking a lot about the fact that the, the group that we got in real quick, we got, you know, I'll call them legendary and infamous together compliment and not so much in one Mike marks. Uh, if you don't know Mike, you're, you've not been paying attention to distribution and thought leadership. Uh, we've got the, uh, incomparable Dirk Beveridge, uh, had an opportunity to be with Dirk last week in, uh, Puerto Rico.

[00:02:38] We did a closing keynote address for the Primera, uh, buying group in the turf and landscape and horticulture business, which was fantastic. Uh, great to share a stage with Dirk and, uh, what a professional and passionate person. So Dirk will be with us kind of covering the human side and how we work with our people and support our people in the distribution manufacturing business. We've got Dan Schubert. Dan's the chief revenue officer of the National Association of Wholesalers.

[00:03:05] We've got Alex Chausovsky, who's, I just have been calling him a globalist, but cause he doesn't call himself an economist, but I don't know, Tom, every time he's been on the show and I had dinner with him a few months in Cleveland and months ago in Cleveland. And everything in my mind points to being an economist with the numbers and the stats that he knows. We've got, uh, Steve Levy from, uh, in for, he's an executive there and, uh, been on the show a number of times and that's going to be a fantastic time to have Steve with us.

[00:03:33] And who am I missing? There's Tom and there's Kevin. And we've got, uh, questions. I was just looking at our questions here. Alex, Dan, um, Steve and you and me and Dirk and Mike, and we are good to go. And that's going to be a blast. So there's going to be what? Seven of us with John, our producer will be on live with us. You and I are going to do some kind of fun. You want to tell our friends about that?

[00:03:59] What are we going to do? Funny, fun. Oh, well, we're going to do something. We're going to do something funny. I was like, let's not, let's just, you know, if we do something funny, it's probably people are going to get a laugh at our mistakes or hiccups along the way. No, we're going to be together for the first time. We're going to be together and that's, we're going to be in the same place at the same time with one camera, supposedly shooting us at the same time. And, um, anyway, we're going to learn a lot about our technology. Let's just say.

[00:04:28] Getting all that to work. Yeah. I think it's going to come together. You know, once we got, uh, once we got other people involved and took a lot of that responsibility away from us, I have a much higher level of confidence and all that. So, but it's going to be fun. So 200th episode. So that's not out yet. You can't sign up yet, right? For the event. No, but we're going to push that out on, um, either over the weekend or Monday, but look for that. If you're listening in today, we'd love to have, you know, large audience on LinkedIn, uh, is where that,

[00:04:57] that invitation would be, but we have a large audience and growing audience on YouTube as well. And some on Facebook, uh, besides those people listening in, this might be the right one though, if you're a podcast listener and which is by far the greatest part of our audience and folks not listening. And would be to jump onto LinkedIn or YouTube and subscribe. So you get the alert because there's just some great thought leaders. And it's going to be with us in this event. We've got some really great topics we're going to discuss.

[00:05:27] Um, I guarantee you. I think it's an opportunity to come live and ask questions. So these guys, absolutely. Yeah, no, absolutely. And you've, you've got definitely a bigger brain trust than you normally have on our show. So. So it's a, it's a fantastic group. I'm grateful for that. I could rattle off 10 other people who have been on the show and participate with us regularly that I would have loved to have had.

[00:05:48] What I look back at though, was we had seven guests when we did the 100th show. We didn't have adult supervision for the two of us. We did have John there with us, but you know, sometimes John, John, John's, uh, you know, John's got a great sense of humor.

[00:06:04] It was a lot of fun and John, our producer and editor of the show with us since we started. Um, but, uh, we needed more than John. So we've got some back front front end, I guess I'll call it adult supervision joining us to keep us on track. So we're going to, we're going to have a lot of fun. You know, I just, you know, without belaboring this, we talked about a little bit before, but you know, I was looking at some stats that Dana had the other day and I think it's like barely 3% of podcasts ever make it to 200 episodes.

[00:06:34] And, uh, I, I'd like to say we're just getting started because now I, the idea of four more years of every Friday morning is a little bit of a challenge to me, but the reality of it is, um, there's so much more we can achieve. We've got some fun partnerships we're going to announce soon. Um, great guests. We've got a really good lineup of people for Q4 and even a broader group for it for next year.

[00:06:58] We're going to start doing more and more of our around the horn 2.0 shows, which are more traditional, uh, podcast style. So I think this is really exciting. I'm just grateful. I'm thankful for you. Cause this was your idea. You know, when it all came down, I came up with a newsletter idea, which is now, you know, close to 13,000 people getting it. Um, but it was your idea that said, Hey, LinkedIn's got this new LinkedIn live thing. So pretty fun.

[00:07:24] Yeah. A gift that just keeps giving. Yeah. Yeah, exactly. But it's done a lot. And, you know, before I, we fully dive in and get rolling on the, on the show, we've got to do our little introduction here for just a moment. But the other side of it is I was at, uh, an event, uh, last week, uh, with a buying group in Puerto Rico, met handful of people that are regular listeners to the show. First time I've ever been at their event, um, and involved in that market at all. Um, we have some little,

[00:07:53] well here are these little flyers that we have out that we always have at the trade shows and, um, had some of those out and had quite a few people that were going to become listeners. And I met there when we were in Puerto Rico, but then it was on to Chicago and was with our good friends at affiliated distributors for their, uh, bearing and power transmission division national meeting, which was always a good meeting.

[00:08:14] And just love that. Just such a great staff at 80 that puts these things together and very professional, but I got to just tell you the story. In fact, Tom, I should have sent you the picture, but I was sitting down with three gentlemen from, uh, an industrial supply and bearing, uh, and belting company.

[00:08:31] And the three of them there, and one of them is on his laptop and gentleman in front of me is a senior guy from the company and founder. And, um, we're all chatting about what we do at lead smart technologies and about how our enterprise growth platform can help their company. They were pretty excited, but I had a few of these cards on the table and, uh, that gentleman's son is probably in his thirties or so picked one of them up and he's looking at it.

[00:08:57] And it's his father. And it's his father that's in the middle. Dad's probably 10, 12 years older than you and I are. And he looks at that and he goes, I listened to that podcast. And the son points at my picture and points at me and he goes, Oh my word. He goes, I've been racking my brain. This whole discussion of how I know that voice.

[00:09:20] And it was the funniest thing in the world. And, uh, he pulls out his phone and on his phone, he goes in and he shows me the podcast that he has saved. And there's ours in the top spot. And then he scrolls over into his email on his phone and he shows me the folder where he keeps our newsletters that come out every week. I've never, I'd never heard of the company before. I've never met these gentlemen. So kind, so gracious.

[00:09:50] And, uh, similar, I had three or four similar type of discussions that people that listen to the show. So, so we're doing something here, you know, it's a good thing. We have a new director of marketing. So people know that there's a relationship between lead smart and around the horn. Yeah. Yeah. I've got certainly haven't figured it out what we've been doing. So anyway, we're not here to where we're already 15 minutes in. And yep. That's one of the things we've got to change next year. Next time is we've got to go fast, faster.

[00:10:20] Well, you know, we, I don't, I don't know. I don't know that we do, but, uh, I don't know that we agree on that, but I will tell you, we just spent time telling people about our 200th show. That's true. The 200 shows. Yeah. So, so my story wasn't of any value. Oh, you're sure. It was, it was amazing. Yeah. Okay. So we're, we're okay with the time we've spent. Why don't you introduce who we are, what we're doing and why we're here? Who we are around the horn. We're here to discuss the news of the week of which we have a lot.

[00:10:50] Um, and the newsletter that we will be going through. If you don't have the newsletter, you know where you can get it. You can email hello at lead smart tech.com and you'll get the newsletter. You can also go get it on LinkedIn. It's there as well. We have a website around the horn pod.com. You can get it there. So no shortage of places to get the newsletter. Probably hello is the easiest because it gets taken care of very, very quickly that way along the line there.

[00:11:17] Um, and yes, we are probably needing to do a better job of explaining that we are sponsored by lead smart, which is the company that Kevin and I run and our co-founders of. And, um, they're the ones who help pay for this every week. And we're going to be doing a lot more, um, promotion now that we have a great new director of marketing on the team here. Yeah. Pretty excited. You know, Tom, I just hats off to Dana.

[00:11:46] Thank you for coming to join our organization. I was telling some people at the event I was at this week that it's pretty amazing. In fact, I did it in a LinkedIn post as well. It's pretty amazing when you can, um, find somebody that's, um, just an amazing marketer, super organized, super structured, understands what to do. That has also spent a significant portion of their career in the market that your company serves.

[00:12:14] So hiring Dana that's just joined us, uh, that she's worked at places like HD supply and other large distributors has that inside big company look and take on marketing has worked with smaller companies. But what was amazing about it is we know Dana because years ago she worked with one of our customers and, uh, she went on to do some other things and now she's coming here. But Dana led the implementation of lead smart channel cloud at one of our customers. So what I just an amazing opportunity to get into marketing director.

[00:12:43] It's a great marketer knows the industry and knows our software to start off. So it's going to be an exciting time. She joined us despite all of that. And still, she's still here. Yeah, she's still here. So we're excited. She'll be here with us in the office next week. So, um, well, you want to tell people real quick and finish up what you were doing there and tell people what leads actually does. Well, we'll get into that. But, um, lead smart is we are an enterprise. I didn't mean to throw you off.

[00:13:11] Oh, no, I just, but we're an enterprise growth platform. You're like, well, what the hell does that mean? Um, basically it is a next generation platform, pull together a lot of data within your organization. And then how do you then utilize that data to enable your sales team, manage your sales, manage the sales process, grow your sales and marketing actions, collaborate better with your sales and marketing actions. All of those things come together.

[00:13:37] And all of those you'll be learning a lot more about because we're going to be talking a lot more about those things as we go forward. Beautifully done. As always. Yeah. Well, you're so articulate. Yes. What's up with the news? Yeah. Right. So which part of the news you want to talk about? We start, we start with the economy and how it's impacting wholesale distribution.

[00:14:00] The consumer prices rose 10th of a percent in July as expected, but not as much as some people were worried about. So now we're at that, uh, annual rate of 3.4%. You want to chat a little bit about all this and this. Well, so what does that say, right? So the 0.1%, I think the PPI was 0.2%. So both of them below or, or at expectations, but what does that mean?

[00:14:29] That's month over month, right? So that's saying, I assume we were looking at the July data. So compared to June to July, prices only increased 0.1%, which, what does that say? It means that the expense, the higher expense for fuel and all the stuff that was fueling the, um, the, the increase before leveled out. Right. So is it fair to say we're leveled out? Maybe. I mean, it'll, you know, you never know about this, right?

[00:14:57] We could end up with a revision or we could end up with different changes as we go forward, but let's just assume for a second that it has leveled out. So if we do see a reduction in energy prices and fuel prices and so forth, you would actually start to see a drop of that going forward. But even if it weren't right, let's just say, again, it stays the same and it levels out.

[00:15:20] Then, you know, this, we've already kind of absorbed, so to speak, the higher prices from energy, which hence the 3.4. But it certainly does not, and I think this is why the market has reacted the way that it has, it certainly does not warrant any sort of further discussion of rate increases. Not that those discussions were warranted before, in my humble opinion, but it's, uh, it's, um, just the same.

[00:15:48] Well, I think what you just described there, especially about interest rates, is the Fed listens to the show. Yeah, I assume, yeah. Yeah, yeah. So I assume they brought that up at their meeting and they're like, you know, after reviewing some of the intelligent comments that were made on Around the Horn a couple weeks ago, maybe we should just leave things the same. I would assume that's how the narrative went. So, yeah, something, something along that line.

[00:16:12] But, you know, what's interesting is both of those number, the consumer number and the producer's number, uh, multiple of those articles, one that we have here and others that I've read and listening early morning doing my, I've been back to, back to trying to do Tai Chi every morning now. So, when I was in Puerto Rico, uh, with Dirk, he was, um, last week, he does yoga every morning and we were talking about that. And for a while I had been doing Tai Chi and now I'm trying to, brought some stretching bands and got some Tai Chi going.

[00:16:40] So, but when I do that, I've got, you know, the smart people are listening to meditation music or something. I have CNBC on or Bloomberg on in the room, but, you know, there was discussion last week about all of this. Um, you know, there was a back and forth last week about some talking about maybe needing an interest rate increase. Others like, no, no, no, it's got to stay flat or lower. And then now what we're seeing from all of these articles here as well is they're almost using the term flat.

[00:17:08] They're not almost, they are using many people using the term flat. You know, that 0.1%, 0.2%, those are, you know, insignificant in the bigger picture. The reality is what's going on in the market.

[00:17:20] I was listening to this morning, Tom, uh, on the way into the office and, uh, it was interesting to hear about, um, um, there was some discussion about the, uh, flatness or, um, softness in the, uh, residential housing market. And, uh, and so the gentleman that there was, I was talking about that. And that's obviously a big indicator that's looked at is that housing market.

[00:17:47] And he brought up the point and I just really triggered for me. It was like, okay, so we've got a small group of people talking about an increase, right? Because, you know, we're not moving fast enough to 2%, but we're moving towards 2%. Um, and there's the majority of people are saying stay flat. No, no change. And if we, I brought Polymarket up here a minute ago for a look at that. Um, I can tell you what that is real quick or if you have it, but it's, uh, 1% of people think

[00:18:17] there'll be a, uh, 25% basis, uh, decrease 76, no change. Yep. So there you go. And, um, so only 20, 24% there of an increase in 76%. Which has dropped significantly by the way. Yep. What it was. Well, yeah. So there was, uh, but now if you look at this is you, you want to push the housing market ahead, the residential housing market ahead, make money easier to get. Yeah. Yeah.

[00:18:46] But the, the residential housing market or mortgage rates, right. Are tied to the 30 year note. So the 30 year note is been roughly around 4.6 between 4.6 and 4.7, which is high. And then the mortgage rates are tied to that. Um, now obviously the, the 30 year doesn't directly be impacted by, I mean, the 30 year runs on its own, right. Its own rate. Right.

[00:19:16] Other things. It's on metrics. Right. So whether they raise rates or don't raise rates, it's, it's, it's going to run on and whatever it runs on, but it has dropped a wee bit this week, um, as a result of some of these things, but it's still pretty high. Right. Right. Which means that the bond market is still suggesting that we're going to have higher costs, at least over the longterm. Right. Which is, um, you know, you can get a 30 year T bill now, I think paying almost 5%. Wow.

[00:19:46] Right. That's, I mean, that's the way it was during the COVID or during the COVID or when we had some of the other inflation there, but, um, still pretty high. Yeah. Well, anyway, yeah, we'll see. I mean, if it can stay flat, right. And the job market stays, you know, they don't have big revisions and all that kind of stuff. And, um, you know, then we will, I don't think a cut is out of the question between now and

[00:20:14] the end of the year, if it stays flat, I don't think it's a high probability. I just don't think it's out of the question. Yeah. Um, I'm sorry, say that again. You don't think what's out of the question? I don't think a cut could be out of the question. If things stay flat and the job numbers stay about with the way they were last week and there's not for last month and there's not major revisions and all this kind of stuff. And we start to even see some drops in fuel costs and so forth.

[00:20:43] You could in fact argue that a cut would be, could happen this year. Like I said, I wouldn't bet on it, but it's not out of the question. Yeah. Interesting time. And I think what's going to be really unique for us to start to really be following here as well is the, um, the pressure, the political pressure that comes on Warsh during, as we're coming up into the midterms, right? These, these in November, there's, you know, these series of elections that are a really,

[00:21:12] really big deal, uh, about where the control of the house and the Senate is. You know, I was listening to somebody this morning on CNBC talking about one of the traders there talking about how they're trying to bring their portfolio. Basically he used the term neutral. Um, they'd been overweighted in, in, uh, equities and, um, they were trying to get back to neutral because of the instability that they're thinking about for the markets tied to the election. Um, so I'm not a big trader.

[00:21:41] I let most of my trading be done electronically, probably 85% of it. Um, but you trade consistently. I'm constantly on calls with you where I hear in the background, the market is closing. Yeah. I haven't figured out how to turn it off. But my friend that tells me that if I get an ESPN alert on my phone, it's a distraction from my work. No, I agree. It's a distraction. I just haven't figured out how to turn it off.

[00:22:09] Um, anyways, the, um, is that from the Apple stock app or? Yeah, it's a, it's a, some, some app that's there that's running and sometimes it does it sometimes. It was funny. Anyways, are you looking or contemplating any changes in your trading activity? I mean, you, you oftentimes trade every, you know, many days a week, if not every day, right? No, no, not, not, no, not day trading. No, for sure. No, no.

[00:22:35] And I'm not suggesting day trading, but you, you are very active in your, in your trading. I'm not buying hold. Let's put it that way. Um, why can't you just say you trade multiple times a week? No, I don't trade multiple times a week. I might trade a couple, three times a month, a few times. I don't know. I think we talk about it multiple times a week. Well, all right. Anyways, you're more active in trading. I'm more active in it. And I don't know that. I don't know that I haven't really thought about it to be quite honest with you.

[00:23:05] I haven't thought about the elections and the impact there. What I've been seeing more recently is there's a lot of teeter totter changes between the quote unquote AI trade, you know, the, and, and SpaceX being included in that. Yeah. And a lot of the chips and everything like that. And then the traditional SaaS companies, right. And there's been a bit of a teeter totter money moving back and forth between them and so forth. Um, but I haven't really thought a lot about that.

[00:23:35] The election aspect of things. Yeah. It's interesting. I mean, maybe it's, it's not going to impact, you know, individual traders to the same way to pay us. It depends on where you're weighted, but if I had the type of money I wish I had, I would probably park some of it right now through the beginning of the year. I mean, there's nothing wrong with taking it and putting a good chunk in a 5%, you know, T-bell. I was going to say, when you're talking about 4.3, 4.5, 4.7, right.

[00:24:05] Very, very safe money. Um, that's pretty interesting. It's, uh, I would be, it would be, yeah, well, I'm, I'm a great market timer. If you want me to be, if you want to make money, just do the opposite of what I do. I'll, I'll, maybe I can post my trades on the show and people can just do the opposite. I would just think time. If maybe you, you want to tell people about your Microsoft trade, right? I mean, I'm bullish too on the white socks. Well, which is probably not a good thing for the game tonight.

[00:24:33] So, um, yeah, I'm, I want to, I'm very bullish on the white socks. It's great to see them. He got one of those Pope. Will says he got one of those Pope hats. I saw that on the news when I was in Chicago this week. Okay. They gave away the white socks games. They gave away Pope hats. So Pope P O P E hats. Let me just be clear. Hey, why don't we talk more about the news? Where do you want to jump to next? Do you want to any of these other articles? No, I think let's get into the supply chain. I think there's a lot of things going on here. There is.

[00:25:03] Yep. So where do you want to start there? Do you want to start with refunds or some other place? Why don't we go talk briefly about refunds? We've talked so much over the months about tariffs, but I think we should kind of talk a little bit about what's kind of going on with this. We've got talking about a hundred billion in tariffs, um, um, being refunded, uh, a lot, kind of a lot going on there with that. That that's a a hundred billion is a, as I guess a good start for what people are looking for.

[00:25:30] Well, I think from what I understand is that they've kind of refunded the low hanging fruit, right? All this stuff that made sense that they had the right evidence for all that kind of stuff. I mean, that's a lot. I remember when we were, in fact, I'm realizing I probably should deserve more than just a couple of tacos for this. Remember I said that there would be refunds before September. Now we've had a hundred billion in refunds in August, right? You can, you, you can have a shrimp taco.

[00:26:00] Yeah. Well, maybe some rice and beans or something with it. Um, you second back to the chips for you. That's good. I'm good with that. So that's a lot of money that's gone out. In fact, they said it's not in this article. I don't believe, but this will actually have impact on corporate earnings for a lot of companies, like meaningful impact on corporate earnings. Cause they're getting this back, which also interestingly enough is. You're flooding a hundred billion dollars back into the economy now. Right. Right. Right.

[00:26:31] Um, which, which could have a negative, negative impact. I think it would take more than a hundred billion, but it is unique in that setting. So, um, the interesting thing is if you, we jumped to that next article, right? So there's the discussion about the department of justice, appealing the court of international trade order requiring us customs and border patrol to issue universal tariff refunds to all importers, uh, including non-parties. So now you've got this push pull about who really gets it.

[00:27:00] And you've got this whole thing right now about this article starts to talk about that. Even is what we've been saying. I've been pushing on through all of this is, you know, for let's even forget about, you know, me, the consumer wanting some money back from Costco, but our audience, our customers are lead smart. And this article talks about that pressure now that's on them because they've got contractors that are saying, Hey, you know what?

[00:27:29] You had a line item for tariff increase. I want those dollars back. And if you're a distributor that did that, and then we've, what we've talked about over and over again, because this became clear literally a year ago, April, just as the tariffs were coming out, we had a discussion with. Uh, I think it was Sean Dubrovac, the economist that was with us. And I can't remember who else we talked about this with on the show.

[00:27:53] Smarter people than us that was talking about how important it is about how you are showing how you're charging those. Sure. Because if you show them as a specific charge, right now we see things all the time, right? We've had to do all kinds because of the shows and events we're doing and some swag that we've sent out to our guests and stuff like that. We've been using FedEx far more than we normally do.

[00:28:19] And there's a line item right on there that says fuel surcharge because of fuel prices, right? So you can't go ask somebody back for a fuel surcharge cost because once that's been bought and fueled, been bought and paid, it's gone. It's been used. But now when you, if you had a line item in there that ties to specifically to tariffs and you're a distributor and you've got your contractor coming back to them, I doubt too many homeowners are going to come back and ask the contractor.

[00:28:48] But now you have, as a distributor, have to go back to that manufacturer and try and push on them. And whether, and I know you've said all of this will never happen and I don't disagree necessarily, but it doesn't change the negative impact that all of this has, right? And that sentiment, I mean, literally I was just having this discussion yesterday with the president of one of our customers.

[00:29:13] We were talking about customer experience and he was raving about, you know, working with, with our team and loving that. And he runs a big company and we were talking about the experience that people have. Well, I just bought the most expensive car I've ever purchased. And that's not that much money in the grand scope of things, but it's big, most expensive car I've ever had. And my post-sale experience could not be worse. My pre-sale experience was just okay.

[00:29:42] But now you have a major, major car brand that, man, I want to go to the, go to the airwaves and slam them. But you're doing it. I didn't say the name. Well, I think you said the name before on a previous show. So I did. And that's right. I think it's right behind me and through my window there too. Anyways, Rivian, the post-sale experience has just been horrendous and, and actually cost me money.

[00:30:09] And so now you think about this, I'm pulling this back around to this article is that it doesn't matter whether it's reasonable or not, or whether this could play out or not. Like you've talked about, you know, the contractor is never going to get that money because it's going to be hard for, for the, you know, the distributor to get it from the manufacturers in the past. But two sides, assuming we never get it right. You have tension now with your customer. Nobody wants tension with their customer.

[00:30:36] And then you have tension between the distributor and the manufacturer because the distributor has to go try and figure it out. Then what do you do? I don't care if you're, it's probably the smaller you are, the bigger impact it has because you have less people and less resources. Let's just say, you know, 3M carrier, you know, Kenna metal, whoever it is, that's the manufacturer you're working with. They decide, okay, Hey, you know what? Tom Burton distribution.

[00:31:05] Here's your money back that we charged you. Now you have to put all that time and resource into, okay, now we have this money. It's only ethical that we pass that on. Now you've got all that resource. This whole thing is causing all kinds of tension and so forth in the industry, which is why I said, leave the damn things alone. And let's just keep, keep them in place. So we have less conflict in our business and less concern and more stability and understanding. Yeah. Well, they didn't leave them alone. That's for sure.

[00:31:36] But I, I do think this next article is interesting. I don't know if you were touching on this. Government lawyers said that the court of international trade overstepped their ability by ordering the customs border to issue refunds to all companies that paid tariffs. So the prior, they're going to reverse again and then they're going to go back and want the money back. Yeah. So that's, that's exactly the point.

[00:32:01] And if we just, and then this goes back and we've had a number of discussions about this time and I've not spent the time to go really learn and understand the Supreme Court. But had the Supreme Court just left things in place, it would have made most people, if not all people's business easier because this is going to continue.

[00:32:24] And it just, it ties back to, and I think this is the, probably the wisdom with, I guess, Japan, that certainly the European Union as well. That is said, let's just do a trade deal. Right. Right. Right. Because what's, what's coming out of this and it'll be interesting. I knew the history books will tell us, and you know, you and I, you know, when we're 70 and sitting on the beach somewhere talking about this,

[00:32:50] the looking back, I think the chaos that all of this has caused has been pretty dramatic and it had just not been fought. And we could have just found a balance with it. And I'm not saying one party is right or wrong in this, but you know, you, there's such a, such a polarizing effect between the right and the left side of the aisle in this country now.

[00:33:14] And then you've got this, the goal though, of the administration, if we, and we always, you know, talk about this, right. If we go back to the goals of the administration, taking away immigration and fentanyl and stuff that they've been working on. But the goal has been reshoring manufacturing. Well, let's start with fair trade, reshoring manufacturing where applicable, lowering interest rates to stimulate manufacturing and building and production.

[00:33:43] I'm not convinced that they won't get there with this. I think we may just end up seeing the interest rates coming down and some level of balanced trade before you see this administration gone. It just, how they've gone about it was a little bit dramatic, but balanced trade, who could argue balanced trade? And how do you get to balanced trade? It's, it's, we've never really had it. Well, I don't know that we're there, but yes, I think there's no, we don't have it. No, no, no. I'm sorry. I was not suggesting for a second we're there.

[00:34:13] I think we are. And I guess my point would be, we're moving towards that. It feels like to me, but it's just been so painful through this process. You know, I mean, we, I remember we had Mike Mortensen from ARG industrial and ARG in Alaska and on.

[00:34:32] And, you know, they were talking about from, you know, talking maybe quarterly, if I remember what Mike said with their key suppliers to having deep conversations about delivery times and costs and things like that every single week. Like, you know, so it's just been, it's been a drain, I guess, on folks. Sure. So, but I think there's a lot of responsible parties. It's not just the Supreme Court. Oh, no. The Supreme Court did their job, right?

[00:35:00] If, if from the, from the legal, you know, legal book, from the legal side of things, right? You know, you could argue, was this the right strategy of how to implement tariffs from the beginning? Agreed. Totally agree. Right. There's a lot of, look, you can push tariffs aside, whether you like tariffs or don't like tariffs and the benefit or, or, or issue with tariffs, but the mechanics of how they've been done and how they've been out has created a lot of this. Yeah. Right.

[00:35:30] And, you know, supposedly the current tariff structure has more legal durability and probably will have less commotion. Again, whether you like them or not, you'll have less disruption or less disruption. Totally agree. But yes, as far as the current ones, look, it's done. It's going, there's going to be, continue to be fighting a hundred billion dollars, a lot of money to be fighting for, for people wanting their chunk of that.

[00:35:52] I think the only real, and there's no perfect answer to it, you know, and how you handle it as a company, other than be trained, in my opinion, be transparent, right? Saying nothing, doing nothing, making no comments to your customers, not having a position, so to speak. Those are good points. I think that's the worst thing, right? Yeah. All you need to do, I think, is be transparent and say, at this point, we have not received anything.

[00:36:20] If we do, you know, we'll cross that bridge, right? People would just want transparency. And to your point, yes, we don't want friction with our customers. The way to remove that friction, or to reduce that friction, is transparency. Right. And communication, right? No communication, don't say anything, hope it just blows over. I'm not sure is the best strategy, at least to reduce friction on that. Nope, exactly right. Totally agree. Totally agree. Good.

[00:36:49] What's next? Well, I'm going to ask you a question. Okay. Okay. Where are we? August 14th, 2026. August 14th, 2027. What's your prediction for where we sit with tariffs? I'm not asking you to bet. I'm not asking for a bet. No, but I mean, as far as what? As far as are we still collecting?

[00:37:18] Are we collecting them? Is this Section 301 in effect? Do we have just trade agreements in most places and people that don't want to play ball? Is there an agreement with China versus vacillating back and forth with China? Any predictions you want to make? And again, I'm not... No, I mean, I think... I owe you tacos and you owe me a steak still, so... Yeah. But look, I think, yes, the tariffs will still be in force. Yes, it'll be under Section 301.

[00:37:48] I think we will see some additional trade deals with some larger countries, but not a whole ton of them. I don't think we will have anything with China that is in writing that is actually... There might be rhetoric and, you know, memos of understanding possibly or things like that. But anything that actually has meat, I don't think so. No, not in the year. Maybe not at all. Just...

[00:38:16] No, to me, it's similar to this whole Iran situation, right? Is, you know, one step forward, two steps back, one step sideways, another step forward, kind of a two-step all the way along. So, yeah, I think we'll definitely have tariffs. I think that'll be under 301. We'll probably be having a lot of the same conversation we're having now. People fighting for money still and so forth. So, I don't see a lot of... That was my follow-up question, Tom.

[00:38:43] Is thoughts on where we'll be with tariff refunds? Oh, I mean, obviously, the refunds will be there. You think a year later we'll still be arguing over it? Yeah, to some degree, yeah. It may not be in the news. But I think, you know, again, it's too much money, right? And lawyers follow the money. And there's a lot of money to be followed here. So, yeah, those still... You know, things like this can take years to get settled out where there's legal stuff.

[00:39:11] So, I don't know if it'll be in the news, but it will still be fighting about it. Yeah. We don't always do this, but right now I'm like 97% fully in alignment with what you said. I think there's going to be more trade deals in place that are meaningful trade deals. That are beneficial to both parties. And those are the things that will drive us towards much more balanced trading.

[00:39:40] And probably, hopefully stabilize the supply chain in some issue. I think from that standpoint. I think you're right. The 301 seems to be the one that can stick pretty well. Well, I would suggest that we should be in a place within a year that the refunds from the Supreme Court issue should become moot by then. I would really, really hope to see that.

[00:40:09] Because, yes, to your point, it's a lot of money. But this should all be able to be taken care of. But if we can get to a place where we have much more balanced trade, that's just the win-win-win across the board. Yeah. So, what I would love to see that is interest rates have dropped by a point. This stuff has taken care of. Trade deals are in place and where we couldn't get trade deals.

[00:40:32] But we have a lot of our major trading partners outside of China because I don't know that we'll ever see fair trade with China. You know, that brings up a whole other geopolitical discussion that we'll wait to or maybe we'll talk with Alex about next week. But I'm in alignment with you on that.

[00:40:50] The only disagreement I would have is I think that the Supreme Court ruling will be, you know, at that point, what, 20 months into that ruling by then, 18 months or whatever. They should hopefully have that taken care of. I think all the refunds and all that will have been taken care of. But the money, the infighting will still be going on. You mean the different layers of where those tariffs were? Yeah, yeah. I think most of the refunds, frankly, have been done now.

[00:41:20] Right. There may be a bit more, but the majority of them have been the low hanging fruits been handled. So, it's going to be the infighting between the different companies and, you know, class action suits against Costco and all these, you know, different things that the lawyers are going to dream up to extract some of that money. It's just the way it'll work. But no, I agree with you. So, the actual part of it, as far as the government making the refunds, that's mostly done, I think, now.

[00:41:49] So, if we're at $100 billion, was it $280? $230, I believe. $230. Okay. So, less than half, right? That'll be interesting if that's the only number that goes up. I mean, I can see another $50 going out through the process. Just a brand of $50 billion. Right. Another $50 or $80 million that just will never go anywhere for one reason or another. All right. Good.

[00:42:18] Let's roll into our manufacturing and distribution and M&A segment. Our friends at Hardy, we saw some emails back and forth. We're going to be participating in their main event in San Diego in December with the good folks. Hardy, if you're in a different market, is the heating and refrigeration, air conditioning, refrigeration distributors, International. I think I got that right. And they're the trade group. We're in the HVAC market and refrigeration market. Really good people to work with.

[00:42:48] Talbot and his team over there. Love working with them, speaking at their event as well in December in San Diego. The beauty is, I'm so excited, Tom. The next four events that we have this fall, I think four out of six events we're doing are in San Diego. It's great. They should do that every year. Somebody had come. I was talking to somebody about this the other day and they said something about, yeah, but you're going to lose the air miles.

[00:43:17] Like, oh my God. This point in my life is the last thing I need is worrying about more air miles. But, yeah, it's fantastic. The AV events are at the brand new Gaylord Hotel in Chula Vista. And then Hardy will be at Marriott Marquis. But, anyways, the reason I bring this up about is they just published a study. Our friend Mark Broham at Distribution Strategy Group wrote a great article about that that we published here.

[00:43:43] About the economic output about that marketplace for HVAC. And $32.9 billion contributed. And it says contributed $17.8 billion in economic value and $8.7 billion in employee compensation. A ton of money that moves through that marketplace. And we have a number of the major distribution companies. You know, you can actually kind of look East Coast, Central, East, Midwest, and West.

[00:44:12] We have some of the major distribution players in that marketplace as leads to our channel cloud customers and starting to migrate in and using our enterprise growth platform tools. So, you know, part of the reason to talk about this, it's just funny. I talk to people this in my travels all the time, is that, you know, if you meet somebody that's maybe a real estate broker or, you know, own a car dealership or, you know, whatever is. And maybe that one's a bad example.

[00:44:40] But people don't recognize the value of distribution, right? I mean, one-third, according to N.E.W., one-third of the U.S. GDP goes through wholesale distribution, right? So it's great to see this. And I tend to, I probably had this conversation in the last three or four years, ten times with people that, you know, we've been out with socially asking what I do.

[00:45:02] And the simplest example is I tell them, I said, the plate in front of you, the fork in front of you, the, you know, the lime that's in your gin and tonic all came to this building through a wholesale distributor. And people's heads just kind of go, oh, wow. You know, and then you start talking about all the different categories, right, of people in that business. So it's just cool to see what the contribution that you see within this marketplace.

[00:45:32] And this is just going to, it's the beauty of, you know, that this is just going to continue to see ongoing growth, just like industrial distributors and electrical distributors and plumbing distributors and so forth, as we see the boom in data centers, right? You know, all of that takes a lot. So let's jump to that next article that, Tom, you want to take us away on this. Mike Hockett, been on the show this many times, got to get Mike scheduled again. Great, great friend of the show.

[00:45:58] He's had me on his show as well at MDM. The KPIs raising the bar for mid-market distributors. You want to, should we chat about that for a few minutes? Yeah, I thought it was interesting, especially since we're in the growth business, right? Yes. Is they were, one of the people they talked to was QXO, right? Which we know QXO is definitely in the growth business as well. They better.

[00:46:24] And the way that they're managing from a KPI perspective, how they, you know, how they're, are they scaling and growing at the right rate? You would think, you know, the traditional, hey, revenue or gross profit or things along those lines. But they actually have six KPIs, which I found pretty interesting. Mm-hmm. You can walk through here. First one was inventory turns, which I thought about it.

[00:46:50] You know, we have a couple customers that we're starting to see the measurement of in-stock items and how fast the inventory is turning with in-stock items. Yeah. There's some custom stuff where they have to get it, you know, just in time or whatever. That's becoming a bigger and bigger deal. And I hadn't really thought about it, but it makes sense, right? Is you don't want your inventory just sitting around there. So that was a key KPI. Second was EBITDA per site.

[00:47:19] I assume the per site must mean per branch or per range. Per range, yeah. Yeah. So really looking at the net profit, EBITDA generally is your net profit per site. So is that site being profitable when you take into account not just the gross profit of the items going out the door, but the cost of running the location and so forth? I think that would be quite eye-opening, actually, in a lot of cases.

[00:47:48] Then there was, sorry, order to cash velocity. So how fast are they, are orders turning into cash? And we're doing a lot with LeadSmart on helping companies track their AR and their credit limits and how fast that that money or the orders are actually. We've seen some, we should run some interesting, there's probably some interesting analytics that we could run.

[00:48:15] Again, I'm seeing sort of just anecdotally from looking at data, times to pay definitely increasing. So ARs, you know, getting larger, timeframes for payment getting larger or longer, rather. Well, they're looking at how do we increase that velocity, right? How do we increase that order to cash? On-time delivery is another one. Yeah, that was a big one. Yeah. Digital penetration. I don't know exactly what that means.

[00:48:45] I mean, that can mean a lot of things. But I assume that there means that there's some e-commerce taking place or some digital commerce taking place. And then finally, cost to serve, which is what is the cost to serve that customer? Which we're also seeing more of that in terms of, you know, what kind of money are we spending to service that customer?

[00:49:08] And, you know, even just in terms of how much investment we're making with our people and so forth, and are we getting the return that we need to? So these are things that indirectly or directly can really make a difference in your, predominantly in your gross profit and your profits or your net profit and your overall growth. And I thought they were some things that we've been seeing indirectly that I want to pay more attention to. Yep.

[00:49:36] Well, I think those are things, as you described it, right, that are really valuable. And we have such a varying group of customers. And it's interesting. This makes me think, you know, I was talking to somebody recently, and you could comment on this better than I could because your team does all of the implementations with our customers. But I continue to talk to our leadership and our customers on a consistent basis.

[00:50:03] But I don't think we have one customer out there that has implemented LeadSmart Channel Cloud and any of our other tools who hasn't refined their processes and their systems in their business. I just remember that one of our very early customers, a large manufacturer, we got on the phone with them as we were getting ready to start implementation.

[00:50:27] And they have a VP for their Latin American business and a VP for their U.S. and Canadian business. And they were very close friends. One of the gentlemen who has since retired are very close friends who worked very closely together for many years, thought they were completely in tune with the sales processes, how they managed their leads, how they did different things within their business.

[00:50:48] And when we started the implementation, I just will never forget that the gentleman who's here in California, we got through most of the meeting and he's like, guys, we got to hit pause here for a minute because I just realized through this implementation process that we're doing things differently that has just evolved within our organization. They came back with a whole level of refinement that we then worked with them on and so forth. But I don't think there's ever a time where people go through an implementation.

[00:51:16] And I say this because I'm proud of the fact that you and the team that you're working with on our implementations is helping our customers with best practices that we've learned of what works and how people are tracking and managing. What are they watching? What are the KPIs that they're using? And I don't think we've ever had a customer that doesn't leave with a better understanding.

[00:51:38] Let me rephrase that, not leave, but finish an implementation and get into maybe halfway through their first year with us that doesn't have a more refined business with systems and processes that they did before. Agreed. And we're going to another level, right? Because with AI, we're finding that we're having to build skills, quote unquote skills, which are more than just a process. How are things actually done?

[00:52:07] How would your best and brightest salesperson handle that? Or what is the best practice overall industry-wise? How would the best industry salesperson handle that situation? And not just at a process level, but at a situation level, right?

[00:52:26] So if I walk into an account and I have to re-engage that account because they haven't bought for six months, for example, that may require a different skill where I'm walking into a company that is buying regularly, but I see a white space opportunity that I want to take advantage of. So the whole skill thing is requiring organizations to even take that to another level. And we're definitely seeing that in the results.

[00:52:53] When you start applying, you kind of have layers, right? You basically can get some basic process in place. But when you layer the skills on top of that and use that with some of the AI capabilities that we've been implementing, it kind of goes to a whole other level. Yeah, for sure. For sure. Good. So let's hit one more article in this section. Then there's a few articles in our AI section I want to talk about.

[00:53:19] But the article there, the second to the last one in our supply chain segment, by the way, for those of you that are listening on our recorded podcast, because we're live this morning on YouTube Live, LinkedIn Live, and Facebook Live. But if you're listening in on the recorded podcast on Apple, Spotify, wherever that might be, first, our always request is hit the like button and the subscribe button so we know you're coming back soon. But secondly, with that is you're not seeing the newsletter. And we started our show today. Tom mentioned the newsletter we publish again.

[00:53:48] It's called Around the Horn and Wholesale Distribution of Manufacturing. You can reach out to us anytime if you would like that at hello at reetsmarttech.com. And or you can go to the podcast website, which is www.aroundthehornpod.com, or easily find us on LinkedIn, and we will get that out to you. But Tom's last article we'll discuss in our manufacturing distribution segment is that SRS expands HVAC platform with a low miller deal.

[00:54:17] So that's easy to just say that more of that out real quick. But there's so much behind it. So we were just reviewing those KPIs that Mike Cockett at MDM had done a nice article about the QXO. So QXO, right, they've got multiple different supply chain businesses and the trucking business and other sides of supply chain. But last year they went through a very, started out very hostile.

[00:54:43] I don't know how you would say it all ended, but taking over and buying a beacon roofing supply. So now you've got beacon roofing underneath that. They're moving. Since then they bought Kodiak Building Group, which was a PE group that owned a bunch of building material companies and kind of expanded out a little bit, a little bit outside of things, but still mostly in that roofing range and construction range and so forth.

[00:55:09] But now you've got another big face that is doing some similar things with SRS distribution. So last year, SR, around the same time, I think it was, that this beacon roofing and QXO deal was being done, is you saw an M&A deal happen where HD or Home Depot, excuse me, bought SRS distribution, one of the largest roofing distributors in the U.S.

[00:55:32] Then, about four months or so, there's this big announcement about them buying an HVAC distributor, a large AD member in the Georgia area, but in multiple states, large company. SRS buys Mingeldorf's, who's in the HVAC business. That's not roofing business. That's HVAC business.

[00:55:59] So now you see this, and then boom, this week, Lowe Miller in Colorado, who I believe is a big, I think a big carrier dealer, gets acquired now by SRS as well. And the reason I bring this up to talk about it a little bit further is that they now are likely looking at quite a few more of this. And I was talking yesterday with one of our customers who was in this same space, and he made the comment, Tom, that was interesting.

[00:56:29] And he said, man, it's just, you know, not too long before there's not going to be any independence left in this space. And I remember I was literally at the airport talking to him yesterday and we were chatting, and I heard his comment about that. And I said, you know, I've got to push back with you a little bit on this because I think there's going to be plenty more.

[00:56:49] And the reason I said that is because if you look at things historically, when big, big company buys small company, big company culture is not a fit for some of the people that help small company get to the place that they needed to get to to be acquired. And it's so common that you see that, you know, there's a few VPs, a few, you know, really good regional managers and so forth that were in that business.

[00:57:13] That next thing you know is three years later, they put their, you know, put a group of people together and a little bit of cash together and they've got a single location open. And next thing they know, they're going through that same build process that the company that they work for that was sold. And so my guess is we're going to continue to see consolidation.

[00:57:31] What would be interesting, and then maybe we can think about tracking this a little bit in our discussions on the show moving forward, is what comes out of those big acquisitions in small startups that now go to build back into these markets as independent.

[00:57:44] So I don't see a point in time where we have so much consolidation that there's hardly any independence left because I think the likelihood is, and I'm sure somebody has the research on this, has written book, is the likelihood is there's enough independents that are born out of those large acquisitions that we see the growth again. I would agree. And I think there's just demand for the independents, right?

[00:58:08] There's a place for them that the larger consolidated companies are not going to either fill that need well or efficiently. So there'll always be a need for the independent. And yes, they can spawn, kind of spawn out of the- Spawn is a great word. Right, out of those things that are there. That from your young days when you used to go fishing with your dad a lot? Beer, what are you doing? No, it's second Diet Coke of the day. Second of the day, man.

[00:58:37] No, it's been a hard couple weeks. I was gone. I was gone for 11 nights. I'm old. You were on the beach drinking gin and tonics. I mean, you were relaxing. Was there a day that I was gone that you didn't communicate with me? But that didn't have anything to do with the fact that you were on the beach drinking gin and tonics. Yes. There was a couple of days where my laptop was at a lounge chair.

[00:59:02] I do have a great picture I should have shared with a spreadsheet open on my laptop, on my lap, in trunks, with a glass of champagne next to me. Yeah. See, I didn't know. You know, that was your idea to open the laptop, not mine. So. Maybe it's my fear of you. Yeah, maybe. All right. I wake up at night not wanting to let you down. Okay. Well, that's good to know. Thank you. And my wife was saying, Tom who? Tom who?

[00:59:29] So just to tell your story, I was in Puerto Rico at an event with a booth exhibiting, working to grow our business. And then on Wednesday night of last week, my wife and I flew to the Dominican Republic. And I was planning to take Thursday and Friday off. But she was saying last week that I worked every morning from about nine to one because she was trying to pull me away on the two days I was going to take off.

[00:59:52] At which point we were on the phone last night with my sister, at which point my wife also reminded me that I did the same thing Saturday. So anyways, it's just because I live in fear of letting you down. So it's a good way to live, right? I guess so. I guess so. I'm just going to assume you're just responsible, responsible executive. That's what I'm going to assume. I think that's probably more of what's going on.

[01:00:18] You want to hit Will's comment there at 9.58? It's related to the newsletter and recorded podcast. Yeah. He said that if you're only listening, you're going to miss the show intro chair dancing. So I think you're giving them a motivation, Will, to just do the podcast and do the audio. Yeah. We'll see. All right. There you go. Yep. Yep. My day is complete.

[01:00:47] I don't know that I've ever been associated with chair dancing. Yeah. I don't know if there's a connotation to that. I'm not crazy. You want to jump into our AI updates and tools and news? Sure. Let's do that. The time we have left today. You want to talk about what Gartner is seeing out there? Well, I think there's a little bit of a theme, right, that we've seen here. I mean, we have some stuff about governments here. You know, it's interesting. It's almost like you're complimenting the curator of our newsletter.

[01:01:16] I think I heard that there. Oh, yeah. I mean, the curator of the newsletter, I heard he works on vacation. He does. And he does all the time. And so, yeah, it's amazing. Is that a compliment? Absolutely. A little bit? Yeah. Okay. Thank you. An acknowledgement, not a compliment. An acknowledgement. Well, maybe. I'm taking it. I'm writing it down as a compliment. I don't care what you want to call it. All right.

[01:01:45] So, I guess the theme here is a little bit, right? And I'm trying to, there's a lot of rhetoric in the media right now about, oh, you know, failures with AI, problems with AI, situations with AI. Oh, people hate data centers. They don't want data centers. I think the article here, are people excited about the future of generative AI?

[01:02:15] Saying only 39% of consumers globally say they're excited about the future of generative AI. AI. It's, I would love to unpack that, and I don't have enough data yet to unpack that, but I'd really like to, is the sentiment that it, and I believe that the sentiment is correct, that we're getting the thing here.

[01:02:37] I do believe that there is, unfortunately, a lot of negative sentiment around AI in general, and some of it even in corporations. But I think a lot of it is being created by the media, and some of the, you know, hype things that we hear from even some of the big AI companies that are around, the dooms people that are there.

[01:03:01] And there's just not enough conversation about what is actually working, right? I think you hear a lot about all these big, huge mega projects that are, you know, of course, big mega projects are going to have challenges. They always do. It doesn't matter if it's AI or not AI, right? You can go back and look at any sort of mega projects and business and history, and a lot of them have challenges, regardless if they're AI or not.

[01:03:27] So, it's like, I really would love to see more. I look at how AI has changed our business in the last nine, just say in 2026. Yeah. It has allowed us to do so much more for our customers, for our, it has enabled our team to be much, much more effective, much, much more providing better value.

[01:03:57] All of those types of things. Now, is it perfect? And is there always some things that are not quite right? Of course. But there's just, I find it hard to believe, especially even at a personal level, that AI is not helping in most people's lives or in the business side as well. Yeah. And I just feel like we're overlooking a lot of that. And we're getting caught up in too much of this rhetoric that, you know, and I don't know what they're trying to accomplish. I don't know.

[01:04:27] It's not like AI is going to go away. So, what is the, what is the rock throwing? Well, I think, well, too, right? You got reporters that need something to report about. But I'm going to take a little different tack on that, Tom, from that standpoint. And I don't disagree with what you're saying. But I think, trying to decide how to say this best.

[01:04:53] I think there's motivations behind all sides of this, right? I think you've got, I think you've got companies out there, and I'm just speaking to distribution and manufacturing, who are not necessarily technologically advanced. And then you have some who are much more than others and have teams and staffs.

[01:05:24] I think we're in a place right now where we're three years into generative AI, basically, or coming up on that, right? Later this year. We've seen this glut of companies come into the market from Silicon Valley that have, some have some value propositions. Others don't. I was talking yesterday to Dana, a new marketing director you referenced earlier, about an event that's coming up later this year.

[01:05:54] And it was related to technology innovations. And she's like, well, have we submitted stuff to make sure that, you know, all of the tools that we've been building and the successes that customers are having so we can look into that, you know, that award and participating? And I told her no. And she was surprised. And she said, well, we need to do that. And I said, well, no, we don't, because that particular one, it costs $20,000 to be considered to what you do. So we've got all this hype that's going on out there, right?

[01:06:23] And so much of getting in front of people is pay to play, right? To get promoted. You've got this glut of technology companies, some goods, some maybe questionable technology, or have launched where they're not fully baked, but their marketing says that they are.

[01:06:40] I was literally talking on Tuesday to a sales gentleman with a company who just raised multiple eight figures within their company on a Series B round. And he was newer to this company. And he left one of those other Silicon Valley big hype companies who's been sponsoring events and doing all kinds of things. You know what he said he left? Right.

[01:07:09] The product doesn't work. Okay. That's good. And he said the hype behind the product does not do what they said it would do. It didn't look like it was going to get there. And there was way too much behind it. He didn't want to tie his career to it anymore. So now this just sounds like you're throwing rocks at other companies, right? Maybe sour grapes.

[01:07:36] Somebody could say, cause maybe we didn't, we don't have the money that those guys behind what we were doing. It's not at all the case because. Oh, you froze and then left. Now you're back. Sorry. Maybe the universe. I was going to say something intelligent while you were gone. Okay. Well, maybe not so intelligent, but I was going to say something while you were gone. But, you know, I, to your point about products not working.

[01:08:04] Can I finish real quick? Let me just get to, let me just get to the end of that rhetoric. Right. At the end of the day is you've got all these wholesale distributors and manufacturers, hundreds of thousands of them just in the U S who are getting bombarded with all of this stuff. They know they need to do something to move their business ahead. They're going to lots of events and then some, even some of the events and some of the media companies, they're showing some of the results, which is good for them. And that's a small group of companies are getting.

[01:08:34] And now what we're seeing is the other side of the coin is we've got the hype from the companies of what you can achieve shows and events. You've got the people that are in the media side of this that are saying, well, we're going to show you all these great things that some small, narrow group of companies are having some success. And then you've got a whole nother group of companies that are thinking, we know we need to do more of this, but we're doing some basic.

[01:09:02] I think you use the term helper agents sometimes with Claude or chat GPT in our business, but they don't typically have a strategy and a focus and a direction guardrails and so forth, which is one of the articles we have here, right. I think that's a great idea is from Manufacturing Net about the five most common AI governance mistakes people make. We could talk about that for a moment, but I think people are just starting to get their head around it. But what we have is we have two sides of it.

[01:09:28] We have the, hey, this is what you should do and try and accomplish. And then we have a bunch of people that these articles you were just talking about are saying, yeah, we tried and we failed and we put budgets and we did this. And we're just so early in this whole game. And my takeaway on this is that this is the, and I, this is, I don't want to turn this into a lead smart plug, but your partner of what you're trying to achieve is almost as important as the product.

[01:09:58] Well, it's more important. I talked about this months ago, right? Don't evaluate. Well, that must be important. It must be important if you talk about it. Remember, we talked about this as like I said, don't evaluate the product, evaluate the company. Right. I don't remember that, but that's a great statement. You should write an article about that. I did write an article about it, actually. It was a LinkedIn article I wrote. That was where it came from. It was a LinkedIn post. Why don't we give that to Dana and have her publish that? I'll find that. Wait, wait, wait. You published some on LinkedIn? I did.

[01:10:28] I don't remember the last time you posted them. I don't remember. I was going to say that. I don't remember you posted anything on LinkedIn. Good. Quality, not quantity. Quality. Okay. That's it. Good. Keep going. Throw rocks or... No, no. I agree. I agree. I agree. Look, if you would have told me whatever five years ago or six years ago when we got

[01:10:52] started with LeadSmart how nuanced and frankly difficult the wholesale distribution and manufacturing world can be related to technology. Not so much, not the people, but the technological framework, the data, the nuance of the data, the nuance of how business is done, all of those things. I'm not sure I would have taken this on. And I think it's really easy to go. And I think it's really easy to, especially for a startup to go, oh, distribution.

[01:11:20] Boy, that looks like a nice green field. You know, not a lot of stuff there. Oh, it looks pretty simple. They just have some ERP data and boom, we're ready to go. Yeah. You start peeling that onion, it's a little bit more complicated and a lot more nuanced than that. So, and there's just a lot of... So, I think that's part of, you know, the reason you see maybe some of these startups that are, you know, thinking they're going to come running into the industry and then

[01:11:48] you kind of run into a wall when you really start to get a couple of significant, you know, projects. And I'm not suggesting that they're all like this. There's some great companies coming out of Europe and Silicon Valley as well. I just think there is that component where you have in Silicon Valley, if someone comes up with a good idea, what appears to be a good idea, goes through the Silicon Valley. We call it the hamster wheel, right? A venture capital.

[01:12:14] And then they have a product and now they start going looking for a market. Sure. Right. So, Tom, with the time we have left today, I think there's another article that we have. It's from Marketing Profs. I think it's actually in our marketing section, but it talks about are people excited about the future of generative AI. That's right. Yeah. Do you have any of those charts by chance? Um, I think so. I just thought these might be worth it. There you go. Yeah. Yeah.

[01:12:43] So you want to take a look at that and we can, this is a, a sentiment, positive sentiment for about generative AI in the future of it is 45% of men and 34% of women. So we need to have more women on this show. We were mentioned, had one of our soon to be new customers mentioned that recently. So we need to have more women on the show. Um, 45% of men, 34% of women have a positive or are excited about the future of generative AI.

[01:13:14] Right. So that's not a lot, really. It's not a lot at all. Again, going back. It's surprising, right? Right. It's surprising. And that's, and again, the only, again, I don't know who the survey was. I don't know if there was bias on the survey. Was it, are you concerned about your job or who knows? Right. I don't know what the undertone is of this. Well, the re the reasons are in the next chart. Okay. There you go.

[01:13:40] So 70% said there's a skepticism in any way was that AI generated content can be used to create fake news or scams. Okay. Nearly 70% said AI content may contain incorrect or misleading information. But I mean, that just ties to news in general, right? Sure. You know, the days of trusting Walter Cronkite or Jerry Dunphy or whoever it might be in the evenings are long gone.

[01:14:07] And then basically we, it goes down the route, the, the, the list here of being able to tell whether content was created by a human or an AI. And that's a whole interesting topic. I think it was Jensen Wong from NVIDIA talked about that a while back. And he said, you know, why does it matter if Tom Burton does his research to get all of

[01:14:31] his statistics by going to the library and opening books and combining all of that into an article? Nobody cared when Tom did that by going to the internet and doing his research on the internet. But now people are concerned that Tom goes and does, let's AI do his research and, and in his wisdom pulls all that together. Maybe has AI evaluate his writing and then he publishes it.

[01:15:00] What's the difference between those three scenarios? It's just, it's just movement of technology and the tools that we have as long as Tom's involved. Well, I kind of look at that now there's the whole thing of the slop that's out there, right? And I was laughing with Dana yesterday in a conversation about some infographs we were looking at making for some upcoming projects. And I said, man, right now, I said, I would rather use a manually prepared infograph that's done in PowerPoint that looks like it's from 2017.

[01:15:31] Then the infographs I'm seeing coming out of Claude and ChatGPT that I have to tell him, I don't even look at him right now because it's just like, oh, nobody worked on that. It's just AI. So anyways, there's all kinds of different things here about use of personal information and so forth. So I'm going to tie these, these charts and these concerns from people back to your comment is, you know, and we're in the first inning of AI and I sometimes wonder if we're still in batting practice.

[01:15:58] Look, I mean, there's nothing incorrect about these issues that are here, right? These are legitimate issues. I don't, I haven't looked at all these charts in general, but is there a, is there a counterpoint here about the positives, right? That are here. Well, not in this article. You should write that. I think I should. Because this, let's see, is this the same article? Yeah. Except what we find in the following contexts.

[01:16:26] Again, there, it seems like the questions are a bit biased to the negative, right? What is wrong with AI versus what is right with AI? Well, the title is, are people excited about the future of generative AI? Right. But. No, this is, this is only a thousand people in Canada, France, Germany, Singapore, UK, and United States. So not a monster study. But this comes from marketing profs or marketing professionals.com. Okay.

[01:16:56] Okay. Anyway, yes. I mean, like I said, there's nothing here that is incorrect and is certainly a potential situation. But I would like to see this balanced with, you know, things that are on the other side as well. And yes, maybe that is a good article to write. There you go. Well, I think that ties to the next article in that section is that one, and this is from CFO dive. It talked about one in four companies delay or cancel AI projects over cost.

[01:17:25] So this is a little bit questionable too. It says artificial intelligence spending is becoming increasingly difficult for companies to forecast and manage with unexpected costs, forcing some organizations to delay, freeze, or abandon initiatives. I don't think we need to dive into the depth of that, but it does make me trigger me of a conversation I had this week. You know, I had my salesman hat on and I was at this event with AD and we were, I talked

[01:17:50] to a couple of different companies when we were talking about per seat use costs. And they were talking about, you know, what was your pricing going to change and how does it happen with that? And I said, you know, it's interesting. I said, I talked, I think it was at least two different people. We had this discussion and then I had it with a new customer the other day as well. That's joining us at lead smart, um, is the industry in wholesale distribution manufacturing.

[01:18:18] It took people a long time. Now we've been, it's how many years has it been Tom, since we were installing software on our, you know, individual computers in a company, 10, 15, 15. Yeah. Let's say 15. So there's a whole lot of people in, you know, mature markets like we serve who it took them quite a while to move from, Hey, I buy software loaded on my server or I buy software

[01:18:44] and loaded on machines to the SAS software, the cloud-based computer model. There's been a lot of people that it took them a long time to adjust to that. But I'm going to suggest that if the, if the world moves to a use-based costing, those people's head are going to explode. And I talked to a few people about this and the reality of it is for companies like ours, as we're using APIs from two or three or four different language models, including all of

[01:19:13] our own tools, that we're in a position where we are able to, um, where we're able to hopefully not have to do that too early while other people are trying to get their heads around all of that. Uh, because right now per user pricing is something people can manage and budget for that. And this is, this article is talking about overruns and so forth and budgets and, you know, token costs and so forth. And which is predominantly around coding, right?

[01:19:42] If you were to look at this, the big use of tokens has been around the AI coding. And a lot of companies have gone crazy with AI coding and burnt a lot of money, right? Meaningful money that, um, you know, as it said here, I think in the article ended up at, you know, a board meeting or ended up at a board discussion, right? That's not really happened in our industry. I mean, I'm not saying it completely hasn't, but that's not a common theme in our industry,

[01:20:07] but in other companies outside of the industry that has been, and a lot of those companies are blowing the whistle going, okay, wait a minute, what the heck are we doing here? And, you know, is this money even remotely well spent? You can get into a whole bunch of different conversation about, you know, how you can reduce costs of that through open source and so forth. It's a completely different conversation.

[01:20:31] But, um, I wouldn't be surprised if one in four companies have blown the whistle on some of the AI coding projects that have gone on and the use of tokens for that, that would, that actually seems low to me, but that's just because it was completely out of control. Yeah. Well, this, this was a survey amongst, um, both technology company, financial services, manufacturing, uh, distribution and retail, uh, companies.

[01:20:58] So really broad across the board, but I think, you know, what we're getting into is, you know, even use cases, just even with, you know, quad or open AI, right. And buying, you know, you, you can very quickly run out of, they're not calling it tokens, but credits can very quickly be, you know, run out of in those settings and budgets can change. And so I think it's just another one of these issues that go back to where's the sentiment at is. And again, I, my point in thinking about this is two components.

[01:21:28] One is we're early in all of this. And two is if you just jump in head first, right. And don't have a plan and an understanding and terms of use for your people and help train them on what they're doing and why they're using and how is it going to benefit them and so forth, you're going to run into struggles across the board. So anyways, we've got a couple of, yeah, a couple of sections left. Anything in particular, there's good article there about back to our sales and marketing

[01:21:56] and e-commerce section about the idea of what was I had there? I just lost it for a second is the customer experience component. As we move down a little bit further into that, there's a good thing about using technology there. And then Tom, slightly into our people and leadership segment. We don't talk about that enough, but there's a really great article that Patty Rausch from

[01:22:22] NEW wrote about tenure capital and the asset distribution companies don't know they're losing. Big component of what Dirk and I were talking about in our session we did last week for the primary group. And Dirk was talking about the people side of things. I was talking about technology. We're going to have a lot of discussion in our discussion on our 200th anniversary show about the so-called silver tsunami.

[01:22:51] And so people, I think, are coming to grips with the idea that the baby boomers are either gone or very quickly gone. And I call them Ralph or Rhonda within the organization that people that have been there and have the tenure that are getting ready to retire. And what have we done for knowledge transfer? That ties right back to how are you using the right technology to bring all of that knowledge transfer into... I want to go back to my skills, right?

[01:23:20] My skills conversation we just talked about. Yep. So anyways, we'll have a good discussion about that next week is how do we look at that? But Patty's article was really nice. Okay. So that was there. So anything else that you want to hit that comes from today or you want to say our goodbyes? You know, I haven't read this article yet, but on our great read, there is an article that says how we become addicted to busyness. It was painful. It was painful. Did you read that article? I did. Was it written by you or?

[01:23:52] I just hope Darlene doesn't read the newsletter this week. Okay. There is a component of some things I could work on that come from that article. Was there anything that jumped out as a key issue? No, I mean, there was just, you know, we live in kind of the rat race world, so to speak, and what we could be doing for ourselves on refining how we look at things, you know? So, actually, the article, I just pulled it up real quick.

[01:24:22] It started with somebody saying, how are you? And somebody saying, busy, right? How often do we always say we're busy? So, anyways, a good article. We could talk about it a little bit. But it talks about people getting comfort in constant motion. And then, I mean, listen, I don't know why I put it in here because it's just, you know, pointing right at me. It says, one of the topics says, when even leisure becomes work.

[01:24:49] It says, the German concept of, let's see if I get this right, Freizigstress describes the stress created when we try to make our free time relentlessly active and productive. Weekends become packed with plans. Holidays become itineraries to complete. Exercise, hobbies, socializing become further measures of achievement. It shows how deeply the busyness habit can take hold. Anyways, I probably should read it over and over again and over and over again.

[01:25:17] We should load that into a cloud and have a conversation about it. I mean, I think it's probably some good stuff in there. It ends with... I'm guilty as well. Yeah. It says three questions worth making time for. Who am I? Strip away your job title responsibilities and other people's expectation. What remains? What do you value? Who are you becoming through the choices you make each day? Why am I here? What gives your life meaning? Blah, blah, blah. How will I lead?

[01:25:46] And then it just says, choose meaning over emotion. I think that's great. I look at, you know, where I'm sitting right now, what we're trying to achieve at LeadSmart, some things I've committed to accomplish in my personal life. My life is one schedule, right? It's as I joked about yesterday and I said, Dana has been so efficient in our first week in our marketing. We've got more people coming to our sales team soon and so forth. I would just be easy.

[01:26:14] My life would be easier if I just, you know, when I get home, I just listen to everything Darnie gives me to do. When I get to work, just give me, listen to everything Dana gives me to do. And then I think you chimed in that as long as you trump both of them of being able to guide me, everything's okay. Right? Yep. So, so I just listened to, you know, Tom and, and, uh, and Dana and Darlene. Um, I think Darlene needs to be first, but I should be fine.

[01:26:41] So anyways, good article where, you know, and it's, thanks again to our, our friend. Uh, we put this into our good, right. Put it into our good read section, but we didn't do anything about, uh, people and, and leadership and so forth. Um, and the human side of things tell our, our buddy Dirk helped us, uh, at our, I think he brought it up at our hundredth episode. Need to go back and find that clip maybe why we got that started. So that's a good takeaway. Anyways, Tom, that said, what's up for your weekend?

[01:27:10] I'm getting ready for the 200th next week. You're going to be working on that this weekend? I'm going to be working on that and some other things for our week next week. When are you coming into town? Monday afternoon? I'm not a hundred percent sure. Things keep moving around. So it'll be sometime early next week. Good. So we've got a handful of new people from our, uh, they've joined our company recently that are out of the area coming into town and got some good meetings planned and some good

[01:27:38] growth planning in place, maybe a little fun with everybody too. I have a weekend that looks about like the rest of my week has liked. It's just back to back to back to back to back, but some faith-based stuff in there, which is good. So that's my release is some faith-based work and so forth that goes with that. So I'll be fine. Um, anyways, appreciate everybody being with us while we're nailing it. 1030. Exactly. I'm Kevin Brown. This is Tom Burton.

[01:28:06] We get together every week and we talk about the news of the week throughout. The U S and the global world, the economy, supply chain, manufacturing, distribution, MNA, AI, technology, robotics, people, leadership, all these different topics. And we try and apply them back to how those impact the people that we work with every day in wholesale distribution and manufacturing, uh, requests from us. If you like what you hear, if you're listening in subscribe, like review.

[01:28:35] If you have the opportunity, Apple, Spotify, subscribe, leave a review. YouTube, please subscribe, hit that button. So you get the alerts and so forth. Um, and help us grow and get out to more countries. I think last week we're in eight, we were in eight countries, uh, where we had downloads of the podcast and, um, multiple countries that were listening live on LinkedIn. So we love doing this, but lastly, completely lastly is don't forget next Friday, 200th celebration.

[01:29:04] Great audience. Um, some of us will even match it early. It's your tickets early. Yeah. Did you get your, did you get your fancy shirt? Tom? No, I think you said you didn't send it to me. I think, I think it's on your desk. I'll, I'll go check, but, uh, that's going to be fun. It's going to be fun. Great group of people. We're really excited about it. And, uh, yeah, watch for the announcement if you're checking in with us on LinkedIn, but regardless, uh, if you're, uh, listening on the recorded ones, you'll want to be listening

[01:29:33] into the recording, but if you can join us live, it's going to be a really fun day live on YouTube, LinkedIn, and Facebook. So that's it. Wish everybody a fine, great weekend. Be kind, be safe and do good things. Thanks everyone. We hope you enjoyed today's episode and our guests. Each week, we try our best to dig into the topics that are impacting your business. So please reach out to us and let us know how you think we can make the show better or

[01:30:02] topics you'd like for us to tackle or talk about more often and even guests you'd like to see join us. We're looking forward to bringing you next week's session and hope that until then you stay safe, stay focused and do great things. If you haven't already, please subscribe to the podcast and leave a review to help others in wholesale distribution get access to the conversation. And finally, please check out our sponsor Lead Smart Technologies and their manufacturing

[01:30:29] and wholesale distribution industry CRM customer intelligence and channel collaboration platform. That's Lead Smart Technologies at leadsmarttech.com. Thank you. Thank you.