Around The Horn Archive

Tom Burton: Good morning.

Kevin Brown: Last week it was drums.

Tom Burton: Today it’s piano. Today it’s piano. You’re a multifaceted, talented individual.

Kevin Brown: Well, you know what? Just a quick note to our editor and producer of our show, John Taylor, we need no other clips from today’s show other than what Tom just said. That’s right.

Tom Burton: We’ll put that all over social media. That’ll be all over social media.

Kevin Brown: It’s been a great show. Nice to see everybody and we’ll see you next week. Right.

Good morning to Bob. It’s nice to have you with us, Bob. And we’ll see some other folks jumping in hopefully momentarily.

So Tom, how are you today? It’s been raining a bunch and there we go, Paul Kennedy, air piano. That’s exactly where my musical talents lie.

Tom Burton: You never knew Kevin was so multifaceted and talented, but now you know.

Kevin Brown: My musical talents started in the seventies where I could push the button in dad’s car to go to the next radio station. And now I’ve accelerated that and expanded that to, I can actually, you know, manage Pandora on my phone and push it out to the Sonos speaker. So there’s my musical talent.

You’re really dating yourself when you’re talking about pushing the button and the little thing would move. Yeah. It could cross the thing.

That’s easy because we’ve been friends since kindergarten, but you, you’re now a year older than I am because you just had a birthday a couple of weeks ago. So you’re, I’ve got 11 plus months where you’re older, nothing but air. I like that.

Tom Burton: What’s Paul referencing me in general, or I think he’s talking about your, your jumping skills, your vertical leap, right?

Kevin Brown: That’s that’s a credit card leap, right?

Tom Burton: Arlene is questioning some of the musical talents.

Kevin Brown: That’s my lovely wife. That’s good. Well, it’s a, she’s here, you know, that’s the morning to Ron as well.

Yeah. Very, very good.

Tom Burton: We had his article last week on, uh, yeah, that was a really good article.

Kevin Brown: Really wasn’t. That was a great, a great article with that and good. You know, so we’re way digressing before we even start, but it’s great to have these guests with us.

What I was going to mention was, um, Bob Britton wrote a really cool LinkedIn post. I haven’t read all of it yet on, uh, earlier in the week about kind of tying to, which we’re going to talk about in a couple of moments here about tariffs and so forth. But I, it was the part that I read, Bob was insightful and I saved it and I’m going to get to the rest of it.

Uh, but kind of looking at what we see going on with the style of how things are getting done in Washington right now. And we’re going to talk about that in a few minutes and Bob will probably have some comments, but Tom, we digressed a little bit. We should probably, uh, do a little bit of our housekeeping and say who we are and what we do and why we’re here and so forth for the people that are listening.

I think last week we were, uh, when I looked at some of the statistics, I think last week it was six countries. We had people listening in on and across all the different platforms between Facebook live, LinkedIn live, YouTube live, and then Spotify and so forth. Um, so that is, uh, the key was we get more and more followers each week and people listening in.

We’ll describe things a little bit more. So I’m Kevin Brown. This is my lifelong friend and business partner, Tom Burton.

We get together every Friday morning, as we say, unless someone’s on an airplane, uh, on a planned vacation or in the hospital. And uh, we look at the news of the week and we kind of look at things from a standpoint of what’s going on in the economy and supply chain, mergers and acquisitions, technology, AI, uh, human resources or people in leadership. We look at a series of different topics and we try and kind of, as we say in the bumper music, if you’re listening on the, on the recorded podcast and the bumper music, you’ll, uh, in intro, you’ll see, we say we use the term peel back the onion, but what we really try and do is look at the news of the week and talk about how it impacts wholesale distribution and manufacturing.

Uh, neither Tom nor I are economists, but, uh, we love to have a chat about what’s going on in the news. We again are live on LinkedIn, live YouTube, live and Facebook live, uh, Friday mornings at nine o’clock Pacific. And we get great guests like we have today, uh, people joining us.

And then regularly we also have great guests. In fact, uh, next week we have a David Gordon and David is a very much a thought leader in the electrical, uh, in HVAC distribution world. We’re looking forward to having him with us.

And then the following week is a pretty exciting guest. We have, uh, my friend Sean Dubrovak, Sean is a global thought leader and both retail and a wholesale markets, a keynote speaker, PhD in economics, and just a good all around guy. And so we’re looking forward to having Sean with us as well.

So lots of good guests coming, but what we do is we review each week, the newsletter that we publish. And it’s important that we share that because if you’re listening on the podcast, uh, the recorded podcast, you won’t see the two handsome faces that are here or the beautiful folks that are, uh, responding in with comments, uh, you’ll just be listening in. But what we have is a copy of the newsletter that we produce every week.

It goes out, uh, middle of the night on Friday mornings at, as I like to say, oh, dark 30 goes out to 10,000 plus people. And that newsletter called round the horn and wholesale distribution and manufacturing just to make our show. If you don’t get that and you would like to three simple ways to get that, you can simply send an email to, uh, hello at lead smart tech.com, or you can, uh, very easily go to the LinkedIn page for the around the horn and wholesale distribution podcast. You can sign up for it there, or we have a website for the podcast, which is www dot around the horn pod.com and all of our past episodes and so forth are available there. So, uh, our ask of you is if you like what you, you see, and you hear, share with your friends, uh, comment with us. And if you’re listening on the podcast, uh, on Apple, Spotify or other platforms, please, uh, give a, uh, subscription and a review ideally.

And that gets that out to other people. So the last thing we’ll talk about quickly, we’ll talk about it more at the end of the day, but we couldn’t do the show each week. If the company that Tom and I worked for didn’t sponsor the show, we’ve got multiple people on the backside of this, preparing things for us and all the costs of production.

Tom and I worked for a company called lead smart technologies and lead smart has developed a AI enabled CRM and customer intelligence platform. It really works like no other platform of its type, uh, very different than historic CRM tools that you might’ve seen in the past. And with that, uh, we are able to help wholesale distributors and manufacturers bring siloed data from across their organization into a single platform using AI tools, then to help them make decisions about what we should be selling to who and when we should do it and what quotes are open and what are we missing that’s going on there.

So probably of all the software tools within a company’s organization, uh, the lead smart technologies, a channel cloud is the name of the product and the channel cloud product is probably the fastest return on investment that people would have on any software investment ever. So if you’re looking to accelerate growth within your company, we would love to talk to you and we hope you can, uh, uh, reach out to us with that as well. So Tom, you want to kind of dive into the news here?

That’s what we’re here for. Yep. Let’s do it.

You’re good. Get started. So China challenges Trump tariffs at the world trade organization.

What are your thoughts to get started on the weekend tariffs?

Tom Burton: Well, I think there’s two, this, this article starting off on the, on the tariff conversation has two points. One is obviously the C the Canada and the, um, Mexico one was put on hold for a bit, but China was not. Um, but I, what I found was more interesting here is the, um, is the, what, what they called it, what was the word they used the exempt packages basically had a word for that, but the minimus, the minimus, the minimus, say exception, right?

So there are packages that are supposedly low value, less than $800, I believe worth the stuff. But if you start to peel the onion on that, there were, I’ll get you the exact number here. I think there were like over 1.2 billion packages that were 1.36 billion shipments that qualified for this quote unquote, diminished the minimus is that exception in 2024, just use small, small, yeah. Small exempt, right. I just use big words. Kill me.

Um, so Tom, we’re not able to hear you. Can you hear me now? Yeah.

Okay. Um, anyway, what was, what was I saying? That was so anyway, the whole point being is these packages are, which come out to be about several million a day, right.

Are being, we’re basically being halted as well, which created a bit of chaos on the way, I guess the post office has come back and said, we will continue to handle but man, is you really start to under, I never knew about this. I don’t know if you knew about this. It certainly seems to me like this was a wave to get around.

A lot of the customer requirements that may be the way a lot of the fentanyl is getting into the country. It may be where knockoffs are getting into the country because they’re just basically sliding through without any sort of oversight. Um, so I think there’s something there, but I think there’s more to it than just the tariff piece.

Kevin Brown: Well, there, so we kind of jumped ahead on that, but yeah, I think that’s, you’re right with that. And you know, a big part of that in your, I couldn’t agree with you more that there is the absolute potential that that could be where some of these things are coming in. A big player in those are, are the, um, Timu, the shines and the, uh, well, Amazon even as well for the Amazon orders coming in from, from, uh, drop shippers in that setting.

You’re absolutely right. But the other side of that is you’ve got a bunch of startups that are trying to compete with Amazon, uh, specifically shine and Timu that are super low cost, uh, items that they’re just shipping direct. And, uh, and that’s a big component of what you’re describing there, I think is as well with that.

So it is, it is kind of interesting with that. I was looking at a little bit different bend on this and, you know, thinking about when you look at the, um, in fact, Tom, could you bring up that graphic about the U S where really all the, uh, great graphic that we, uh, ran across about top importers of every state. And I thought what was pretty unique about that is we look at that a little deeper is, you know, there’s a handful of states that, you know, the, the dramatic part of it is, uh, coming from China, but we’ve got a lot of other states that are seeing, you know, the largest part of their imports are coming from Canada.

Uh, we’ve got, you know, the Southern states so much are coming from Mexico. I got a kick out of it when I was looking at this map a little closer. And for those of you that are listening in and not seeing what we’re sharing here, it’s a map of the U S and it’s got a kind of a pic, uh, icon of the flag of each of the countries where the majority of their imports come from.

I thought the funny one for me as a side note was, uh, in Indiana. Did you see where that one’s from?

Tom Burton: Uh, I can’t see it, but it looks like Ireland or Ireland.

Kevin Brown: Yeah. Ireland. So it’s just, it’s just Irish kids coming to go to Notre Dame, I think.

Tom Burton: Or lots of beer or something. I don’t know.

Kevin Brown: Yeah. The, you know, it’s Irish kids going to Notre Dame, but interesting to look at where this is. And obviously, you know, uh, the big number is 20 plus percent in California, Nevada coming from China.

But I think as we starting to look at this in, in the current administration’s views, and I think this is a bigger picture scenario to look at with us. I think what we’re seeing here specifically with Canada and Mexico is. You’ve got a clear threat that China is saying, Hey, we want to surpass the US US, right?

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

Uh, we’ve got the steel that’s coming in from Mexico and other things like that. So I think when we start looking at this is like, okay, well, we’re going to do. Play the geopolitical game of the negotiations with the tariffs back and forth with China.

But I think one of the ways to really look at this Canadian and Mexico thing is, you know, those are little brother countries, you know, in theory, when you look at economic production and GDP and so forth with a lot of leverage that the U S has over them. I think when we, when we look back on this, uh, in history, what we may find in this time is that this whole scenario with the tariffs on Canada and Mexico and Mexico is a little bit of an outlier, but a Canada and Mexico is basically saying, Hey fellas fall in line. Because what we need to do is the two top priorities are immigration and drugs or fentanyl.

And if Canada and Mexico are in lockstep with the U S on that. And the U S can leverage and pressure them was like, which is being done right now, then tightening up their borders will tighten up our borders to immigration and, and, uh, the drugs and the fentanyl. So I think there’s a broader picture than just say, we’re going to slap some imports and tariffs on Canadian, you know, maple syrup.

Tom Burton: I’m not, I’m not sure I’m following. So what you’re saying, or let me see if I understand what you’re saying. By getting Canada and Mexico on board, you’re saying that that’s going to then squeeze China or we’ll look, we’ll look exactly what happened in Mexico.

Kevin Brown: Right. What, what if, if the, if the border and, and fentanyl are the big issues, right. That this administration has said, just look at what happened to Mexico before they even took place the day before president of Mexico sent 10,000 permanent soldiers to the border.

Right. Just stop drugs and to stop immigration. Canada, the expectation of Canada is tighten up your borders for the things that we don’t want coming into our country and the leverage to get them to do that because you know, while, while Trudeau who’s, you know, I was texting earlier this week and talking to some, some customers and some prospects and some friends in Canada, you know, are, we’re a little bit embarrassed with some of the strong stance that some people in their country have taken against the U S as well as some of the things that Trudeau have said, because Trudeau is on his way out, right? No, nobody really looks at him as I think they, they probably looked better at, at, you know, the former U S president when he was a lame duck there for a period of time. But he tried to push back on this, but now they’re caving in on things.

So the idea would be North America is lockstep and the way that this administration is getting them to do that is putting the pressure on them from a tariff standpoint to say, get in lockstep with us. And then if you’re in lockstep with us, then we can achieve our goals of immigration and, and the reduction of drugs. Plus to your point earlier, right.

With these small packages, China has been getting around like steel tariffs and so forth for, for a long, many years by bringing, getting stuff coming in through Mexico. And so let’s put the squeeze on them with tariffs or whatever other things that we have, whether it be aid or whatever it might be to achieve those overall goals. So I think it’s kind of like we were talking about before the show even started today, Tom is like, I think you made a comment is like, don’t, don’t judge anything the current president is saying for 48 to 72 hours to see what comes of it and really what’s behind it.

Tom Burton: So again, I think what I’m maybe hearing you say is that the chess game, right. If you play the chess game, right. With the, with our neighbors, with Canada and Mexico, then therefore that’s going to potentially give leverage and influence on what we’re trying to accomplish with China.

Is that, is that kind of what you’re dots between Canada, China and Canada, Mexico, and China?

Kevin Brown: I’ll say it one more time. North America needs to be in alignment with three countries there. Okay.

Right. To stop what China’s, what the U S government is saying they’re trying to do, got leverage over all both those other two countries, leverage has been put in place. They’re abiding by what they want to do, what they want to get done to get accomplished.

Yep. So it’s bigger. I think that my point is, and I’m sorry if I’m not articulating this well.

Um, unfortunately no one else is commenting on it, but you, but, um, the, uh, the idea behind it is there’s a big picture, the guy that’s pulling the strings on this today. And the U S administration wrote a book called the art of the deal. And everything is about a deal.

Right. And there will be lots of things that look odd along the way while we’re getting to the deal.

Tom Burton: So I think where I just was somewhere. I think that’s what I was understanding.

Kevin Brown: You just wanted to, um, I did have a chance though. It was interesting, you know, as we talked about the tariffs before we leave from that, because it’s, you know, potentially a big impact on wholesale distributors and manufacturers, but I had a lengthy conversation earlier this week with a friend that runs a national, uh, distribution company. Senior operations and purchasing person.

And, uh, you know, they’ve been, he was talking about this, you know, he said it at the end of the game, it boils down to end of the day, it boils down to how good of a supply chain game you’ve been playing all along because, uh, in the commodities that his organization sells a lot of, they’ve been moving things out of China for a number of years because they found other countries where they even get better margin on those products.

Their inventory is managed very well in these things. And, uh, there’s a, a, a big play for the people that have done a great, great job with supply chain to actually start taking some market share to two key points though, that he brought up that I thought were really interesting is that one is that, uh, nobody has been speaking about this as we’re just either we’re in right now, we’re just getting ready to go into Chinese new year where everything shuts down for pretty much a couple of months anyways. So if you don’t have stuff pre-purchased that’s on the water already, we’ll probably be, have this whole tariff thing with China roughly sorted out by the time things are gearing back up again. Anyways, super insightful thought.

I hadn’t, I wish I had thought of that myself, but it makes a lot of sense. The other thing that’s probably really valuable to this audience is this gentleman that I was talking to who said he has already been from the business that he does have in China because they have a lot of private label products, uh, that they get directly from China is in, in, in his particular case, they’ve done a good job of hedging and protecting against these types of risks, but he said, uh, two, two factors, one, he’s been getting price reductions already from some Chinese companies, right? Which that’s a big deal.

And again, this is something I hadn’t thought of at all, but stop and think about this, right, is, you know, when we’ve looked at, even with, you know, inflation with food prices and things like that going up, things go up dramatically and then they come back down a little bit. They typically don’t come back down to where they were. So, so now if you think about the potential leverage that a, uh, a manufacturer distributor here in the U S has with their Chinese vendors, if they’re putting a squeeze on them, if they have enough volume to do so that they’re getting reductions in prices from those Chinese manufacturers in this setting that says, Hey, you need to help me offset these tariffs as well.

Cause the end of the day, it impacts the district manufacturer distributor and end user in that setting is. You’ve got a lot of leverage going back when they want to try and raise those prices again. So there’s a lot of dynamics.

It’s why we do what we do here in the show is to have some of these discussions. So I thought it was very interesting. Uh, this particular feedback in common I got from this large distributor.

Tom Burton: Yep. That’s a good point. And I think the thing about the lunar new year, whatever I, you know, even said in this article, right.

I don’t think Trump has talked to the Chinese president yet or had any discussions yet, but there’s time, I guess, to sort this out before it really becomes an issue.

Kevin Brown: Well, and again, it’s this, as you all often like to say, right. It’s a story behind the story. So we, we see what the news wants to share with us.

And then when we unpack it a little bit more, we kind of see a little bit more what’s really going on out there. So good. Good.

Let’s jump ahead. We spent quite a bit of time there, but a couple of other articles again, if you’re listening in on the podcast and not watching us today, we’re reviewing the around the horn and wholesale distribution newsletter, you can subscribe to that on LinkedIn or, uh, at the, uh, www around the horn pod.com website, uh, manufacturing orders and shipments and inventories were rising a little bit in December. So a little balancing act going on with that. But, you know, the, on the manufacturing side, it’s good.

Uh, and the U S I think part of that’s probably tying back to some, um, folks looking to bolster their supply chain and, and protect some inventories in the setting of what, of the risk of coming from tariffs. So, so good, good piece to have there. Um, Tom, what do you say if we jump ahead a couple of articles?

Um, there’s a quick article from industrial supply about year over year spending in construction was rising by 4.3%. That’s good news, but that ties into the next article, which how California wildfires are affecting supply chain. I, I kind of enjoyed kind of seeing that while it’s tech saying that, you know, it’s not, there’s no impact on that today because what we lost was thousands and thousands of homes is people that are listening in or watching us today. You know, no, if you’ve been with us in the past, those, those particular fires that you saw the devastation in the last few weeks here in Southern California, where Tom and I are, they were happening about an hour South of Tom and about an hour North of me.

Roughly. Uh, Tom where Tom lives, Tom was a block away from evacuations from a major fire in the Ventura County area. Um, wait about a block away was, was evacuations for you, right?

Tom Burton: Yeah. Back in November. Yeah.

Kevin Brown: Yeah. Back in November. And then in September where I live, we had a 23,000 acre fire, but we, I say we only lost 150 homes, 150 homes is devastating, but when you compare it to thousands and thousands of homes, it’s a whole different story, but it’s interesting.

This article again, it’s from construction dive.com. It talks about a while, you know, we didn’t see warehouses or lumber yards or pallet yards or whatever burned down in that setting. What we have is this massive rebuilding initiative that needs to take place.

So I think behind the scenes right now, what we’re seeing is this major adjustment for all types of wholesale distribution, everything from building materials to HVAC, to electrical, to plumbing, to, to safety equipment, even we’ve got this big boost of now getting, uh, preparing the supply chain to support that rebuilding effort, the balancing though, the struggle is right. The article talks about potential shortages of drywall, cabinetry, plumbing and roofing supplies, uh, could impact this. And then back to our original discussion today was tariffs.

If tariffs start having some impact on these things, it will be interesting to watch the supply chain resilience and maintaining that resilience for this rebuilding.

Tom Burton: Yeah. And it, it does say though, that the rebuilding process minimally will take two to three years before you’re starting to break ground with this.

Kevin Brown: Um, I think that’s what the article said, but I think if you, and I agree with you on that is, but I think what we’re seeing now is in, in this is more of a, probably local news, but what we have is, uh, a gentleman in Los Angeles who had run for mayor, uh, a billionaire, uh, very successful real estate investor, and, uh, he had run for mayor lost and, uh, he is coming back with saying basically what the president was saying when the president visited is, Hey, this red tape that you have, you, you need to push through these things. So I think what we may see in this setting, I don’t want to spend too much time on this cause it’s more of a local issue here, but, uh, but it can impact. And we’ve got similar things going on in North Carolina after the hurricanes and so forth.

Um, but what you’ve got now is this business group that’s being put together that will probably have the support of the federal administration just based upon party lines and support and so forth. That’s really going to want to push through this. And one of the things that they’re doing right now in the specific in the Palisades fire, because it just happens to be the socioeconomic issues that go with the people living in the Palisades fire, there’s people there that are ready to say, I’m going to pay the myself.

I’ll pay the environmental contractor. I’ll pay the disposal people. I’ll get, just let me have access to my property.

And that’s a little bit, I think what we’re going to see. So I don’t think that two to three year thing is going to be reasonable, but in some instances, broad scope, I think that’s a reasonable number.

Tom Burton: Yeah. There’s a whole lot to it’s, and we can talk about this separately, maybe another day, but I have a good friend here in town. Who’s the Ventura fire chief lives next door to him.

And like the guy, the head of the entire Ventura, yeah, the chief. And, um, he shared some of this stuff about just the percentage of homes that were uninsured in the, in the Palisades area and that they’re obviously not going to be able to be reinsured as going forward. So there’s a lot of conversation about whole neighborhoods potentially being rezoned to multifamily because people can’t rebuild in those areas.

And the conspiracy theory is, is that, and I think that, you know, there’s a lot of builders and other people that are going to try and swoop in, buy the land for cheap and then multi rezone it and then do multifamily or other types of properties other than single residential here.

Kevin Brown: And so that’s great. Great discussion. So we’re having dinner on Monday night, uh, in, in, uh, Mississippi.

So maybe that can be a broader discussion on our car ride from the airport there. Cause I’d like to hear more about that, but that’s, that is interesting, but what is intriguing with that and I’m digressing, so we’ll move on here quickly, but is here in orange County, where I live is I’ve been seeing on the local news and news feeds is that there’s a huge influx of people from the Palisades. That are coming down, trying to rent and buy that inventory that’s available specifically in Newport beach, some in Irvine and Laguna beach.

So it’s kind of interesting with that, because I think what a lot of those people probably seeing is what you are is the Palisades is no longer going to be what the Palisades was.

Tom Burton: No, no.

Kevin Brown: The important thing to not forget is, and I hate to see this is we see so much of this, where the news seems to be as much or more on the Palisades sometimes versus the, the socioeconomic issues are very different in the Altadena fire. And, you know, I’d like to, hopefully we see a balance of aid going to those two places. So good.

Well, let’s jump into our manufacturing and distribution segment here. There’s an article there from Reuters. A lot of wholesale distributors that, that tune into our show regularly and, and get the newsletter have business relationships with Honeywell and Honeywell has been under major activist investor pressure.

In fact, just one of the, one of the divested is talking about a divestiture and a split, I should say versus the divestiture. But one of these even divisions is a $15 billion division. So, you know, we’re talking about all three of these divisions, probably being 50, 60 billion is my, going to be my assumption or guessed with those of you combined them.

But when you’ve got an activist investor that takes a $5 billion stake in that, you’re going to listen pretty closely with them. So we had in December, I think it was, or early January, they completely sold off their safety and industrial division that is equipment based and hardware based to PIP, which is a protective industrial products. They, I believe bought the Honeywell brand.

And then now we’ve got them splitting off their materials division, their automation division, their aerospace division. I think the automation division is what really has a big, big play into the, into the distribution world. So they’ve got exclusive distribution out there as well in a lot of areas.

So this is going to be a good one to watch, to kind of see what happens as they, they put split these off into different companies.

Tom Burton: Do you see any impact from that? Or is it going to be pretty much business as usual? Assuming that I’d love it.

Kevin Brown: I’d love it. If we have any listeners that maybe work with them or have experience working with them. I don’t think there will be a lot of it.

You know, I think that the pressure, you know, comes on, on how I haven’t even read deep enough into what that means from a shareholder standpoint, but I would assume, you know, these divisions are all already pretty running, pretty autonomous, I think Tom, it’s probably a good, my assumption would be, and then time will tell about this. My assumption would be in this setting, Tom, is that the likelihood of what we’ll see is people won’t feel too much of it, much like, you know, do you, do you realize that, you know, GE, the MRI that you go into in the hospital or the doctor’s office, it says GE is no longer part of the refrigerator group, right? It’s just, it’s just still a great brand that’s out there.

I’m sure they’re doing nothing with the brand. They’re going to leave the brand intact and operate as separate companies. I think what this does is you move those into three separate companies and I’m sure that’s what the activist investor is thinking about is we drive shareholder value in three divisions because those numbers are going up because there’s more of a focus.

So, um, good article here from, uh, Ted, the electrical distributor magazine about Sonopar. Sonopar, I believe now is the largest, uh, uh, wholesale electrical distributor in the world. I’ve been buying up quite a few brands over the last period of time, but in their Midwest region, they’ve bought up Echo electric, Springfield electric, Richards, Pepco, a few others.

Uh, and now they’re aligning those, uh, under a brand. And usually what we’ve seen for a big part of thing is you’ll see a, um, uh, Springfield electric, a Sonopar company as their title. And now they’re starting to put some of these brands together, which is going to be an exchange.

You know, there’s power in brands, right? So, uh, having a major brand, I think like that may be a benefit to them.

Tom Burton: Yeah. I think there’s, I mean, I don’t know a ton about their company or their market, but it would seem like what they’re looking at here is a centralized brand can have some leverage and some broader appeal rather than maybe some of these more regional brands that they’re, that they’re under.

Kevin Brown: Yeah. And they’re doing this particular one is in a broader region. So rather we’ve got, I’d say maybe a better term might be localized brands and they’re driving this into a large regional brand.

So that’d be a good one to watch. We’ll pay attention to it as well. Uh, but you know, it’s over, it’s 1.2 billion in sales of those combined branches. So it’s good. So, uh, industrial supply published this, but it was 80 affiliated distributors put it out as well. Um, there, uh, the owner members of affiliated distributors beat some records, uh, with a 6% increase for 2024, which is good.

Congratulations to them. 83.3 billion of combined sales with this particular buying group. Uh, great news, but you had an interesting take when we were chatting about this earlier.

What were your thoughts on this?

Tom Burton: Well, I mean, 6% is great. Look, there’s nothing wrong with 6%. What I find interesting is in the conversations that I think both of us are having right with prospects and customers, we are hearing more often than not, they have growth goals of doubling in five years, right?

Kevin Brown: Well, if you take, and if I can interrupt you for a second, we have some customers that lead smart technologies that are 80 members that have these goals, right?

Tom Burton: Oh, a lot of them are 80 members.

Kevin Brown: Right.

Tom Burton: So yeah, I would say the, probably the majority of them are 80 members. So there’s aggressive growth goals. Well, if you take doubling in five years, that’s 15% annual compounded growth, right, which is significantly higher than 6% growth.

So the question that would be interesting to understand is it on, and granted, I understand that’s an average, right? That’s the 6% average growth among their members. But, and so maybe some of them are growing 15% and some of them are not, but that’s still pretty a big variant between what we’re hearing as the goal in a lot of cases and what reality is.

And, you know, I, I, we’ve talked a lot about this, right? I think the real opportunity is we talk to our customers and prospects about is how do you get a lot of that organically, right? So rather than going out and buying more branches and, and, you know, potentially, um, you know, acquiring companies and things like that, can you do it organically using, you know, some of the technology and some of just optimizing what you’re, what you’re doing, I just found it interesting when I saw 6% here and we hear a lot, this double in five years as a strategic goal, that’s been coming down from ownership or their board or, or whatever.

Kevin Brown: I think, uh, you’re, you’re kind of spot on with that. I, you know, I think there are aggressive goals with some, and there’s some that are trying to keep, I don’t want to say keep their head above water, but, you know, this, this ties into discussions that we’ve had many times in the past as well, is that, you know, there are people that are, are, have growth goals, but they’re maybe a little bit comfortable. Uh, maybe not working on, uh, transforming digitally, maybe not having the same level of, um, the, um, maybe the focus on, um, on, on rapid growth, accelerated growth, and we have companies that we work with, you know, within lead smart that are looking to use that double in size, right.

Which takes roughly 15% over five years, right. You’ve got some aggressive work to do. And, uh, you know, we think about investing in a rule of sevens, right.

Uh, it should take seven years to double your money. But, uh, if you’re trying to do it in five, we got to bump those numbers up significantly because of the lack of compounding. And I think there’s two mindsets, right?

There’s mindsets within distribution that says, um, we’re going to block and tackle, so to speak, like we’ve always done, right. We’re going to acquire a couple of companies because we’ve got a great line of credit. We’ve got a, um, uh, a branch growth strategy.

And, uh, and then there’s others that are saying, well, we want to use historic methods, but we’re going to use technology and digitization, so to speak, to really accelerate that. And I think when you put those traditional strategies together with a strong digital strategy, and not just a digital strategy that says I’m going to buy more software, but a digital strategy that says I’m going to buy more technology, whether it’s software, it’s AI tools or whatever it might be, that says these are a major capacity or major, uh, component, I should say of my overall growth. And I think those are the people that are probably going to win that race of doubling in a certain number of years.

Right. Yeah.

Tom Burton: No. And I, and Ron popped in a question here. Do you see a more insight in segments or certain areas growing more than others acquisition?

No, I don’t have any specific data of segments or, or areas that are growing more than others is more anecdotal data that we’re getting from our prospects and customers. Um, but I agree with what you’re saying, Kevin, is that a lot of them are thinking that growth is going to come either through acquisition or opening of new branches or inorganic growth. Right.

Right. Whereas I think the low hanging fruit, as we see over and over is at least handling a lot of that through organic growth, through optimization and, and of what they are already doing. Right.

Right. And there’s plenty of room as we see every day that are, um, that are whatever. And I agree with Bob’s comment here, right?

The problem with growing through acquisition is, is long story short, it’s hard, right? And it’s risky as he’s saying here, because the core competencies of your acquire aren’t really the same. You may not have the same.

There’s, there’s a lot of work that goes on, right. And trying to merge those together, get those working properly, all of that kind of stuff. So it can be risky.

And, and the other thing that, well, we’re really going off topic, but the other thing that you really got to think about is growth is great, but what does that do to profits, right? There’s risk in growth in a sense that if it doesn’t work quite the way you want to, and you’re investing in it, it can erode profits and your net income pretty quickly. So, um, so I’m not saying that our inorganic growth is bad.

I’m saying, I think there’s a balance of organic and inorganic that can potentially achieve that.

Kevin Brown: Well, I would love to, to, to Bob’s comment. I agree with, um, in what you’re saying. I would love to see some research, although I don’t think it could really could ever, you could get research that would tell the accurate story.

Cause I’m not, I’m not convinced people would tell the accurate story is what percentage of acquisitions, uh, whether private companies acquiring private companies or public companies, acquiring public or private companies are relevant to that is what percentage of them ever yielded the growth and revenues that were anticipated. Uh, I would, I would have to guess. And there’s a whole lot of people on here, a whole lot smarter than I am that have, uh, you know, I’m just, as I’m looking at the side of my screen with the comments, I see, see my friend Paul Kennedy there with a Dakota supply group or DSG.

Paul has insight into a lot of this. If he feels like commenting, that’s, that’s great. If not, I’ll, I’ll corner him next time.

I see him face to face over a beer and ask this question again, but you know, I think it’s a, it’s, and I’m not trying to throw rocks at anybody in this setting, but I just think at the end of the day to Bob Britain’s point here is that digestion I’ll call it integration is hard. And to, to think that I think you would really, you might get the revenue growth, the top line revenue growth that you want to get to talk back to our original point was about, you know, uh, whether it’s an ad company or somebody else, um, you know, 6% growth is wonderful, but if you’re trying to double, uh, in a certain, as an example, to your point in five years, you need a lot more than that. And the question is, even if you got to the top line doubling that you wanted to in that five years, where is your organization at, from a cultural standpoint, what is your balance sheet look like?

What does your debt look like? All of those things that go with that. Um, interesting time.

So yeah.

Tom Burton: What’s the profits look like? Have your net profits actually increased or, you know, what’s your cashflow? Well, there’s a lot of variables.

I think culture and all that stuff is valuable too, right. The take into account.

Kevin Brown: So anyway, well, it’s probably the hardest part of the culture side of it in the people’s side of it is probably one of the biggest challenges, you know, I would think you could talk to, you know, some veterans out there that have done lots and lots of acquisitions and, you know, the, the stuff that the numbers you can make work and the numbers are probably going to stay pretty close, um, in that setting, uh, well, there we go.

Paul, Paul just jumped in to help us here. It says integration is the key preserving the core competencies. Well, also getting synergies is a fine balance.

So art and science, I think is what he’s saying here, right?

Tom Burton: That’s it’s not easy, right? It’s it’s no, it’s not add water and stir. That’s for sure.

Kevin Brown: No, that’s, that’s exactly right.

Tom Burton: We’ll go. Well, thanks for that. Completely off the rails with this article.

Kevin Brown: So that’s so unlike this.

Tom Burton: Yeah, no, I like it. It’s like a general conversation with me instead of around the horn. We should call this off the rails.

I think that should be, or maybe that’s a whole new show. I don’t know. Interesting.

I like that.

Kevin Brown: I like that. Good. Let’s dive into our e-commerce and marketing segment that we talk about each week, the article from a digital commerce, three 60, our friend, Mark Grohan, who was on the show with us a while back, and we’re going to get him on again this year.

It’s an insightful guy. He, he penned an article here about a digital transformation. Tom, you want to take a stab at that first and I’ll follow up.

Tom Burton: Well, his point being right. Pretty simply was millennial buyers. If you look at the kind of the, I guess the bookends of millennial buyers now, the oldest ones were 14 years old when Amazon launched.

And the youngest were in the year that the iPhone was introduced in 2007. So long story short, they lived in a world of technology and e-commerce and all of that, their whole life. They don’t know anything other than different.

They weren’t pushing radio buttons and having the thing move across the radio dial. So, um, yeah, his point is that’s all they know. Right.

And so the transformation and so forth of, of, you know, this is all stuff that we’ve talked about over and over and over again. And, you know, I think he, he has some good statistics and went over some statistics that we’ve covered in the past about buyers and their mentality and so forth.

Kevin Brown: Well, I think that this is, uh, there’s some great graphics, um, that are in this particular article. We need to start kind of showing some of these to our audience, but this is, again, this is digital commerce. Three 60, uh, January 30th was, was when Mark wrote this, but, um, I think he updated it as well because some of it is coming from a, a Santa commerce survey that they did actually this year of 750 B2B buyers.

And, uh, they talk about their, what their targeting is advantage. The advantage of e-commerce is, um, 25% reliability, 25% efficiencies. And then the other 50% is speed is 23%.

And then accessibility and ease. So, you know, now they’re saying, you know, 72% of B2B buyers now prefer to buy online. And the point being, and this really ties into even the next article that we have here about, uh, which is also from digital commerce 360.

And if you don’t, you don’t, uh, one, if you’re not connected with Mark, uh, Rohan on LinkedIn, great guy to follow. And then also, um, you know, regularly taking a look at a digital commerce, three 60 great newsletter that they put out each week. Certainly you can get the tops of their articles here on Friday mornings with us, but, uh, they do some good stuff.

But the second article that we have featured here is about Grainger and growth through data technology and AI, and all these things just merged together. Right. And what we see is, you know, this article was about what a B2B buyer wants, but we see this convergence now of the ability to it’s the things that are becoming available, right.

Are influencing what the buyer wants. And now things are becoming that much more available and easy for use of, um, wholesale distributors to give people what they want. Right.

And we talk about it all the time. Maybe this is the next book that you write. Tom is about the gray area between consumer experience and wholesale experience or B2B experiences.

You know, they’re, they’re getting so intertwined with expectations of the buyers. So I think this is good. Granger’s just basically, if you were to just even read the headline from this article about what Granger’s plan is, is, um, their commitment to investing heavily in e-commerce data and digital technologies to outpace competitors.

Well, guess what we, you know, you’re never going to outpace Granger spending ability, but the beauty of technology is, you know, a small local guy. We talked about this two weeks ago, I think is that, you know, a guy in a Quonset hut, you know, down the dirt road that has a Starlink connection by satellite internet could get a Shopify shop up and be selling to Granger customers five States away and be doing that through relationships with wholesalers like ORS, NASCO, if you’re in the industrial space or others in other areas, um, you can be doing that in, in weeks. Right. Um, yep.

So there’s great point. RP talks about this is, you know, a call to action to all distributors to get going on AI and other tools. Right.

Tom Burton: Um, I like that.

Kevin Brown: Yeah. So good stuff. All right.

Any other thoughts on that, Tom, before we jump?

Tom Burton: Oh, let’s, let’s move ahead.

Kevin Brown: Good. So tech brew had an, a kind of an interesting article about, uh, you know, we’re talking a little bit about marketing and e-commerce, but I dropped this, even though it says, uh, AI, I dropped it into our marketing segment specifically because we’ve been talking a lot about, uh, and there was, I heard a great comment on another podcast the other day, because they were talking about, we’re going to talk about deep seek, the AI tool in just a moment. But, um, you know, they were talking about the likelihood is, is that deep seek, a lot of it’s learning came from chat GPT. Well, then chat GPT got caught red handed, training its model off of copyrighted things from the New York times.

Right. Um, in that case, it’s pretty, pretty powerful. So now the copyright office is, uh, says pure AI need to not apply.

So if you think you can go write articles and get them copyrighted and, or write a book and get it copyrighted by just having AI spit things out, you’ve got another thing coming now.

Tom Burton: Yeah. It will not, and this is not, this is old news, right? They’ve basically maintained it, that they will not allow anything to be copyrighted that is a hundred percent generated from AI.

But if you have some, if you can prove that there’s some human creative contribution, then you can, you know, I guess, argue or fight that point.

Kevin Brown: So, yeah. So this is, um, it’s just trying to find that article again and bring that up. Uh, where’d they go?

Here we go. Um, yeah, this was, uh, just from some updates that they did. This is, uh, not necessarily old news.

This is updates from earlier in the week, uh, that the copyright and trademark is actually last week, a new report about, uh, so they’ve enhanced what you were mentioning dramatically. And it says the conclusion they interpreted, uh, interpretation of existing copyright law. Uh, they did two years of review and thousands of public comments.

So this was published in these updates last week about, I think, putting some, it says right here, it says, um, it didn’t deviate from its original stance that wholly machine-made art is ineligible for copyright, but they also determined in their report that law there’s laws already on the books that covered enough to answer these questions without new legislation. So questions of copyright ability and AI can be resolved pursuant to existing law without the need for legislative change. So it looks like this is something that they’re just going to continue to stay on top of.

Tom Burton: Good.

Kevin Brown: What’s next. When do you want to hit?

Tom Burton: Oh boy. Um, you know, this was a good, this next article, what’s changing in B2B marketing in 2025. I’ve been very impressed with these marketing profs articles.

They’re very well thought out. Very well, um, put together. We could probably spend, I don’t, we don’t have time to show a whole bunch on it, yeah, on that.

That’s there, but, um, it’s, uh, one of the things I found really intriguing, I think it was number nine or whatever on their list. It’s like a top 10 list of things that are changing in there. Pretty innovative things is the synthetic influencer.

So basically creating a virtual AI driven influencer that has an identity in your organization. Training that synthetic individual to be super knowledgeable about whatever it is that you do. Right.

So, um, and then make that synthetic individual available, basically 24 by seven to engage with and have conversations about whatever it is that you’re, you’re doing. Um, I just find it intriguing. I hadn’t thought about that angle of it, but I think that there, it could.

You know, it’s obviously like saying, well, I have a GPT or I have something that talks about, I’ve got a marketing agent, right. But I’m having somebody that I’m, that’s, you know, verbally having conversations, all of that kind of stuff. It often crosses the line.

Well, it’s like that a customer service agent, you know, you can see it going in a lot of different directions, but I just found it as an interesting concept that they brought up.

Kevin Brown: Well, I mean, I, I think, you know, I think I shared this with you, uh, in our audience a couple of weeks ago, I was doing some work with, uh, uh, preparing some things for our marketing team. And I was, um, I had developed a fairly simplistic agent using, uh, the paid version, of course, at Chet GPT, uh, with a lot of marketing data and information about what we do at lead smart technologies with our channel cloud products and market information, uh, some general marketing stuff. And then a lot about our particular product.

And, you know, I had a conversation with that agent for 25 minutes. While driving without ever looking at my phone, full conversation back and forth about specific marketing topics. I was working on really identifying and doing more work on our ideal customer profile and the personas of buyers within that.

And so I think we’re going to be to that stage very, very quickly, where it’s just as to your point of what this article is describing is that’s just an everyday occurrence is, you know, I, I use a coat. I, I don’t think it’s been adopted by you or any of the other team, but. You know, you’re working on a project right now that I call code, you know, code word Ralph, right.

And I was talking to somebody about this the other day and they said, well, Ralph, and I said, well, every company has a Ralph and it might be Rhonda, but they’ve been there for 25 years in the company, right? They can tell you every initiative that’s happened to the company. What worked, what didn’t, what kind of hires worked, what didn’t work when the marketing department had these great new ideas and they fell on their face or they did great, they can even tell you in the warehouse that’s 20 miles away in the back, underneath the pallet rack on the North side of the building is a, a, a moving blanket that’s covering a file cabin.

They can tell you about a file. And, uh, that’s in there and, uh, and what it’s about and why it’s relevant to what you’re talking about today. And that’s where we’re headed is that we’ll have the Ralph or the Rhonda that every company already has.

Everybody has access to them 24 seven. And they also have access to all of the other large language models that are behind that as well.

Tom Burton: So, you know, I’m not very good with large words, so, but, uh, I’ll let you try and pronounce that. But anthropomorphism, right. Right.

Um, of AI is not healthy. And, and I mean, that’s, I think a very good example of what this is, is. Migrating into a very different sort of type of relationship.

I did want to hit Kelly’s comment too, but before we move on here, and I think her point is, you know, she’s saying Google, when they first started digitized every book, they mapped every Congress. Right. Then all of that went into LLMs. LLMs are based on those sources and so forth. Is this whole copyright thing that we’re talking about and plagiarizing? Is it even practically able to be, does it even have any practical relevance? Yeah.

Is the question. And I don’t know, it may not because I don’t know that everything won’t become a copy or a, a derivative of something else here before too long.

Kevin Brown: Well, you know, it’s, it’s, it’s kind of funny. I I’ll, I’ll make this quick comparison. Uh, I was just talking to somebody the other day about non-compete clauses.

Right. And, um, the, um, well, it’s a good point. I’m going to interrupt myself.

Once you hit Bob, uh, uh, Bob’s comment. Great, great thought. Right.

But, but what, what Bob’s saying is here is that Ralph and Rhonda have the discernment and sensibility to know when not to say something, some Ralph’s and Rhonda’s too, uh, but, but I think conceptually, I couldn’t agree with you more, but, and the reason that you hear it a little excitement in my voice right now is because I think what Bob is just saying is so spot on, because this goes back to the idea, because based upon this discussion that we’ve had, and I was just talking about agents and all the things that we can be doing is, you know, that goes back quickly and easily to that. Well, oh my God, my job’s going to get replaced.

But I think what, what Bob’s commenting is, is what, uh, Jensen Wong with, uh, Nvidia said a while back that, you know, people were saying, well, like, why would you need a CEO when you just have all of this data and it was exactly Bob’s point was that discernment and sensibility and the ability to take all of that data and, and not just have a data driven response, but have a sensibility driven response by somebody that really understands the organization.

So great comment, Bob. Love that.

Tom Burton: And, and they also, I guess you could take the flip side of that still. The challenge we’re dealing with with AI right now is it will try and say something, even if it doesn’t know, and it tries to act like it knows, and it’s very good at it being the coming across, like it knows, right. It’s very convincing of what it knows.

Kevin Brown: So I’ve been doing some things lately with some of the tools that I’ve been using, whether it’s plot or perplexity or chat GPT and literally telling it, I don’t believe it and forcing it to come back with defending what it said. And I think it’s back to Bob’s point about discernment is, is really great. So, and Tom, by the end of the show, you’re going to be able to say that word.

Okay. That and de minimis. De minimis.

I got the de minimis.

Tom Burton: Anthropomorphic. No, you didn’t. I didn’t.

De minimis.

Kevin Brown: De minimis.

Tom Burton: You got it. There you go. And anthropomorphic.

Oh, well, forget it. Let’s go to it.

Kevin Brown: Very good. So, but I did before we go, Tom, and I really want to dive into this and we probably will have some things we don’t get covered today, but going back to the, that particular article from this is marketingprofs.com and started pulling data from them a few months ago. Um, there’s two points.

They talk about predictive personalization and hyper individualism in marketing. It just makes me think about the call. I, I joined you and your team were on yesterday with one of our, one of our called flagship customers.

And when I say flagship customers, it’s not because of who they are. It’s because of what they’re doing. Um, and, and this is a company without going too far into it is they’re using data from their ERP system.

I should actually have you describe this time. What, you know, I’m talking about here, right?

Tom Burton: Yeah, but go ahead.

Kevin Brown: I’m, I’m interested to see how you, how you, so I mean, at the end of the day, right, they’re taking ERP data, right. About what customers have historically purchased. They’re making that available through our platform, lead smart channel cloud to their marketing team to slice and dice and dissect all of that data and tie that into promotions that the marketing department is doing either related to specific products or partnerships that they’re doing with vendors that they have so that their sales team now knows who to go talk to about special promotions that are being marketed. Um, there might be cost savings or discounts for a period of time, but this is that, that time in life where we’re talking about siloed data from across an organization, which is what our specialty is at lead smart with our channel cloud product is where we take that ERP data, marketing data, e-commerce data, other siloed data.

We bring that into one place and we make decisions about how we can accelerate growth in our business from what historically has been siloed data. So now what would have taken days and weeks and months, if they ever did it for this particular customer is they’re saying I’ve got a promotion and something that I really want to specifically do. Let me take financial data or ERP data in this case, look at the people that would be one benefit from this or are most likely to buy in this case and drive that data across to the person that needs to go influence it, which is a salesperson, which I can now use AI tools to remind them what they need to go talk to people about.

Tom Burton: Yeah. They’re flanking the multi, the marketing process and they’re personalizing the marketing process. So as you said here, right, they’re personalizing it by sending the right promotions to the right people or what would they believe are the most.

And then they’re flanking that and making that more visible and more relevant by having the salespeople kind of arm and arm following up with those key customers. So it’s a great way of getting the synergy between sales and marketing improving as well. But yes, it’s a good example of personalization as we’re talking about here are starting to move in that direction.

Kevin Brown: But these are the two things of what this company is doing is the two things that are talked about here. Predictive personalization and hyper individualism, right? So it’s very, cause people can say forever.

Well, I ran a report from the ERP system or maybe a data analyst did send it to the marketing department and said, these guys have bought this before and then we’re going to send them this email about the sale. This is, this is totally different. This is saying I’ve got data from across my organization and behavioral data and then likelihood to purchase.

And now I’m arming my salesperson and setting it as even potentially part of their goals and objectives. So we’re in a great place. All right.

Tom Burton: Great way to get organic growth.

Kevin Brown: Yeah. So technology, cybersecurity and AI, we’re diving into this section of our newsletter again, as a reminder, if you’re listening on the recorded podcast and you’re not watching us live, you’re not seeing the newsletter we have up or any of the charts or graphs that we put up. So if you would like to get this newsletter again, hello at leadsmarttech.com the around the horn and wholesale distribution newsletter. You can just search that around the horn and wholesale distribution or around the horn and wholesale distribution podcast on LinkedIn. And that’ll take you right to the ability to sign up for the newsletter or the website for the show around the horn pod.com. And we’ll get that newsletter out to grows every week and we’re getting more countries coming in every week.

So Tom, this is a from CFO dive.com deep seek surge hits companies posing security risks. Do you want to take a first stab at that?

Tom Burton: Yeah, I won’t go. We talked a lot about what deep seek is a week ago last week, but you know, long story short, right. It’s the new relatively new Chinese model that came out with a bang, what a week or so ago now or two weeks, almost two weeks.

Kevin Brown: Yeah.

Tom Burton: But anyway, the there’s kind of multiple different versions of this. There is a hosted version that deep seek offers that you can use pretty much for free. They also have APIs that you can tie into to their environment.

And then you can also, it’s open source, so you can take the whole thing and run it on your own computers, right? So you can run it on your own thing. So there’s lots of different permutations of how a deep seek could be utilized.

The question that comes up a lot is it’s safe. And the answer is, it depends if you’re using it on their hosted version, I wouldn’t use it for business, honestly. And I certainly wouldn’t put anything in there that was personal or personal, you know, relevant.

I’ve, if I want to have it on my phone, I wouldn’t even download it to my phone either for reasons, because when you have so many different apps on your phone, a lot of times those apps can kind of hack into my banking.

Kevin Brown: My banking app is there. Yeah. My financial dad is there.

My Schwab account app is there, right?

Tom Burton: Right. So I agree with you completely. I would certainly not put it on my phone for any purpose.

And if I’m using it on a desktop on browser, I would not do, I could ask it how you make pancakes, but I wouldn’t do anything that has any real personal information. It’s very clear. Or attach a document for review or anything like that.

Right. There’s very clear in their terms of service that anything you put in there, they have the right to use and utilize and gets basically back into the big Chinese data warehouse. Now on the open source side, if you take it and put it on your, Bob says, bless you.

Thank you.

Kevin Brown: For anybody that didn’t notice, I kind of half coughed, half sneezed there. So thanks, Bob.

Tom Burton: On the open source side, right now it’s not connected into the Chinese world. It’s running on your own private server. Microsoft created a version.

Perplexity. Perplexity did. I think Amazon did as well.

So you’re not running into those same security concerns. Maybe. Maybe.

Well, I don’t believe, I think that you’re pretty safe as far as the data getting to China. I think the challenge question then becomes with that is, well, should you be using it? Is it biased?

Is it biased in the data that it’s using? Is it other things like that? Well, all models are biased in one way or another.

So it’s hard to say on that. I guess my question would be is why you would use it, right? If you have other alternatives that are reasonably in the same context.

Kevin Brown: I don’t think, you might have deeper insight into this, but I don’t think there’s anything unique or that makes it better than the tools that we have that we right now at least believe you are all running on US servers. I mean, I use perplexity a lot. I kind of go back and forth.

For me right now, AI tools are probably because of we do a lot within our company with open AI is so I do a lot with chat GPT is probably 65%. But I’m probably now doing 20% of what I would historically do with Google. I’m using perplexity and I’m really pleased with that.

Although Gemini being behind Google Chrome searches is great now as well. But I’m kind of a little bit clod, a little bit more perplexity and then mostly chat GPT. But those tools right now, I’m feeling comfortable and oh my word, that’s a great comment.

Tom Burton: It will not tell you. It’ll basically say we can’t comment on that.

Kevin Brown: It asks DeepSeek about Tiananmen Square and anything, well, what we’ve already seen with DeepSeek and this was just a comment that came in was asking about Tiananmen Square. And what we’ve already seen with that is it may answer it, but it’ll be gone within seconds. So that’s it.

Tom Burton: It won’t answer it.

Kevin Brown: I know what happened the first week it was up, but there was answers that you saw change because of the negative influence view it would give of the Chinese government. I’ve looked at it that, oh, Will says that that’s perplexing, Kevin. So that’s quite, quite good.

Tom Burton: Kevin is perplexing.

Kevin Brown: I wouldn’t argue that either. I look at it being a perplexity user is I want to watch for a while before I’m willing to use that component within perplexity because it’s just not automatically used. So my view of it, but Kelly made a good comment and I’m laughing about this.

She said that, and then there’s TikTok, right? I kind of laugh because each week our team behind us that manages the show for us, they may take out little snippets from the show and one of them that they published on social media and it’s there on LinkedIn if you want to get a look at it was, I guess I was a little passionate because they made a snippet about my comment about TikTok because as I look at Deep Six is we’ve just spent, what, a year plus with worrying about TikTok and no one loads spreadsheets from their company into TikTok, right? Nobody loads contracts in to get them analyzed and suggestions made into TikTok. We’re watching TikTok with the Chinese and thinking, depending on who’s thinking you subscribe to is that they just like to dumb our society down a little bit if you go with that line of thinking.

But the risk is there is, and Tom, I’m really appreciative because, you know, we look to you as our so-called science guy here, technology guy with your background in education, being a computer scientist by education, as you brought that up about the apps because I don’t think most of us are very careful of what we put on our phone. And you know, I think about it is the data that just literally our CRM data that’s within the lead smart app on my phone, the my Schwab account, my, our business’s banking app, my personal banking app, which is different. And the risk that we have is pretty great.

Now there’s plenty of bad actors behind China in the world. But when we start thinking about these things where we’re putting on our phone, I heard somebody, the comment made in this goes with Kelly’s comment is, you know, about TikTok is they relate. And this was a cybersecurity expert that was talking about this.

He was on MSNBC. And he said the the comparison of of TikTok and deep deep seek is basically, how did he put it? TikTok’s risk was Sesame Street like in comparison to the magnitude of what the risk is here.

Tom Burton: Anyway, long story short on this on this article, a lot of companies are blocking it. I would recommend blocking the hosted version if you’re a larger company. Yeah, I would not allow anything to go on to that at this point.

And I would question why we would want to use it and how. And I mean, there’s some logical reasons to. There’s some potentially cost saving reasons to use some of their API related stuff.

But anyway, it’s it’s it’s certainly not something you want to have as a free for all in the organization.

Kevin Brown: So, no, I think in that case where we’re actually meeting, have a meeting next week with a large wholesale distributor. And that’s one of the issues that they’re working on right now is what do my people have access to? What could they subscribe to and so forth?

And trying to put some guardrails about around all of that. And, you know, RP just made this comment here about how our phones are listening. I’ve had this happen twice, probably in the last 18 months.

Where it’s not my phone, it’s Alexa, where I’m literally get this happened twice. And it’s been it’s interesting. It’s been on the the device in our in our bedroom where my wife and I have been just getting ready in the morning and talking about something.

And it answers something within the conversation. But we never said its name. But all of a sudden it chimes in with something.

And Alexa is like as an answer to something. Yeah, something, you know, and I’m not at all a I look at that stuff mostly as, hey, if you want to listen to what we’re talking about, you’re pretty bored. Yeah.

Tom Burton: So I mean, I wouldn’t I wouldn’t on my phone. I will not trade crypto or anything like that where there’s an opportunity for something like that to be hacked in a way that would be catastrophic. Right.

And there is some opportunity for those types of things when you’re and I don’t have a lot of apps on my phone. I don’t think compared to a lot of younger people that might have hundreds of running apps on their phone at any given any given moment. So, yeah.

Anyway, we’ll move ahead. Yep. Good.

Kevin Brown: All right. Which one of these you want to hit next? Oh, boy.

So there’s an article here. I’ll just kind of hit this article here from industry industry today. Can investments pay off now?

And it just kind of talks about, you know, economic uncertainty, geopolitical influences, sustainability goal, all the other things that are going on in the business and give some kind of hints and ideas about trying to get them to pay, you know, get an ROI. And and it kind of ties in. I’ll be a little self-serving for a minute.

It’s funny, Tom. I say this. We historically have not spent a lot of time talking about the product that we’ve developed at Leadsmart with our channel cloud and our A.I. tools related to CRM and customer intelligence. And I’ve got some regular listeners who are like, you guys need to talk about what you do more and, you know, and so forth. But but this is and I’m not even just going to say about us. But, you know, as we think about A.I. investments is. Most manufacturers and wholesale distributors are just really trying to get their head around what all of this means and from that standpoint and. There’s easy ways to start, and I think they’re easy ways to start or certainly as we hear people saying all the time that we want to go get a. What are people use chat GPT, maybe we get a company version of chat GPT and we allow people to try and get dip their toes in the water.

But there’s really great places to start. Right. If we start thinking about, you know, well, it’s we’re starting to see a little bit of some of the more forward thinking ERP providers that have some A.I. tools being built in. But, you know, when we start to stop to think about it is you’ve got the vast majority of our customers, elite smart, whether you’re a 25 person company or a 700 person company are making their first leaps into CRM. And I mean, it’s astounding to me, the companies that have never taken a leap into that. And one of the great ways to start is not just with CRM, but with A.I. enabled tools from your CRM that bring all that siloed data together. Now, there’s A.I. companies out there that are focused on inside sales and what products to recommend. But thinking about what you know, whether there’s companies that do what we do or not or just where we’re at is looking at it from a standpoint is what are the ways that I could dip my toes in the water using technology that is going to be help me accelerate my growth just by having that technology? And, you know, I’ve said for quite some time now, there will be a time very soon where right now our source of truth in our business is our ERP system.

Everybody’s is right. It’s our single source of truth. But the reality of it is it’s not and it never has been.

It’s just been the single source of truth that’s tied to your financial debt. But now when we think about all the siloed data that we have across an organization and we bring that siloed data together in a single platform that includes the financial data, that’s where we need to move to be our single source of truth. Right.

Tom Burton: Well, look, ERPs are a single source of truth as it relates to financial transactions in the organization. It is not the single source of truth around the customer and the customer relationship and the customer actions that are taking place. It’s not designed for that per se.

So I think it’s important to have a single source of truth for your financial peace. But what we’re obviously talking about is how do you use AI to really drive growth and growth comes from customers. There’s no magic.

It doesn’t come from transactions. It comes from customers who make transactions. So that’s really the focus there.

Kevin Brown: Mark, it’s looking across the business versus at a transaction, right?

Tom Burton: Hey, Mark, going back to your Alexa thing, he says you can log in and see why it responded. So you should check that. I don’t have Alexa, so you should check that out and see.

Kevin Brown: OK. Thanks, Mark. Mark, great having Mark with us.

He’s been with us a few times recently. I met him briefly at an ISA event a while back. He’s with Enable and a great resource as well at Enable and happy to have him from the UK.

So he’s spending his Friday evening with us. I hope that there’s a gin and tonic, Mark, in your hand, assuming you’re in the UK right now. So if by this time of the evening, there should be a gin and tonic in your hand, if not a Guinness.

All right. So let’s say our last few minutes here. Well, let’s just jump into our sales and M&A segment.

There’s just one piece I wanted to catch there. ORS NASCO this week, which is the large national wholesaler and reseller. They just recently this week announced their acquisition of R3.

R3 has historically been safety, Jansan and some even some packaging things was owned by Bunzel, the large starting in food service. But now Bunzel’s as a distributor. But Bunzel’s been buying quite a few manufacturers in the industrial safety space over the years.

So that was their redistribution arm. And so congratulations to the folks at ORS NASCO. Probably less being done with if you’re an electrical and HVAC, certainly outside of the industrial segment, a little bit less with ORS NASCO.

But we have we have listeners that are in the office product space, the food service space, lots of different spaces. But great acquisition there. It does reduce the number of of wholesalers that you can turn to.

But that was the example I used earlier. Right. You could be the guy that’s, you know, a mile down the dirt road with a Starlink account and a Quonset Hut and an account with ORS NASCO and you can be selling online quickly.

So kind of let’s just kind of jump ahead. Then, Tom, a little bit past that.

Tom Burton: I really liked, actually, this digital sales room. Oh, good. OK.

Let’s just take a second and talk about that.

Kevin Brown: Because from sales and marketing management dot com.

Tom Burton: Yeah. So basically the idea here is that having a platform where you can invite customers in to get or prospects and to get much more detail about it. Well, I don’t know if we talked about on this show or or we talked about it, whatever.

But one of the things that were that are popping up is how much information do you put on your website going forward? Because, you know, historically, especially like as a tech company or certainly as a distributor, right, you you put a lot of information on your website and what’s happening is I can come and potentially, especially in the tech space, replicate or copy, as we’ve talked about before, whole applications based around information that’s on your website. So more and more companies are moving or at least thinking about moving away from their website as being their primary place to share information with customers.

And these digital sales rooms now become because it’s firewalled, right, or it’s behind the gate, it’s gated, it’s gated. And yeah, as Bob says, they’ve been around for a long time and they’ve been microsites. I think we’re going to see a much bigger that’s I think what this article saying is that there is much more broader adoption starting to happen.

And the capabilities of the digital sales rooms are, I think, becoming more robust, right, with the video and all the things that we’re and it’s something I think we should be thinking about, honestly, is really building a robust digital sales room, putting less investment on your website, your website maybe is. And then really where customers want to go deeper in their legitimate prospects, you have them in a good digital sales room.

Kevin Brown: So we were talking about this a couple of weeks ago and I hadn’t thought about this and you brought it up and said, you know, we’re getting to a place where technology companies, including ours, will probably start putting a whole lot less about all the depth of what it can do, because I think what you’re describing is the potential that literally you could an AI tool could scrape that and say, now I can go right. I know how to write the code to go do these things.

Right. It’s going to need a lot of prompts along the way. But, you know, you could something else could pop up in that setting.

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

Even talking about what our customer buyers, it’s kind of micro targeting their customers right now, imagining that that digital sales room where I can quickly and easily and maybe even an AI agent helps me build one is I have one that’s like I think you were alluding to this is that’s very customer specific based upon the issues that are important to you. So let me illuminate that you want to focus on. I want to close 10 more, 10 percent more of my quotes this year.

Well, let’s feature a lead smart channel cloud, you know, micro site for you, so to speak, as as as Bob was describing, where it’s, yeah, all of the things we do are in this gated, you know, or or closed environment. But for your organization, we could even drop in. Here’s what we know about your company.

And then you’ve been looking at these things on our website. So we’re going to set this up for you. And now this is your micro site for you to back to personalization.

Tom Burton: Yeah, great point. I do think it goes back to personalization. It goes back to security.

But we’re talking about I think we all have to be more aware of things that we put out there can be used for purposes that we never would have thought of five years ago. Right. So.

All right, let’s let’s move ahead.

Kevin Brown: You know, I just thought of something. I’m just going back to that Alexa comment I made and I was just looking on here on the comment that Mark made about logging. I think what Alexa was doing was just jumping in to help give my wife somebody interesting to talk to.

That may be too. Yeah, maybe true.

Tom Burton: He’s trying to help you out or Alexa trying to help Darlene out, trying to help Darlene.

Kevin Brown: Right. Very good. All right, Tom, let’s kind of jump ahead.

Just we’re running short on time. Some good articles in our people in the leadership segment about employee engagement surveys. This was interesting one from HR dive.

Both of these were from HR dive dot com this week that half of U.S. workers say they’ve used AI to complete workplace training. So I think I think what that when I dove in a little bit further, it’s like asking its own questions. You know, you’re taking some online training and then I know I’m going to need to take a test.

So, well, let’s just use chat GPT.

Tom Burton: My neighbor just got a new job at a large company and he was doing all of his H.R. tests. And I was the first thing I saw someone. Did you go to chat GPT?

And he’s like, I had chat GPT on my phone. I was just going through and answering it all the way through. So I think that is probably more the exception than the rule right now.

Kevin Brown: Well, hopefully you’re hopefully your neighbor’s new employer is not with us here. So we added a new section a while back called channel leaders on the move. There’s a couple of good sections in here about some people in distribution, both in the electrical plumbing and and low voltage electrical space.

So their moves. But Tom, the one thing in our industry scuttlebutt section that we have every week, we’ve got some good topics that go with that. But the one I did want to mention, just as we run short on time today, is our friends in in Canada, EB Horseman.

They’ve just opened a new branch in Campbell River. So great, great article. There’s some pictures of their new branch and they’re good friends of ours there.

Tom Burton: So we wanted to promote that innovative and some some pretty cool stuff, I think.

Kevin Brown: Well, they’re they’re what I love about what what Steve and Amy and the I.T. side and even the CRO they’re trying to work on is really do some innovative stuff. Much of what we were talking about earlier, where we blend, you know, technology, A.I. and I guess we’ll say they have their their Ralph and their Rhonda and they’re blending that with their A.I. and their and their technology tools to accelerate the growth in their business. Congratulations to them.

The last thing is we each week we have a second look section as well. There’s an article there called A.I. in distribution and from skepticism, strategic advantage in that. And so our good friend Brian Hopkins from Distribution Strategy Group and he used to work for one of our customers, he wrote that article.

I thought it was nice. He kind of breaks down how people are moving from the skepticism to to strategic advantages with that. So very good with that.

And is anything else for that, Tom, or want to hit the road?

Tom Burton: I think we should wrap it up.

Kevin Brown: Very good. So, again, I’m Kevin Brown, Tom Burton. We get together every week.

We chat with great folks like the comments we had today. We’re very appreciative of people. Literally, we had multiple countries commenting today and people from all over the U.S. and North America. We greatly appreciate that. Again, as we mentioned earlier, as we started today, if you like what you hear each week here, please hit the subscribe button forward the invitation you might get from us to your friends. If you’re listening on Spotify or Apple podcast or wherever it might be, please subscribe and then leave a review.

And when you’re leaving a review on things like that, that just means their algorithm pushes us out to more people. So we’re we’re greatly appreciative of that. Again, we can’t do this each week if we didn’t have the support of the company that Tom and I work for, Leadsmore Technologies.

We’ve developed an enabled CRM and customer intelligence tool that brings deep data and deep insights into your data that helps you support your customers better, learn more about and support your teams and get great insights into your entire business, all on a single platform that can actually be used across your entire organization. We do that as we bring together siloed data from across your company. We give you actionable insights to help you grow.

So if that’s something that you want to look at in your organization is thinking about trying to accelerate growth. We’re talking earlier today about companies that want to, you know, double in size over five years. You need 15 percent growth per year.

That’s what our technology tries to help you do. Right. So very good.

Aloha, Bob. Thank you for that. Tom, anything exciting for the weekend ahead?

Tom Burton: No, just got to get out of here bright and early Monday morning.

Kevin Brown: So, yeah, we’re on an early flight. I’ll meet you for dinner in Mississippi on Monday and then Tuesday night’s dinner in Birmingham and home for, well, not a late dinner, home quite late. I think dinner is going to be at the airport.

Changing planes, trying to get back on Wednesday. But I like to look forward to traveling with you. We don’t get to do it together that often, but that’ll be good.

Evidently, there’s like a football game or something Sunday.

Tom Burton: I don’t know anything about it.

Kevin Brown: Yeah, you know, come on. So who’s your pick?

Tom Burton: Well, I certainly want Philly to win. So, OK, I think everybody in the country, unless you live in Kansas City, wants Philly to win.

Kevin Brown: So this is one of those games like that to me this year. Football in general at the end has been disappointing because when I watched Ohio State, you know, play against Notre Dame, I’m like, could just both of them lose.

Tom Burton: So anyways, I really wanted Detroit versus Buffalo. Didn’t get that, but I thought it might be a much more interesting game.

Kevin Brown: I would have been much more interested in that game. I’m going to throw some ribs on the smoker and enjoy some ribs during the Super Bowl. So I’m going to be more interested in the in the Bordeaux and the ribs probably than the game.

We’ll see what happens. We’ll talk about it next week. Everybody, hey, thanks for being with us again.

Tom Burton: Kevin Brown, Tom Burton, and have a good weekend.

Kevin Brown: Yeah, exactly right. Thanks. Be safe, be kind and do good things.