Around the Horn in Wholesale Distribution, Episode 96

Sa. Sam. Good morning. You okay?

I'm a musician today, not dancing.

Okay. I didn't know if you were all right there for a minute.

So I was having a seizure or something.

Exactly.

They took the words right out of your mouth, didn't I?

Exactly. You said it. I didn't.

All right, well, you know what? Still on crutches over here next to me. So last weekend at youngest son's wedding, I didn't have to embarrass Mrs. Brown with my. With my dance moves.

So you could have done, like wheelchair dancing or something.

You know, we did kind of get a little. Just a little edge of a slow dance in together, but that was. That was about it. So how are you doing today?

Doing okay.

Good, good, good, good. Looking forward today's show, we get some exciting news we're gonna share later in the day about an upcoming episode as well. But before we dive into our weekly discussion the news, let's talk about who we are and why we're here. So I'm Kevin Brown here with my lifelong friend and co founder of Lead Smart Technologies, Tom Burton. We get together every Friday morning, unless someone's on vacation, which is rare, or someone's stuck on an airplane. And we chat about the newsletter that we publish every week. So every Friday morning, we push out at odark30, a newsletter called around the Horn and Wholesale Distribution that goes out to a little over 10,000 people each week. We try and bring the news of the week as we see it happening, whether it's the economy and supply chain manufacturing and distribution, artificial intelligence, cyber security, mergers and acquisitions, all kinds of different topics. E commerce, sales, marketing, and so forth. We bring that news together and we try and kind of, as we say, peel back the onion on how that news impacts manufacturing and wholesale distribution. So again, as I mentioned, the newsletter is called around the Horn in wholesale distribution and manufacturing. If you do not get that and you would like to, the easy way to do that is to just pop us an email@helloadsmartech.com we'll make sure we get you on that list. The other place that you can sign up for that is on the website for our podcast and live show, which is www.aroundthehornpod.com. and that has past episodes, a little bit more information about the show and can certainly get you signed up for that as well. So we do this again, as we mentioned, every week, but we're doing it live this morning as we do every week on YouTube Live, LinkedIn Live, and Facebook Live. And if you happen to Be listening later on on the podcast. You will not see what everyone else is seeing on the screen. And that's that newsletter that we mentioned before. So again, if you'd like that, we'd be happy to get it to you. So whether you're with us live or listening later on the recording, we're appreciative of having you with us. We're Today, Tom, we're 96.

96. 96.

So we're, we're going to actually just blurt this out now. July 26th, if you want to mark your calendars, will be our hundredth episode. It'll be that because the 5th of July we will be hopefully sitting on the beach with our feet up and not having a show that, that day following the, the long weekend here in the US So we're looking forward to that. The, it's going to be a free for all. It's going to be a WWE like event. We've got, we're going to announce the, the, the guests that we have, but rather than one or two guests as we've had previously, we're gonna have seven or eight guests with us. And it's going to be a lot of fun and kind of what you'll find is I think it's going to be a who's who in wholesale distribution.

I think so.

Yeah. So we'll get, we'll get maybe an understatement. Well, you know, there's a couple of wild cards that are going to be with us that you just don't know what might leave their mouth. So that's good. So before we dive into the news again, if you like what you hear, if you join us regularly, the great thing that you could do for us would be if you're Listening live on LinkedIn is hit the follow button on Lead Smart Technologies page. You'll get all the updates about the show. If you're on YouTube, hit the subscribe and Follow button as well. You'll get the updates there. Same with Facebook. If you're listening later on on the recorded podcast, please. Whether it's Spotify or Odyssey or Apple Podcasts, whatever it might be, just hit the subscribe button and ideally leave a review that will get this out to a broader audience and we can continue to grow the show well past this hundred episodes that's coming up soon. So finally, we couldn't do this each week if it wasn't for our sponsor company that Tom and I work for, Lead Smart Technologies. Lead Smart has developed a AI enabled customer intelligence and CRM Platform solely developed for wholesale distribution and manufacturing. It is a solution that can bring very quick adoption within an organization, return on investment and accelerate growth within companies. So we can never be of any help to you or your organization as you continue on your digital transformation journey. Please let us know. And we thank the sponsorship from LeadSmart for us to be able to do this. So, Tom, enough of that. Ready to dive into the news?

Let's dive into the news.

Well, we start each week. We have different segments of our newsletter. First one we do is the economy and supply chain. So I was impressed with you last week. No gloating on your part when the Fed said that it may just be one cut this year.

Yeah, I'm not gloating. In fact, like I said last week, I'm. When they say things like that, it makes me nervous. Right. It's. But interesting and not interesting, I guess. Not surprising. Data here, US labor market, housing data point to slowing economy. You know, it's, it's, it is funny. I, I believe next year, in 2025, we'll probably have the four or five or six cuts that they were talking about this year. So I actually believe that will likely happen because I do think we do have, especially as it relates to the consumer, a slowing economy. And that's basically what they were talking about in this article is, you know, there's, it'll be interesting to see too how the, how the summer shakes out. You know, in terms of travel. I mean, I'm hearing record, record level, record levels of travel and all of that, which is super expensive. I mean, it's really expensive to as, you know, to be away from home to do anything.

Yep.

So it'll be interesting to see how that shakes out. But yeah, definitely looks like some, some things slowing down.

Well, I think, you know, it's, it's a mix of things. I think the risk right now. Right. Is as we see some of these things happening is that they didn't act quick enough is the risk. And I think you're, you see a little bit of that from, from Powell and the discussions is there's a little bit of a caution there that it could be, wait a minute, we're slowing down too much and then we've got to stimulate and there's a, there's a big, big balancing act. So I'm sticking with my two cuts this year. And well, I think it's too late for either one of us to change our bets. Right. We've been talking about it here in front of a large audience globally for months now. But I think it's going to be an interesting thing to see within this, you know, labor challenges. You know, one of the comments said this article was said as from a chief economist, Comerica. It said economic indicators for the second quarter largely point to another slow quarter of economic activity. But they said soft activity in the labor market reinforce the expectations to begin those cuts in a few months. Initial cut in September, this gentleman is saying, you know, and again, we just pretend to be economists on Friday mornings. But this gentleman, who is an economist and highly touted evidently because Reuters is quoting him here, his comment was an initial cut in September and a second cut in December. So we'll see, huh.

There's no shortage of opinions, let's just put it that way.

I think the good news is, is that we didn't put any caveats into our bet about what percentage those cuts were. Nope. Nope. Right. So we'll just, we'll see what, see what plays out. But I'm guessing between now and the January when we know who won all this, we, we might have already had a stake together along the way.

Could be good.

Good, good, good. So similar article along here, Bloomberg article talking about US Industrial output rising more than forecast, which is some good news. Again, this talked about this gain and all the gain is less than a 1% gain, but it's way beyond what anybody had expected. So kind of take away from me on that is the thing that I think is important to watch from a manufacturing and an industrial output side is capacity utilization in factories. And, and we've looked at that a handful of times throughout the show when we see some of these indicators. So now they're looking at this, this rate being up at 78.7%. So you know, I guess perfect, perfect scenario, right. If we go Back to Economics 101 and Guns and Butter, right. In production is that we would be at 100% utilization. I don't know that we've ever been there could ever get there. But seeing that number rise is probably a good balance.

So is that number represent the manufacturing or factory output utilization or.

Exactly right. Yep, yep. It's looking at a measure of potential output, what should be able to be available to be output and then what is actually the utilization currently. Right. So when we add, you know, inventory issues and, and raw material issues and so forth through the pandemic, ships lined up out in the channels and so forth, then those numbers were coming way down because the, the opportunity for production wasn't there. Then when we had a glut of inventory. We saw some spike, then we saw a glut of inventory coming in because everybody was catching up. And then we flattened out again and now we're seeing that little, you know, blip of a rise.

So I'm, we have another article coming up here talking about the fact that, you know, the record growth of manufacturing plants in the U.S. i'm, I'm wondering if part of the, if there is a lower amount. I'm wondering part of that is it's new factories getting ramped up, getting started. Does that factor into the equation? I mean, the amount of new manufacturing that we're going to talk about here in a couple of minutes is quite substantial. I mean, it's meaningful. It's not like a little. Yep.

I don't know that there. And I, I don't know the answer to your question is. I guess the key thing.

Yeah. No, I just, it's just.

Yeah. Is. But I would, my, I'm going to make an assumption and a guess. My assumption is that it's too early to see those things coming into play right now. But I would think when we have this discussion a year from now, then we're going to see as we talk about whether that's the chip ax or whatever it might be and, or near shoring and on shoring or most specifically in this case onshoring, those numbers will start to reflect.

I think there's another interesting point here. I purposely put in this graph because it's. I know realize it's hard to read, but if you look at it closely, you'll see that this has just been a roller coaster right up, one up, down, up one up down. But if you were to look at it kind of straight across, it hasn't changed a hell of a lot of. It's pretty much the same with a lot of up and down between here and there.

Well, it's kind of like the economy in general.

Right. I think it really represents this roller coaster that we've, we've been dealing with.

Yeah. And it's, it's, it's small. It's typically. Right. We see a couple of movements in this particular chart, but in general it's slower movements, you know, or smaller blips. It's more like the first segment of a. What is a pqrs waves on a, on a, on an ekg. Right. They're slow, smaller, slower blips. And that's what we're seeing. And I, and I guess, you know, the theory it should be small blips on our way to optimal economic output and recovery is what the, certainly the Fed would like to be looking for with this. So you know what? We're seeing some good signs. We spend every day, all day on the phone with wholesale distributors and manufacturers that are using the lead Smart channel cloud solution. And the good news is there's still a vibrant buzz out there of business growth and enthusiasm. There's no nice, really naysayers out there. Everybody's fighting the same battle whether it's, you know, any one of us that has a balance on a credit card or is thinking about borrowing money, same issue for a distributor out there. It's, it's uncomfortable. Right. But doesn't change what we need to go do.

No, I, and even the slowdown that I believe will occur next year is not, is going to be consumer driven, in my opinion. I agree with you. I see on the business side a lot of bullishness and just a lot of conversation about growth and looking at growth. I don't, I see a lot of offense, not so much defense. I think that's going to change, know. But obviously we'll see what happens with the consumer. But that may not have all that much impact on the B2B world of, of distribution. Should we move on?

Yeah, well, let's, let's kind of get down to this, this topic, this next.

One'S very much related.

Exactly right. So this is from Supply Chain Brain and again we bring these articles that we found of interest throughout the week together each Friday morning and in the around the Horn and wholesale distribution and manufacturing newsletter. This one is five key challenges facing U.S. manufacturing and, and I think, you know, this, this really dives into. And I was appreciative of this article because it dives in Tom, on that, you know, on. We talk, we talk regularly on the show, right. About the, the enthusiasm and excitement about, you know, on shoring and near shoring and, and managing supply chains and so forth. And you know, I think one of the comments that we have had a number of times recently, I think it was both something that was written in an article and then we had a guest, I think it was Mike Mortensen with ARG said this, you know, we're back to managing supply chain with our partners weekly rather than quarterly.

Right.

But it's easy to sit back and you know, sit in front of a microphone and a camera and talk on Friday mornings and pontificate about, you know, good news, about reshoring. But there's a lot of factors that go with that that make it really Quite challenging at the end of the day to actually get it done. And there were some really good points in here. You know, they talked about five key challenges within this that I thought were super relevant, some of which I hadn't thought enough in depth about.

Well, one of them being energy and power and electricity, which is. We're going to have another article about that in a little bit as well, but I do think that is going to be the, these, the most biggest critical impact that we have on business in the next five years is, is energy and having the power to power everything that we're trying to, you know, accomplish.

Yeah, to your point. Yeah, that's when we'll dive into that even closer here. There's some of the statistics in that article that's upcoming is, is pretty astounding to me as we look at that. But they talk about, you know, powering, right. Is we've got to get power to these facilities. And we, we have. Before you think about AI, before you think about, you know, I think it's 2035 that you won't be able to sell an internal combustion engine vehicle in California any further. I don't know about what other states are or where they're at with that, but we're already, we're already tapping our, our energy sources in our grid.

Right.

The way it is now, I, you know, I don't know how it is in Santa Barbara where you are, but where I'm at down here in South Orange county in Southern California here is we get these flex alerts, so to speak. Right. Brownouts already, you know, and it's, it's pretty, pretty astounding when we think about the stress that we're going to put on the grid. And there's no way developing that grid could possibly keep up. So that's an interesting piece. They talk too about labor issues. Right. And we've talked about that over and over again on the show about the challenges that go with, with keeping enough people employed. And that's one of the biggest challenges that we talk to distributors and manufacturers about is, you know, keeping people in the warehouse, keeping the drivers in place, keeping, keeping the people in the business that they need to.

So what were what real quick, what were the top five?

Yep. So powering power, which we talked about. Labor.

Yeah.

Climate change risk. Right. They talk, they. And this is interesting too. Right. And this kind of ties back to other things we talk about on a consistent basis when we look at supply chain. Right. This is talking about. They tracked through this article, the group that did the survey. They tracked 300 extreme weather events that could wreak havoc on supply chains. They looked at historical data that showed the frequency and intensity of extreme weather events like heat waves, floods, droughts and hurricanes all are on the huge increase every year. So now we've got these supply chain impacts, right. And we, we think about them when they happen. Right. But sometimes we'll think about labor issues and, and maybe port strike or whatever it might be. But now we're talking about the climate change issues. You know, when you've got trucks pulled over the side of the road because of weather issues that aren't moving, big issues. And then they talk about maintaining a strong supply base. And this was so this, that was the, that was the fourth one, maintaining a strong supply base. And I really, I'm just going to read the sentence out of this because I think it's powerful. It says if a company reshores product assembly to the US for example, but is still reliant on nuts and bolts from Chinese or Taiwanese suppliers, it has not solved its supply chain problem. Establishing new supplier networks can be time intensive and costly. Right. And, and we talk about this, I think we talked about it a little bit even last week. Right. Is as you look at near shoring so much of it in Latin America and a lot of it in Mexico is they're still relying on China as well in those settings. So really understand, I think these days that whether you're a manufacturer or a distributor, you have to understand the depth of your supply chain. Not I get it from XYZ or Acme Manufacturing, but whereas Acme manufacturing sourcing goods.

Sure.

The last piece was the regulatory environment. Right. And compliance costs, if you look at, you know, some states have dramatically higher compliance costs, whether it's insurance rates or it's regulatory impact, whether it's, you know, environmental regulations, safety regulations, all of those things. And frankly, you know, in I hate to say it, but if you look at China and other parts of Southeast Asia, right. Safety regulations are, if there are any there, they're very different than what they're here. You've got, you know, U.S. manufacturing companies, you think about some of the, the retailers out there of a Nike or retail brands and so forth that are trying to push that, you know, control sweatshops and things like that. But so much of that is window dressing because you just can't, you know, you can't control it.

Yep.

So those were the five. Right.

Bottom line is, is, you know, it's the others. The devil's in the details. Is really line right. Of it's great to go onshore. And it's not. Shouldn't be. That definitely shouldn't be. Not to do this. But there's a lot of, again, devil in the details to get all that to work.

Right, that's right. That's good. Yeah. So something to just continue to pay attention to and focus on is as we see these things happening and the climate change risk was the one that kind of stood out to me is it only makes sense. But, you know, sometimes things of common sense, when they pop up for us, we're like, duh, you know. But it was an interesting one for me as well. Yeah.

I wasn't that. There was a graph in there that showed like this big spike in extreme weather, but then they didn't explain what they meant by extreme weather. Where if you looked at the graph of some of the other typical natural disasters and things like that, they were pretty flat, maybe a little bit up. So anyway, didn't know exactly what they're. What they were referring to there.

Yeah, well, I mean, they're just. They're watching that historical data move and then. And I think, you know, listen, it's funny. I say this all the time, right? Is I don't ever want to get into the debate with anybody about, you know, climate change. Everybody has their opinions, everybody has science that they believe in, whatever side of that discussion you're on. I live 40 miles from where I was born. We were born in the same hospital. And all I know is the weather is very different than in the last 10 years, than the previous 10 years, and certainly very different than childhood and growing up. So there is. There is change going on with. Which is why we're seeing. I think we haven't talked about this on the show, but we're just coming into hurricane season, and I think the number of named storms that they expected, you know, is even higher this year than in the past few years where they've been through the roof.

Yep.

Good. Well, we're still in our. In our manufacturing distribution segment. Good article that came out of Industrial Distribution magazine. It was called the Entrepreneur and Distribution. Tom, I don't think you've had a chance to meet Jack Keough that wrote this before. Jack's trying to be retired in the Boston area and has been just a stalwart in the industrial and distribution world for, well, the entire time I've been associated with it. I think I first met Jack in the. In the early 90s and he wrote a nice article here, though, about. About the focus and the need for entrepreneurship and, and continuing to support and thrive to see the thriving in distribution. I thought it was kind of a cool article. Some of the stuff he talked about.

Well, he said, and I don't. The statistic I believe he said is 20% of all American adults are considering entrepreneurship. Right. Which is the largest it's ever been.

Yep.

And then he goes on further, which I completely agree with, which is what are the challenges that exist to building a business?

Yeah.

And I think this is an area, this is an area I think a lot about, you know, having pretty much been a entrepreneur my whole career and having very few quote unquote real jobs.

Yeah, right.

Is I think that we have to figure out and I say we as a society and a, and government or whatever is to make it easier or at least less friction for. Maybe not easier, but less friction for entrepreneurs to get started. And I think we make it more difficult than it, it's already difficult. Right. So don't. By no means am I saying it's easy, but I think we make it more difficult. And if we got 20% of the population thinking of entrepreneurship and we make it more difficult like you just pointed out regulation or. Right. Or you know, even access to capital or just anything. Right. I mean getting a bank account, even getting a business bank account when you're starting a company can require is a lot of friction in a lot of cases and a lot of hoops to jump through. So I think it's something that, and it'd be interesting to see politically, you know, if some of the candidates are. I know you hear a lot about cutting taxes and, and regulatory. But are we going to make it easier for. Again, not easier is not the right word because it's not easier but less reasonable.

Reasonable.

Yeah, just less friction and less headwind to if you're going to go ahead and create business. And that applies not just to an entrepreneur who's just starting. That's really to any sort of small medium sized business that is, you know, trying to, to get off the ground.

Listen, one of the quotes he talked about was from Jensen Huang from Nvidia.

Right.

And what are they. They think they've been going back and forth with Apple and Microsoft about highest market cap out there. Right. But trillion dollar company in, you know, the, the, you know, the golden child of Wall street in the last couple of years. And he just said it was a million times harder than I expected. Now he, you know, we're talking about small businesses, entrepreneurs and, and by the way, that study was from a global entrepreneur study between Babson College and London School of Business is who had put this research together that the Jack was talking about in this. But you know, it says 19% so nearly one in five adults are in the process of founding a business or have done so in the past three and a half years. So that might be a side hustle or it might be I'm taking every penny of equity out of my house and going all in.

Right.

But he talks about this. He said I don't think anyone would start a company if they knew what it was. Basically what would entail is he said or at least no one in their right mind would do it. Now there's people like the two of us, right, who have done it over and over and over again throughout our careers. Sometimes high levels of success, sometimes hiccups along the way. And I'm confident that we've done it, we're doing the right thing and good things right now. But. But it is just darn hard. And I think this just is a great article celebrating the idea of the entrepreneur and distribution. And there's just story after story about this and this is one of the things that I love and I'm going to try and actually carve out some time this weekend. You know, our friend and friend of the show Dirk Beveridge is in, I think it's week, I can't remember like day 28 or something like that of his We Supply America tour where he's out touring with family owned, independently owned or employee owned distribution companies. And just so many of the stories that go, you know, goes along with that and so many of our, of our, of our great customers at Lead Smart are multi generational companies. And when you hear the story, you know, I mean perfect example Tom with this is you know, the entrepreneurship that goes with that is if you were to talk with you know, Dan Judge or Jennifer Murphy from Netplus alliance, you know, I was visiting with them in February, I think it was their offices overlooked the Erie Canal. You know, if you're sitting in their conference room, you look down on the Erie Canal and it's I think Dan's great grandfather that they had a mill, right? And you look back on these stories and Jack's article talks about Sid Jacobson, the founder of MSC Industrial, which is now a publicly traded company, you know, selling cutting tools from the trunk of his car. My first job in distribution was for a company called Z Medical and the founder of the company, I think it was Tom Zapara was his Name. He came back from the Vietnam war with no job and he sold vitamins and band aids to the refineries in and around Los Angeles and turned that into 70 locations around the country. You know, so great story about the focus entrepreneurship.

Well, every business started somewhere it did.

Yeah. Some of the stories are better than others.

Yeah, some of the stories are better and they have better, happier endings. Yeah, but. Yeah, but anyway, I think it is going to be a big thing politically even I believe is making the road a little bit easier for people to get started with businesses. Or again, less friction. Yeah. And less headwind.

Friction's the key. Right. If you try and keep all the licenses and insurance and everything that you're supposed to. It is.

And what it does is even keep up with. I mean you don't know what you don't know half the time and then all of a sudden you can get slapped with a fine for something you didn't even know you were supposed to be doing.

That's right. Yep. Great, great point. Good. Well, let's jump into our e commerce and marketing segment.

Okay, let's do it. So this is entrepreneurship.

Yeah, exactly. Right. So this was our first article, problems. It's from Digital Commerce 360. We try and use a lot of their content regularly. Problems AI and real time payments could solve in E commerce. And one of the reasons that I keyed in on this article was, and it doesn't talk about this a lot, but I think it does tie in on the back end of this is, you know, as we've talked about blockchain quite a bit and so I kind of wanted to get your thoughts on this. As we look at E commerce traffic increasing, we've got AI related so called cyber criminals on the rise out there and this talks about AI related payments and I think part of that will be tied to cryptocurrency as well and or blockchain. So want to get some of your thoughts on that?

Yeah, I mean there's a lot going on there. Um, you know, this article in particular was focused more on how can we avoid some of the fraudulent activities that exist in E commerce. Real time payments is an interesting one. I actually think real talk about something that really helps an early stage business or any business is getting, you know, paid. I mean my wife has an E commerce site. Sometimes from the time the payment comes through till it hits the bank can be six, seven days. Right. And you do that at volume. It all of a sudden you start to realize that, you know, that's a Lot of float out there and things like that that are occurring. It also opens up the door for a more fraudulent situation where the money kind of sits in different places and travels in different places and. And so forth along the way as well. So yeah, I agree that AI can definitely help identify fraud. It's funny because my wife's has a. Her e commerce site is Shopify and we did get a payment not too long ago where AI came back from Shopify and said based upon what we can tell, this person doesn't look legitimate or this, you know, it was like a beware kind of a beware type of thing. It turned out to be okay. But it was interesting to see sort of the red flag on that to at least be aware of it. And then we had to actually approve to do the transaction because they, you know, flagged something or somebody as being that way.

So did they tell you why they saw it that way?

Yeah, it was. If I remember right, it was. They said that this person or this credit card may have been involved in a fraudulent transaction or there was something that was like a red flag. I don't know if it was really using AI, just maybe data. But the idea being is that, you know, here was a red flag that you should be be cognizant of.

Gotcha. It's. It's kind of intriguing with this. So I was kind of appreciative of this is just looking at it from, you know, they related it. I'll just share this with you. It said 48% of B2B sellers and 40% 6% of E commerce retailers cited fraud as their leading business concern. In addition, it said 31% of B2B sellers and 30% of E commerce retailers cited the risk as chargebacks as leading concern. Now, you know, we see E commerce within distribution as we look at it typically, right. Our typical customer leads. Martin folks that are typically on coming to the show here, most of their e commerce is more tied to transactional things with existing customers. But what we're seeing more and more of is distributors who are putting a Shopify site up separately or having maybe an Amazon presence or they're selling. A good example would be just, you know, selling power tools online. You might be a geographically, you know, your warehouse might be in. In XYZ state, but you want to start doing that more, you know, potentially even globally, but certainly nationally. And now we start putting ourselves at a higher level of risk because we could be getting any type of customer could be coming versus what we see so regularly. Maybe in pipe, valve and fitting or, or H vac or industrial where, where people are coming in and building orders on the e commerce site versus a true traditional shopping site. So there's some risks there as we try and look at, you know, expanding into new markets and doing different things is kind of, it's, I guess it might be seller beware in this case versus buyer beware.

Yeah, exactly.

Good. So good things to keep an eye on. All right, so again, we're still in our e commerce and marketing segment. Next article from Social Media Today. It was tied to some research they did with, with LinkedIn 9 defining traits of the modern B2B marketer. Let's, let's unpack a few of those because I think if we, you know, what made me think about these, Tom, was, you know, oftentimes as we talk with, you know, with our customers there, you might now we have, you know, you meet people in wholesale distribution and manufacturing who have very sophisticated marketing department and then you meet people who, the person in the marketing department might be somebody from customer service who they also have scheduling trade shows and maybe running a few ads here and there. So it's a broad, a broad difference than this. But for those people who are one, evaluating, I guess their existing marketing department or two, really trying to look at the growth of it, there was nine kind of factors here. And let's just kind of maybe unpack a few of these. The first one was talking about, you know, strategic thinkers. And for me, the, the first part of that is, you know, does the person have some background in doing this to start with from a marketing standpoint? But they talked about analytical prowess, industry expertise, and some level of financial acumen that was in the first part of strategic thinkers.

Yeah. I truly believe that, you know, having owned a marketing agency, been around marketing off and on my whole career, I think the, the mindset of, or the skills as we're talking about here for a marketer is going to be the most radically changed job for the next 25 years or next five years even, just put it that way.

Okay.

And the strategic thinking is a great point of that because more and more the marketing, marketing and even sales executives have to think more like a business person and less as a marketer. Right. Because if you think about it, the marketing and sales, or you want to call it revenue or whatever you want to call it. Right. Those two groups working together are responsible for driving the growth of the business.

Right.

And we even see this a lot with our lead smart customers. More and more they're Expecting the sales team to understand gross profit and understand the ramifications of discounting to gross profit and what that means on the business and so forth. They're expecting salespeople to understand accounts receivable or receivables and what. And the impact of that. They're expecting them to understand, you know, customers that don't pay with the proper, with the terms that they've agreed on and so forth. And from a marketing perspective, more and more you have to understand the business. So the strategic thinking part of it, I completely agree. It's not just strategic thinking like I have ideas, it's strategic thinking related to actually how the business operates. And you got to almost think like a CEO or, or a key executive.

Yep, yep. I think that that's a great point. So jump into the second one. They talk about technology trailblazers, right? That there's some key skills involved. But part of the stat that it added to that was that, you know, 2, 2 out of 3B, 2B leaders say their organization is currently using AI, which is a 20% increase from last year. And obviously we're going to continue to see what that is. So you know, the key skills they talked about was tech early adopters and an evangelist. Two is innovative problem solving and three is a user centric mindset. So I thought that was kind of interesting with this is, you know, we, we talk to companies every day who are just kind of dipping their toe into marketing outside, I'll say digital marketing of doing things outside of you know, the company barbecue that they have at each branch twice a year or some events that they might put on and so forth. So as we look at companies who are digitally transforming, we see companies consistently day in and day out that are, whether they're dipping their toe into using something like Mailchimp or something as you know as, as advanced of ActiveCampaign or HubSpot for marketing. The technology tools become critical and we need to have people that understand that and are forward thinking in that arena. So what are your thoughts on some of the next ones?

You know there's one here. We don't have time to cover all of it but I'll go down to number five here. Data interpreters. Which my favorite data.

You like you.

No, I don't really like data, but I, I really like the fact that companies are starting to respect their data and recognize the value of their data.

Very good.

And you'll notice here it's, I know it's hard to read here on the screen, but it says data Analysis is the number one digital. What is it? Skill.

Yep.

Being added to LinkedIn profiles globally. Right. Well why would people do that? Because they want to be recognized or show that they have some experience with data. Clearly. Because those are areas where people are going to be looking to hire and looking for high skill jobs. But as a marketer in particular, and this isn't just like data like who opened your email and that kind of stuff. But really again, understanding the business, understanding the effectiveness, understanding. I mean think about this from a marketer perspective. You can influence gross profit in a business.

Absolutely.

You can probably even to a degree influence your payments and your AR and how you do, how, how you look at certain things, but you certainly can influence gross profit. So think about the data and looking at the data and what are we doing to drive and manage gross profit in a, in a business is a good example of I think this data analysis and obviously how you use it for AI and how to drive some of the other things.

So yep, that's good.

And then yeah, I mean the last or number eight here, vision, which is kind of what we've been talking about, Visionary Chief Marketing Officer. I don't see a lot of chief marketing officers in our world. Maybe that'll become more and more of a trend. You certainly see it more and more in the, or a lot in the tech world. But I do think it'll become more and more of a trend and I do think it'll be a very senior business centric position. Yeah.

And I think what we, when we do run across them in the distribution world and manufacturing world is, I won't say this across the board but oftentimes it's a title and the role is different than maybe what you might see in other industries, whether it's retail related or technology marketplace, SaaS, software, whatever it is, the, the role. And we, and we see some of the same thing Even with, with CROs, with Chief Revenue officers, they, they tend to sometimes mean a little bit different things but you know, good, good, good infograph here about things to be thinking about, you know, and, and it doesn't matter if you're listening with us today, if you're a, a sales leader, marketing leader or, or an executive is where we're headed from a marketing standpoint. We're already at a place now where we can do just so much more than we've ever been able to do. AI is going to change this from helping with content development, analyzing markets. We're going to talk in a few minutes about, about, about prompt Prompt engineering within AI, which, the tools that go with that. So I think that the day of the, you know, we're just going to move somebody over here into marketing and, and, and have them go to a couple of webinars or, or some events here and there is going to be changing. And those people that are there in that setting, no offense to any of them, they're just going to need to, to optimize things. They're just going to upskill themselves. Right now the, the beauty of it is between trade associations and buying groups and so forth is there's no shortage of events for marketing and e commerce for these people to go learn. And we participate in one each year with affiliated distributors. And it's a phenomenal event from a learning standpoint. And it's not just going to listen to speakers, it's talking amongst peers. So good stuff. All right, well, that kind of leads us into our technology, cybersecurity and AI segment, which I mentioned a few moments ago. There's a good article here from. And by the way, Tom, before we kind of go any further, I'm going to reiterate the discussion that we had early on today. If you happen to be listening on our recorded podcast, you're not seeing the screen that those that are with us live on LinkedIn or YouTube or Facebook are seeing. They're seeing the newsletter that we send out each week. It's called around the Horn in wholesale distribution and manufacturing goes out to about 10,000 people each week. If you would like to get a copy of that, you can reach out to us anytime and you can reach us@helloadsmartech.com or drop by the website for the show, which is www.aroundthehornpod.com, and you can get that information there. And if you're listening and you'd like to see some of what we've seen, just go back to the Lead Smart technologies page on YouTube, LinkedIn or Facebook and those recorded sessions will be right there as well. So Tech Target talks about prompt engineering, tips for chat, GPT and other large language models. Tom, let's maybe start with get your thoughts on this as our resident expert here is why does it matter that we do prompt engineering? And maybe we start off with talking about what is prompt engineering? And then let's talk about its importance.

Well, what is prompt engineering? If you take away the fancy title, it's how do you set up your AI environment or your chat or your whatever to be as relevant and as knowledgeable as possible based upon whatever it is you're trying to do. So whether that's going to Chat GPT and asking for a recipe on how to smoke ribs or how to cook rib eyes or whatever, or if it's for your business and you're trying to do something with data or you're trying to do something with best practices or processes in your business, the more that you can prime the pump, if you will, for the LLM, then it's going to be ready to provide better answers. Right? No different than anybody training yourself. Right. If you walk into a new job, you don't generally just get dropped on something to do. You generally get trained and indoctrinated and put into what it is. So at a high level, that's what prompt engineering is about, what people are learning and companies are learning is that there's can be kind of a multi step sequence of things that you can do with prompts. So it's not just one prompt and you're done, but there's a sequence of things that you can do to prompt that's going to again, increase the relevance, reduce the number of hallucinations, renew, reduce the output of what you're doing. And I'll give you a simple example and this is a tip that you can use if you're for example, on Chat GPT. So let's say you go to Chat GPT or Gemini or whatever, your favorite, whatever your favorite AI platform is and you want to, I don't know, let's say I want to learn, tell me how to cook the best ribeye steak. Right?

And it says go to Kevin's house.

Yeah, go to Kevin's house. Right. So I could just ask that question. I'll get some answer back. But what I found is, and what I've. What you're, what I'm finding and others are finding with models is rather than starting with that question, ask Chat GPT, just say what do you know about cooking ribeyes? Or what do you know about cooking? Or what do you know about smoking? You know, barbecuing or whatever the case may be. General questions, right. But ask it to tell you what it kind of knows about those things and then even go back and forth on a little conversation back and forth about its knowledge before you get to the real question and the real thing that you want data on. What that does is kind of prime the pump and create sort of, I don't know, it kind of warms them up a little bit to then give you better answers. So that's a simple example of using prompt engineering that a lot of people don't think about, right? Like how do I warm up the, the model and then give it the question that I really want an answer to. I'm going to get a much more relevant answer.

Good. So let's take this back maybe and make it even a little more rudimentary. So you know, one of the, the definition that they used in this article was learning how to formulate questions that steer the AI toward the most relevant, precise and actionable responses that you can get from the AI. And I think where it's different is a little bit. Let's go back and think about maybe just whether we used, you know, we're asking Google questions or, or you know, another search engine that we're asking questions to in a non AI search, just a regular searches. We all probably over the years have found that we, you know, just give you a, you know, simple example, right? We may be able to take maybe our spouse searches for one thing and is struggling to find something, asks us a question, we go type something in with a different request of just Google, right? And we come up with a lot more information because we maybe have figured out how to ask the question a little bit better and a little bit different. Now what happens? But that's not learning anything, right? That's just asking us for results when.

We get into driven transaction.

Right? And so now when we get into AI to your term of priming the pumper, the article talks about steering it is we're preparing it to take us down a path. I use this within our company to kind of share some things with and kind of make some comparisons with some marketing agencies and then get some. I built a turnout, building a GPT out of it. But the start of it was talking about marketing, right? Is I asked it questions first about what does it know about marketing, right? Then it was I need you to be a world renowned expert. Can you help me with these things? And then I did something a little bit different and I said ask me as many as 20 questions that you need to know about me and my goals on this topic. Great. Right. And then now talk about priming the pump. Answering. Now this, this, this, all of that.

Is prompt engineering that you're talking about.

Now this scenario took about three hours to get the whole thing done. But it was a major project, right, to do those things. But what this talks about, right is and this is something that we've never been able to really do with. So the first thing they talked about was, you know, add detail and context and the Second is be clear and concise. That was pretty much the same thing we needed to do with in the same world when we were working with just asking Google questions. But now what we're able to do is talk about the follow up sequenced questions that we can continue to unpack things. That's where I think this gets really, really valuable to us because now it can say here's four, it can give you back an answer. And again to your point earlier, it doesn't matter whether we're talking about, you know, Gemini or ChatGPT or Anthropic or whatever we're working with. Right. Same idea is now it can say, hey, it gives us these four topics in answer to our question and we can say great, unpack these first two more. Right. And, and share with me where your research is about these things. So very, very different than what we're doing now, than what we've done before. And I think the big takeaway with this is don't look at using Chat, GPT or Gemini or whatever tool you're using thinking that you can maximize its benefit by asking standardized questions like you used to do with Google.

Yeah, well, and that's how most people have used user. Right. And it's not that you won't get something back but if you want to get the Google or search engines are not conversations.

Yeah.

They're, they're search transactions. Right. They're keyword based transactions. When you go into a LLM or to into AI, you're, you're basically setting the stage for a conversation that's going to lead back and forth. So therefore it's a different set of actions that you really need to do. But anyway, I, yes, it's becoming more and more of a skill and especially in business because, and we've seen this even this week when you really start to start analyzing data and business data, you've got to give it context, you've got to get it to that point where it understands why it should even just like anybody else. Why am I looking at this data? What, what is the relevance of what I'm trying to accomplish with this data or this information?

Yep.

Well, I do that when you do that and the good news is I'm finding that a lot of the models are getting better and their results if you properly tee it up for them.

Yeah, and well, I think that you, you were, you were showing kind of a behind the scenes view of some of the tools coming out within Lead Smart Channel cloud that are AI driven tools where you can literally type questions into the, into the platform about, you know, order data and, and quote data and different types of data within the business. And we're, we're able to in the platform make that a little bit easier on people with some, some generic prompts that we can give them. But the more all of us understand this for all facets of our life, whether it's, you know, in our, in our business world, in our personal life, whether regarding our own, own health. Simplest example that use something is haven't had an MRI on my, on my ankle earlier this week and you know, it was two pages of results. It's just how screwed up my ankles are. But I understood the majority of it. But I literally got the printed copy from the orthopedic surgeon, I scanned it from my phone, I put the scan into ChatGPT and asked me to ask it to put all of those things in the layman's term and what I should do next as a patient. And we have those tools. So the more each one of us understands how to do some prompting and forget about the big term engineering, if we understand how to use prompts to help us, we're going to be in a better place. Yep, good. All right, so we, you referenced earlier, Tom, in this segment that we were going to talk further about power needs as we're in our tech and cyber and AI segment here. This was a interesting article from Axios about AI data center demand poised to juice us power needs. So it's pretty astounding what the expectations are that are going to be coming.

Yeah, but I guess on the plus side, there's literally billions, if not trillions of dollars being thrown at this problem right now. Because if you, I mean, think about it, right? If you look at the amount of money that's going into AI, you look at the value of these companies, Nvidia, Microsoft, right. The big players, Apple, the big players in the AI space, they're all going to run in. We all are. They are, but as a company, but we all are, as the use of AI are going to run into a brick wall if we don't have the energy to do it. And we can't create that energy in a sustainable manner. So there's a lot, a lot of money being thrown into this right now. Probably not as fast as it needs to be. But I, I have confidence that we're going to get this sorted out and we're going to be in a much better place. And I think even overall, just as far as sustainability and climate and all of those Things. We're going to be in a better place when we, when we get through all of this.

Yeah. Well, it's interesting as we look at this, and I think, you know, it's, it's. It probably goes hand in glove with, you know, the whole concept of AI isn't where it needs to be yet. And, and these things can't. You can't flip a switch and say our power grid looks different than it. Than it. Than it is. Those things have to take time. I did, though, here at the. At the distribution strategy groups, their AI and distribution event. I wasn't at the one a few weeks ago, but the one last fall they had Zach Cass from, was one of the early employees at OpenAI. He's now a consultant out on his own. But Zach was talking about, you know, the, the idea of the things that we talk about, right. If. If AI is truly supposed to be, you know, having the impact on us that maybe, you know, I think his reference was it could be the. As important to us as fire. Right. Is what AI could be of the relevance it could have in our future. If those things are to happen and come to fruition, there's no way that traditional energy sources would be able to keep up. So when you think about it, right, when you, you look at it as. And it's something I think about quite a bit because it's impacted my family, is when you think about cancer research, cancer research has moved along slowly because we've got all these trials going on. We've got patients, unfortunately, who are doing better or are dying. We're trying to replicate things faster in a laboratory. Well, now when you can start replicating those studies through AI and digital twins versus a live cancer patient, things can happen quickly. But the power that's needed to achieve that from a computing power and the time that goes into it, we're not able to do that. And that was one of the things Zach was talking about, is a lot of the things that we see that are going to change our lives, like whether it's solving cancer or whatever it might be, we can't get there with our energy sources the way they are now. He was saying we're going to need something like, you know, true fusion or some other things other than plugging something into a wall.

No, no, it's not going to be the.

What we.

It's what got us here won't get us there. Yeah, no doubt about that.

Well, so there's. Go ahead. I'm sorry.

No, I was going to say, even in the article there, right. It points out that I think was it 10 times. It takes 10 times the amount of energy to make a chat GPT request and it does a Google request, right?

It's. That is the. They called it a stunning stat. It's where I was going to close this out and just say if you're listening to this whole discussion and maybe your head's spinning about the power side of it is think of this, right? A chat GPT request or AI query are estimated to require 10 times the electricity of traditional Google queries. Now we just spent our previous article talking about prompt engineering and asking series of questions, right? So think about the magnitude of that, the requirements from an energy standpoint that just wasn't there previously. And, and when we were just searching Google and it was what, you know, 20 months ago, that that's all our options were or to just go do a Google search.

I don't know the exact step, but I'm pretty sure it's like a typical simple thread conversation on a chat GPT or takes about the same amount of power that it takes to, to charge your iPhone. So every time you're in.

Okay, I haven't heard that before.

Yeah. So every time you're going through like a series of things, right, A series of questions, it's about, you know, with normal, normal use, it's about the same power that would require. You would require to charge your iPhone. So it's, it's significant. But the answer isn't to say, well, don't do it because it's taking too much power. The answer is to solve the problem, right. And, and we can and we will and there's a lot of money going into it. So.

No, no, absolutely. I don't think it's a case of if. If or not. But I mean it does tie back to, you know, when we talk about, you know, electric vehicles and EVs and so forth and if we go all in on all of these things, it's, it's not sustainable the way things are now. And you know what? It'll probably be a problem that will be solved by AI. Yep. You know, when all said and done. So good we can. Let's bypass our sales and M and A segment. There was just that the Home Depot completed their acquisition of SRS Distribution. But that ties us into our people and leadership segment that we do each week. This was kind of a great article that I enjoyed talking about four types of organizational culture and which is best, I think which is best when we talk about culture within an organization, depends on the organization. But one thing is you will struggle in any type of organization with culture if you don't work on culture. The end of the day, this was.

I was actually a little disappointed with the way that they laid this article out. Okay, I know where I know they were, you know, I know what they were trying to do, right. They were trying to simplify and bucket sort of corporate cultures. But I don't know that you can do that. I don't know that you can bucket something in one thing and say this is how it operates. But I do agree that culture in companies are becoming a bigger and bigger and more important issue. Right. Especially as you try and get more employees and get people working there. So I think these are some good things to start, start with and to look at. I just, I don't think you can take culture and drop it into four buckets and say my company operates like this and my opera. I know what they were trying to do. I just was a little bit disappointed with some of the way that it was structured.

That's interesting. I had a completely different take on it.

That's fine.

I thought it was fantastic that they, they. And there's many more than these. So they talked about an adhocracy, right, that emphasizes innovation, flexibility and a full dynamic approach to problem solving. The organization. They talked about a clan culture emphasizes internal focus and integration, prioritizing collaboration, trust employees and employee well being. A hierarchy culture centers on stability, control, internal efficiency with clear organizational structures. And then they talked about a market culture that looks at focus on competitiveness and achievement, emphasizing external positioning and results oriented goals. And they talked about pros and cons with each one of those, which are. That was valuable. I look at that from a different lens, from a standpoint that says, okay, I happen to be the CEO of a technology company and we have a very unique type of customer that we serve, which is very different than traditional technology companies. And as we're building a culture for me, I looked at each of these and said there's probably good things from each of these to pull in working on a culture. So I kind of look at a lot of, I look at things in my, in my business career, but really in life is where are all of the resources that I can get to come up with what's right for me or what's right for me and my family or what's right for me and my organization. So that was.

I thought there was some good data in there. I just, I didn't. I just didn't really like the idea that you could silo everything. I agree. It's a hybrid.

No, it's. Yeah. Anyway, no, I think, I think there's, there's a view of this is. And I think if you look at this right, the. You could, if you took each one of these and spent a half hour, you could probably think to companies that, you know, either know, been involved with or have read about that fit into each one of those. But the reality is companies need to have their own dynamic culture. But it starts from a desire to have a culture. So whether you are using entrepreneurial operating system or whatever platform that you're using to help build your core values within your business, the methodology behind your core values and how that translates into your culture, culture becomes critical if you want to have a cohesive group to grow.

That I agree with.

Yep. Good. All right. We can skip through kind of our industry scuttlebutt today just because of time. And we had our good read article this week. The Leadership Journey lifecycle talks about uncomfortable leaders. You know what, I'll just give this in a nutshell. It talks about uncomfortable leaders as they referring to it. Here are aspiring leaders and I think we're all growing regardless of our role. Whether you're, you're managing, you know, four people in a warehouse, packing boxes, or you're a senior executive in an organization. We're all aspiring to be better leaders. They talk though, about having. There's a shift between having done the internal work of locating, they said, your superpower and finding confidence in the cultural background and, and then identifying that bhag or that big hairy, audacious goal. And you've done the visualization part. You know, it made me laugh as some of the conversations we've had, the two of us recently about the growth of lead smart technologies and the culture that's developing there is thinking about that. Well, we have conversations every week visualizing about what needs to be done and, and this talking about this uncomfortable, being an uncomfortable leader as part of your life cycle is getting to that place where now you've moved to the actualization part, right?

Well, I think that's the biggest. Go back to our article earlier about entrepreneur. Right.

We.

There's a lot of us out there that have big ideas, big visions, big things that we want to accomplish things, how we want to change the world, help the world. Right? But none of that happens without the doing part of it and the action part of it. Right? And that's harder. That's the hard part. The vision for a lot of us is very easy. So. And I think it's a really good point. Right. As a leader, you've got to balance the vision with the execution. And even though, you know, I've learned this in my past. Right. Is trying to, trying to lay too much vision on an organization that's just trying to execute can actually worsen the culture. It doesn't increase the culture.

Yeah.

So, yeah, that was a really good, good, good article from that perspective.

No, it's good. You know, and it's again, it comes down like everything in life. Right. It comes down to execution. So that's good. So I know both with some of our own research and the help of the folks at Modern Distribution Management, we've updated the upcoming events.

Ton of them. Well, I couldn't believe this as I was going through looking at all this, it's like I think there's double the number that we had last year at this time for the second half of the year. Could be.

I mean a lot of those are the same ones from that are yearly events that they're having there. But you know, now when you look at those line items and travel and event budgets, you see how few of them were actually doing when you, when you choke when you see some of those budget line items of the amount of them that we probably could or ideally should be at.

Yeah.

So a lot of opportunity there. So good. Appreciate Mike Hockett and Tom Gale and the team at MDM that they do their updates. We try and keep up to date on events but again it goes ties back to. We're looking at our newsletter here and whereas we close out today's show with that is if you don't get that you'd like to see that schedule of events, then get on board for the get in the newsletter each week. You can do that through reaching out to us directly at hello lead smart tech.com and or through the website for the podcast which is ww.aroundthehornpod.com Tom, good show today. Thanks for the conversation.

Yep. And we have. Yeah, I was thinking no, 4th of July is not next week, it's the week after. So we're good for next week. Yeah.

So no, we'll be together next week then we've got another show the week after and then we'll put it this way, it's worth tuning in to see some of the tidbits of the people that are going to be joining us. But that, that hundredth episode show is good, you know, and I think it's Important. Well, let's just take a moment or two and kind of chat in closing today about this. You know, we had a discussion over the phone over the weekend, actually, the two of us did, about the importance of. Of this. I call it a celebration. But it's not a celebration about Tom or Kevin or Lead Smarter around the horn. It's really the celebration of the hundredth episode is around the audience. Because if there weren't people that, you know, when, when I'm at a trade show or an event or an industry event and I meet people who I've never heard of them or I've never heard of even their company who come and say that they listen to the show every week. When we get to some of the accolades that come for the show, it just means that we've developed, are developing a community of people that share with each other and that like what we're doing. So the celebration isn't about, you know, Tom and Kevin. It's about doing good things with a good community that supports wholesale distribution and manufacturing. So it should be a fun event.

I think it's a milestone, but at the same time, it's a starting point. I think there's a lot more that can be done to build the community. And I think community, just like the shows and everything else is so important right now. So.

No, it is. And it's. It's a place for people to come and share ideas. And some, some days we have, you know, we can't keep up with the comments and other days we have very few and doesn't change what's going on out there. We get comments regularly from people that are. Are listening just with the podcast. So we're appreciative of Everybody that the 100th episode will be great. I think. What is it? Less than something like 90% of B2B podcasts don't make it to 10 episodes. So that's. We, we. We wouldn't be doing this each week if it wasn't relevant to some people out there. So anything exciting on your. On your weekend? Are you going to be packing up your house? You're moving here?

More packing, more packing, more packing. So.

Okay, well, I'm sorry that I live three hours away and can't help you.

I don't think that would be good for your ankles.

No, no, no. Probably wouldn't. Good. Well, nothing exciting for me this weekend, but we, well, thank everybody for coming. The last thing is, we're appreciative again, about the sponsorship that we have through Lead Smart Technologies. And we thank you for being with us. If you enjoy what you hear, share with your friends, hit the subscribe, hit the like, hit the follow, whichever it might be on whatever platform you are. And that'll get us out to more people. So, Tom, wish you a great weekend everybody. Thanks for being with us today. Be kind, be safe, and do good things.

Thanks everyone.