Around the Horn in Wholesale Distribution - Episode #169

Here we go. Good morning. Good morning. Good morning, gentlemen.

Good morning.

Hello.

Good morning.

Hello, hello, hello.

We have an illustrious panel to join us today. I was trying to decide between infamous and famous, but we'll go with illustrious instead. So appreciate you being with us. Mr. Marks, Mr. Heller, Mr. Beveridge, Mr. Kennedy, Mr. Burton. And got our good friend John Taylor behind the scenes today pushing the levers and clicking the buttons and so forth to help us through the day. But this is year three of us being together and we added Paul this year for some adult supervision to help us get through the discussions. Paul, hopefully you have a large contingency of people nearby to help you keep this group in line.

It takes a village.

It takes a village. Very good. But it's great to have everybody with us today. So we've again, this is year three of us bringing this group together to kind of talk about highlights and lowlights of the previous year and what we see ahead for the following year. But before we get started, wanted to introduce both the gentlemen that are with us here today and my partner and co developer of our show around the Horn and Wholesale Distribution, Tom Burton, that's with us. Tom and I do this every single week. We always say unless we're on an airplane, a planned vacation or the hospital, we do our show. We've done the show. I've done my portion from an airport after getting off of an airplane, from vacation as well, but not yet from a hospital. So we'll see if that ever does happen and hopefully we'll never need to have that happen. But we do this every week. We publish a newsletter, it's called around the Horn in wholesale Distribution that goes out to about 10,000 plus people. And we consolidate a lot of news from our around the world, most specifically in the US and North America. And we bring that news together on things like supply chain and the economy, AI technology, software, robotics, all of the things that go with that. We do that as well talking about mergers and acquisitions and sales and marketing as of two years ago, because our good friend Dirk Beveridge called us out on it, which it was the perfect thing to do. We didn't talk enough about people on the human side of things. So now we have two segments in the newsletter. It's called again around the Horn and wholesale Distribution. And with that newsletter now we have a section on leadership and HR and we have a whole nother section there about channel leaders on the move, we call it, where we try and publish, where folks are shifting careers and moving to new companies and or retiring and so forth. So appreciative of Dirk for helping the reminder of that. But again, that newsletter goes out each week to about 10,000 people. If you would like to get that, we would love to share that with you. You can get it three simple ways. If you're active on LinkedIn, you can, you can go simply to LinkedIn and search around the horn and wholesale distribution or the lead smart technologies LinkedIn page and you can subscribe to it there. You can send us a very simple email to helloadsmart tech.com we'll get that out to you. And the other side that you can do that with is we have a website for the podcast which is www.aroundthehornpod.com. we can get that to you as well. So before we kind of dive into the show today, we're going to kind of go around the horn to our guests here and ask them to introduce themselves, tell us a little bit about their background, what they're working on, their companies and so forth. And Mr. Marks, we're going to start off with you, if you don't mind.

I do not mind. I'm Mike Marks. I'm the founding partner of Indian River Consulting Group. I'm, I'm old, been doing this for a long time and I'm sorry, semi retired. Although people laugh at me and tell me I've been Semi retired for 10 years. But, but I, I'm mostly at this point sit on the board of a couple distributors and manufacturer and, and I'm helping, I'm, I'm about 25 of my time is helping a very large distributor do an AI orchestration project. It's been going on for about a year and a half. I'll be with them through next year as well, trying to be adult supervision so they don't have to rework a bunch of stuff. And I'm helping a couple companies out, you know, with advisory services. But that's, that's basically it. I'm on the board of Florida Tech and mentor students and just have a good time. And I've got a really good girlfriend and she doesn't quite understand the retirement part about the money. So she keeps saving me money by buying things on sale. So I will probably say semi retired for a while. So anyway, that's me. I came out of distribution. I love it. I got a distribution tattoo in my left butt cheek.

And here we go. Mike, last year you had, when we did this show, you had a sling around your neck. How's it shoulder?

Well, yeah, well, it was around my neck, but it was holding up my shoulder. I had, I torn a rotator cuff, actually seriously tore it. And so I would all my predictions were made on oxycontin, which I actually think I did better using the drug. So I'm just thinking about continuing.

Did you do that for this year?

No. No.

Actually no medication.

Well, let's not get into the details here.

Very good. Let's shift over to our good friend Ian Heller with the Distribution Strategy Group. Ian, will you give us a little bit of for those people who have been living under a rock for the last 30 years that may not know you, maybe share a little bit about you and your background and your company.

You're too kind, Kevin. Thanks. So yeah, I'm co founder of Distribution Strategy Group. We're a media and software company covering the wholesale distribution industry. And I co founded it with my good friend and business partner Jonathan Byne, who's got a PhD in computer science in AI. And I have an operating background. So I've been a senior executive at 4Big publicly held distribution companies in different verticals. And so we have a newsletter too. You can go to distributionstrategy.com to sign up for our newsletters, plural. And we have a show coming up. So thanks for putting up the slide. It's called Applied AI for Distributors. This is our fourth annual version. The speaker lineup is shaping up nicely. We've got Jeff Croom, who's all over YouTube. He's got a PhD in cyber security. He's going to be talking about cyber security in the age of AI. Matt Sigelman is the president of the Burning Glass Institute. He specializes, his whole institute specializes in how AI affects jobs or they specialize in the evolution of jobs. But part of what they cover is how AI is going to affect jobs. Nick Periclee, who's I think just about everybody's favorite up and coming expert on AI, is going to be talking about agentic AI for distributors. We have Dwayne Roberts and Stu Tisdale, who are senior executives at Summit Electric and ADI respectively, who'll be talking about how they are incorporating AI into their operations. And then Alex Chowsky, who's, you know, phenomenal economist and speaker, is going to be talking about giving us an economic preview with the focus on how AI is going to affect the distribution industry. We have some other speakers coming. We've got a great lineup that will include a couple of workshops on how to build your AI roadmap, how to build an AI agent. We just added one which isn't on this Slide, which is how Executives can use LLMs effectively in their daily work. So we're really excited about this show. We'll have about 30 or 40 different technology companies there as sponsors. This will sell out. We should have changed to a bigger facility this year, but we didn't and so sign up early and I've never, that's not a sales job. I don't, I've never said that to our, about our other shows and. But we'd love to see you there. It's in Chicago June 23rd through 25th.

So that's quite a lineup.

Yeah, thanks.

It's, it's, it'll be nice to see a. Nick's new company kicking off there as well.

Yeah, well, we love, you know, if you've seen Nick, he's just the definition of a really fine, super smart, high quality, high integrity, you know, young man. And so we're, we're just delighted to have to be able to work with him on this.

He's a good, good friend. So that'll be great. And I would almost say Alex, Alex has been on this show with us multiple times. I met him through you and it's almost worth coming to Chicago for the event to hear. Alex. Yeah, he's just so insightful on economic data but he breaks it down so easily that people like me can understand it.

So same.

Very, very helpful. This will be the third year, right, for this event?

Fourth.

Fourth.

Fourth year.

Okay. I know I was at the first. I guess I've been to all of them so far. The first one was phenomenal and they just keep getting better. So great.

Thank you.

My Mike and I, and I laugh about this because last year I walked down the hall for about a 10 minute walk with Mike and it's the hallway discussions that are just, it's astounding the things that happen in the corners of the, of the ballroom or over by the elevators. A quick passing turns into 20 minute discussion.

So it's a great, you know, distribution office gets criticized for being technologically behind other sectors. That's not this audience. This audience is different.

Yeah, very good. Dirk, let's drop over to you and we'll get some feedback on how you are helping the human beings of the world.

Cool. Thanks, Kevin. And Ian, I said I participated in your program last year, that AI conference. Absolutely amazing what you guys put on. So thank you everybody that's listening. I highly recommend you register today for it because it's truly, truly top notch. So thanks, Kevin. I'm Dirk Beveridge, founder of the FAM. After 40 years of working in distribution, on sales, innovation, and the last five years, the We Supply America tour, something different happened over the last 18 months. For 40 years, you guys, I walked in as a consultant to the industry, into the front door of distribution businesses on the We Supply America tour. I pulled that RV to the back of your businesses and I walked in a different door. And when you do that, you see the business from a new light, you see it through a new lens. You meet different people and you hear different stories. So what's happened over the last 18 months for me is I quite literally have made a conscious decision and I've taken 40 years of consulting and I put it, as I say, in a brown box and I've taped that box shut and I put it over there to collect dust. And my partner Bethany and I have created what we call the fam, the Fully Alive Movement. We are on a mission to empower 1 million people to rise from just getting by to living fully alive. And we have seen firsthand, we've heard the human stories of everybody from CEOs to emerging leaders to those individual hourly paid individuals that are in the warehouse. And the human side of this business needs to be elevated. And that's what we are on a mission to do. And I believe your audience, Kevin and Tom, I certainly know the audience that we've been exposed to over the years and through Resupply America Tour. These businesses are absolutely the north star of those organizations who want to and do in fact invest in their people. We see that there's another paradigm, another way to invest in people to help them grow, not only professionally, but personally as well. And that's the mission that we're on so the fam you can learn all about it. Dirkbeveridge.com Our newsletter. Newsletter and we'd love to talk about it as we go on today too. The human side.

Lots to talk about with that as we get into some of our AI discussions and other discussions today. So it's great stuff. Mr. Kennedy, my friend.

Good morning everybody. Boy, I'm as I'm sitting, I feel like an underachiever as I sit and listen to all these other gentlemen introduce themselves. Really honored to be with this group of thought leaders, distribution thought leaders and another plug for Ian's Applied AI conference I was able to attend last year. And Kevin, you're right, it was the hallway discussions and just the interactions. And Ian, I think it is the forward thinking distributors and technology partners that are there. And that's the group you want to Be with if you want to be leading from the front.

Good dinner there that night too, huh?

Yes, an outstanding dinner with you.

We had a nice evening out in the neighborhood there.

Yes, yes we did. So I'm Paul Kennedy, President and CEO of DSG. We're a distributor of electrical, plumbing, H vac and waterworks across the upper Midwest. 63 locations across the upper Midwest. We are 100% employee owned. And as I think about what Dirk was just describing as people centric and human centric. I think ESOPs are one of those great equalizers as it comes to, you know, being a people centric organization. I also have the privilege of being the current chair of the national association of Electrical Distributors. And I'll put a plug in for the. The Western Conference nad Western Conference actually starts on Monday in San Diego. So if you're in San Diego with and you're looking for a place to hang out, come on over and also serve on the Affiliated Distributors. The AD LLC board. So heavy. I was thinking about this this morning. 31 years in distribution and then 7 years prior to that as a. As a plumbing contractor. So I've been in this kind of, in this trade world for kind of my, my entire professional life. So thrilled to be here today. Thanks Kevin.

Thanks. Thanks for being with us, Paul. Appreciate you being added to the group and your willingness to join us here. You know, as I was thinking about this, I'm gonna. I think I can speak for all of us here. If it wasn't for what you, your team at DSG and companies like dsg, the rest of us wouldn't be here. Right? It's what you have created there. The work that you do with NAED and Affiliated Distributors as well. Those are the people that the company that Tom and I run at Lead Smart Technologies. We'll talk about that in a moment. What we do is to bring technology to wholesale distribution. And Mike consults, Ian provides information. Dirk provides deep insights into people and his history working on all facets of distribution and manufacturing both. So we appreciate what you guys do and I love it. And I'm sure we'll talk about this more today, but we have, at Leadsmart we have many, many companies that are employee owned and I really enjoy seeing all of that and the value that that brings to the growth of companies. I've been involved on a interim executive role with a company a number of years ago for a few years with an employee owned company. It's just great to see the power that that brings. So last but not least, I'M Kevin Brown. Tom Burton is here with us. Tom and I are lifelong friends. We met in kindergarten a long time ago. TVs were in fact color already but just barely and we've been friends ever since. And we started our company Lead Smart Technologies about six, seven years ago. Lead Smart Technologies is a customer intelligence and AI enabled what we define as smart CRM solution. We solely work with wholesale distributors and manufacturers. Tom comes from 30 plus years in technology and about 10 years now of working with distribution and manufacturing. And I've spent my entire career. I started working in 1989 for a national distributor of safety equipment and spent another 10 years after that as a manufacturer's rep and sold my agency and invested in a manufacturing firm and have seen all sides of things. So Tom and I got together, put our heads together to build some industry solutions that we felt the industry was missing. And we helped distributors and manufacturers both understand their customers better, their teams better and their entire business as well by bringing data that's siloed across organizations into a single platform where we can apply lots of different technology tools including artificial intelligence to help accelerate growth. So that's what we do. But we need to dive in and get chatting away with this group. So John, if you don't mind, we're going to go one by one and we're going to review through last year we all made some predictions, some of them we did really, really well with. Some of them I think have not yet been achieved and some of them were just kind of a miss. So if we didn't get this exactly right Mike, these are yours, your predictions if you jump right in. But I'm going to share these pretty quickly talked about distributors that actively support increasingly tech savvy contractor customers will gain market share. Talking about contractors rapidly adopting mobile technology and so forth, we're going to talk about what we're seeing with that momentarily. Two is that AI adoption will widen the performance gap between early adopters and laggards. And then finally with that AI will eliminate significant friction inside organizations, reducing the need for large customer service headcounts, so on. So Mike, anything to add to those from last year?

No, I'm actually surprised under OxyContin that.

I'm, I'm surprised, I'm surprised you remember that you said these things.

Well, I, I, I don't fully remember but, but you said, I said it. I'm sure it's true. The, the, the, the thing about the contractors, there's so much technology that there's, that there's a Whole focus. If you look at, go to some of the contractor meetings where, where they're man, it's called managing the business from your truck. And, and I mean you can have an entire suite and do everything digitally in, in any of the, any of the traditional service businesses and have it work now. It's, they're still in sort of the same stage that we are with AI and distribution. There's a lot of experimentation and, and people trying things. I just sat through Jonathan Bynes Waxy is part of tsg, part of Ian's group. They did it, stated the AI and actually talked about true adoption and what's going on and cut through a lot of the noise. There's a lot of experimentation that people are involved in and I'm sure we'll probably get into more of that and the contractors are pretty much in the same thing in terms of doing it. So I mean my view is I think this is going to continue to expand on the contractor side in 26. And the problem with my second one, I know for a fact with non disclosure agreements that there are some people that, that have made some significant gains but there's, there's something kind of kinky about it because when they asked about it everybody says oh yeah, we're playing with copilot, we're doing chat GP and they're doing, they're doing really integrated and genic process control and, and they just, they don't want to share. Nobody wants to share. I think there's sort of a first mover advantage or at least a perception and, and we're seeing more and more pressures coming out now as the board goes to the CEO says what is our AI strategy? They have no idea, they don't know what it is but they figure let's get something up because we got this fear of missing out. And so their IT guys put together, you know, link a couple agents together and put nice little demos and that's what's really created this growth and experimentation I think. And, and, but there's still, there's a lot of thrashing around and the people that have actually made the progress tend to be somewhat reticent in terms of sharing what they're doing. I think my third one, you know, the, the Mark Beniott's layoff of 4,000 customer service people at Salesforce back in November as is sort of a visible exception. But I think this is had the third one's happening a whole lot slower and I think it's because people are stuck in and they're playing with these single use cases and they work. But the problem with AI, as soon as you start to do it, do more of it, it ends up being a governance problem because all of a sudden the supply chain guys are doing something and the finance people get upset or the warehouse people get upset and the complexity just goes up by two orders of magnitude. And so I think that slowed down some of the progress. But you know, I'm frankly, I'm surprised Peter Drucker said that, that you can, he used, when I was in graduate school, he made us learn how to forecast or what he did. He made his forecast at the beginning of a class, what we thought was going to happen, write it in an envelope. And at the end of the class he gave us the envelopes back and said, what did you miss? And, and usually what happens, we pay too much attention to what happened yesterday instead of the larger trend. And then the other thing you said, it's pretty easy to figure out what's going to happen. What's really hard is to figure out when it's going to happen. And I think a lot of this stuff, this is just, it's taking longer for people to get this thing down. There's no such thing anymore as a fact strategy. Everybody just has faxes and we're still, we're still messing around with AI.

Very good.

Can I jump in real quick, isn't it to me, what, what comes to my mind, Mike, is when you say it's taken us a little bit longer to jump into this. I mean, AI is so damn young.

Right.

I mean it just entered four years ago, Ian. Right. And with your first conference. And so yeah, it's taking time, but damn, it's also coming on fast, isn't it?

Well, it's as big a change if you look at the, at the, at the world. It's as big a change to the world as the Industrial Revolution was, which created two world wars. As we went through all the disruption, hopefully we don't mess it up again. But, but AI has been around for. I did my first AI project for the US army in 1970. I mean, AI is a lot bigger than large language models. And the project I'm working on, we're not using the large language model at all in terms of going to find information. We use it for no code programming where a supply chain manager can say, this is what I want to have happen on a process. And the large language model generates the Python code right on the spot. And they can hit a button, test it, and if it doesn't work, they can change it. It's really easy to iterate. Then the other thing we use them for now is just to manage conversations between employees and the company. So we actually committed to OpenAI back in the beginning when this thing started. Knowing what I don' now, since it's only company data, we could have used a small language model and there's a whole lot of them that have gotten really smart in the last year. So. But you're right, it's new and it's coming so fast that, that people are. Anytime you're trying to do something fast, there's always collateral damage and confusion. And that's part of the reason people, I think, are going to really get flummoxed by all the cyber security stuff that we're looking forward to next year.

So it's great. Go ahead.

Tomorrow. I was going to mention just Mike, you were talking about, you know, boards coming to CEOs, saying, what's your AI strategy? And I think about. I don't know that I. Do we have an AI strategy or do we have a business strategy that we're trying to solve with AI? Because I think the landscape is littered with technology solutions, AI solutions to problems we haven't even determined need to be solved yet or haven't really clearly defined, you know, in our business. So I like to think about it from a. Let's make sure we're clear on our business strategy and then how do we leverage AI to enable that and to accelerate?

Paul, you're in the minority, but you're spot on because AI is a tool. It's not a strategy in and of itself. I mean, whoever. Nobody ever came up with a fact strategy. Right? It was just. It's another tool. But the thing is, Dirk's right. It's happening really fast. And the fact that you got a business strategy, you're saying, how do I use these tools to improve our customer experience? Those people are making progress. When you look at what McKinsey's putting out, it's all about the business strategy. It's about empowering your employees, not replacing them. And, well, we'll get into it, but you're in the minority. I talk to a lot of people and they're all worried about their AI. And there is no such thing as an AI strategy. You know, show me your fax strategy. And then they give you a funny look and then the conversation goes to what you're talking about.

Well, it's funny you say that, Mike, because I was listening to last year's show and you made a similar reference to the fax machine. I think it was one related to one of Ian's comments is that AI will become ubiquitous within our world. Just like in the late 90s was we started seeing the Internet coming available to us. It was the biggest. Wow, this is the best thing since, you know, sliced bread, whatever it might be. And now it's just part of our day to day life. And I think Ian was commenting on that as well. So let's move ahead. We're going to hit what our predictions were from last year. Let's get to Ian's. Ian commented that scale and proximity will be the next major competitive battleground. We had a nice kind of comment about what we were seeing with the big nationals out there and even some of the historical B2C players that are dipping their toes more and more every week into into the B2B world we talked about. I thought this was a great comment that Ian made that AI will likely not go through a hype cycle collapse like we see in Gartner's hype cycle and that independent distributors are not disappearing, that their numbers are still growing. So those are some of the key things that we got from Ian. Ian, anything to add to those?

No, I would just say to clarify the first point, what I wasn't saying is that transactions will move offline or that online capabilities will become less important. What I mean is the battle will turn to availability because online availability will become commoditized in a world where you can get anything anywhere online. Then the competition becomes how fast can someone deliver it to me? And that's why you're seeing these massive millions of square foot crazy distribution centers being built by Amazon and Home Depot and Walmart around the country is because they want to compete to be able to get you to deliver the product to you more quickly than your competitors. And that has an impact on distributors because you know these B2B divisions of these companies are growing rapidly. I mean, Home Depot sells more to businesses than consumers. Now it's more of a distributor than a retailer. Amazon Business, nobody knows how big they are. You know, the SEC rule is that once a division exceeds 10% of your sales, profits or assets, you have to report it. Well, Amazon's probably going to hit close to $700 billion in sales last year. That means Amazon business could be $60 billion, one of the largest distributors in the world. They wouldn't have to disclose it because they're so big. And so I don't, I don't think they're going to disclose it yet. I don't think they're, I don't think it's a $70 billion distributor, but, but it might be and they're closing in on that and that. I don't think you're going to see like a wholesale apocalypse that's like the retail apocalypse yet. But I think if distributors don't find ways of matching these big players on availability and delivery, then over time that could develop.

That's great, great point. And we talk about that on this show regularly. Tom and I do. Just about that line is very blurred right now between my personal life and my business life and expectations. Right. I mean, I think we've all, we've all placed that order probably at, you know, 9 o' clock at night from our phone, from something that we needed from Amazon. And when we woke up in the morning, it had been delivered at 4:45. And it's on our front. I have some, literally have something on our front porch right now that came during the night and I think that line is blurring and that was Amazon's goal. I share the story all the time. And it would have been 2012, 2013. Somewhere in there, I was talking to a manufacturer's rep, it's Indiana, he's in the industrial, industrial safety market, who actually was trying to figure out a way how to bring some of the products and brands that he represented to Amazon for Amazon business at the time. And he had stopped in at a wind farm that was being built and the guy there told him that he's buying more and more from Amazon every day because he can use his prime account. So that that time was there in two days and that the local distributor would often have 70% of an order. Another guy might have 40% of an order. But to get everything he needed, he might need to go to two or three different distributors. And now when he went to one location, did it from his, did it from his phone and he got that then within a couple of days. So we continue to see this grow and now we're know what, 10, 12 years into this and it's not going to change that.

Yeah, go ahead.

I needed a. Sorry. I needed a plumbing part and I looked at a national distributor's website and they, and then I called them. They couldn't promise delivery in 24 hours, so I ordered it from Amazon instead and I got it the next day from that distributor.

So.

So that distributor is promising better delivery performance through Amazon than they are directly to their customers.

But that's solely Because DSG doesn't have locations in Colorado yet.

Of course, if I order from dsg, it would have. I would have just driven over and picked it up.

Yeah, yeah.

And pricing was secondary, right, Ian? It was. You were all, you were focused on delivery.

I needed it. I needed it for, for the weekend. We had people coming over. I needed to replace the faucet. I would have paid really any, any reasonable price or not so reasonable price to get it.

Penny says you would have paid any price.

That's exactly, you know, how the decisions happen in my house.

No, no, I just, I've met your lovely wife and she operates very similar to mine.

So.

There was, there wasn't a discussion about how it was going to get done. It was that it was going to get done.

That's. That's correct, yeah.

If we can tie that to Paul's conversation earlier about not having an AI strategy, but having a business strategy. What goes through my mind is, you know, Jeff Bezos comment that everybody asks about what's going to change in the next 10 years. Nobody asks what's not going to change in the next 10 years. And it's those things that remain the same that you can build a business strategy around. Right. So for Amazon, it has been that strategy around selection, price and delivery. And they just continue to find ways to deliver on price selection. And that's strategy. And that's what you just described there, Ian.

Very good. Let's jump ahead to. I think we've got Dirk's comments from last year. So Dirk's predictions were that it would be a defining year for human centered leadership and distribution. Talking about companies prioritizing employee welfare, empowerment and purpose will outperform organizations that treat people as interchangeable assets will lose talent and momentum, and that a broader industry movement focused on frontline workers will accelerate. So we're going to go back in a few minutes. We're going to see what our trusted artificial intelligence analysis of what's really gone on in the world and then our discussion last year will bring to us about what we saw with this. But Dirk, want to add any thoughts to this and did we get this right with what you remember you talking about?

Well, I don't remember and I haven't seen this until right now, but I will continue to double down on what's on this slide. Right, very good. It is, it is going to be. I'll make the statement later, I believe. But thriving companies are built by thriving individuals, not the other way around. And we have to double down on that first principle. That our businesses are driven by the human being and those human beings that are self empowered, that are whole themselves, those are the ones who are going to drive our business.

Very good, Paul. You know, it just came to my mind. Paul, how many employee owners do you have at DSG?

A little over 1100.

Wow.

Okay, so I'm assuming all that stuff Dirk's talking about resonates well with, with you and your organization.

It really does. And that's, and it starts with me, right? Starts with me as the, as the leader of the organization. And, but to have people waking up every day with a, with a purpose that is greater than just, you know, delivering profits, it's, you know, enabling, making sure that we're enabling their ability to do their job to their fullest ability. And then, but it's also, and I can't remember who said it, but you know, hey, your, your business life and your personal life kind of get intertwined. There is this work life balance I think is kind of a myth. It's a kind of a work life blend and, and it's making sure that you blend it right and, and ensuring that. So I think the ESOP provides some level of, you know, financial security and, and wealth creation for, for our employee owners, but also the purpose of the work and, and tying into what we're trying to accomplish in enabling our customers to be successful and enabling our communities that we work in and we have businesses in to thrive. And that's, that's really, that's our purpose and bringing that back and making sure that people are aligned with that and it gives them a reason to get up every day as opposed to just. And Dirk, I'm remembering back to when you came to visit us on the We Supply America tour and you were talking to, to Koji in, in the warehouse and I remember you asking him, hey, what do you do? And he's. I think he said, I'm just a order picker. And I remember you having a, a visceral reaction to that.

Yep.

And, but so it's, it's bringing more purpose to the work that is being done.

Very good.

I love it.

I'd like to add something to the. I, I taught a global strategy class in Austria over Thanksgiving. I'm not a turkey fan. And, and everybody was interested in mission, vision and values. And the funny part of the whole conversation was ended up talking about ESOPs and it's an international class, so we had to explain what it was. But in terms of that, what Paul was talking about and what Dirk was talking about people want to add value. They want to see how they have impact in the world where they're making things work. And, and that commitment and those, that energy that they bring to it changes everything. And, and what we did is we had them go to company websites, airline websites, and look at their mission, vision and values on the website and then say, well, what do you really think about the airline? And they said, well, they're all lying through their teeth and it's not what they actually do. ESOPs work and IT really matters a lot.

Hey, I have a question for kind of touching on some of the AI and the ESOP thing. And Paul, I'm not sure you're the best person to answer this, but we hear a lot that employees are nervous about AI. It's going to take my job, it's going to replace me. Do you think that that nervousness or even that concern is reduced with an ESOP because they know they're part of the ownership and part of the family, or how does that kind of align?

I mean, as I think about that, I think there's probably a little, maybe more stickiness with the ESOP as it relates to that particular topic.

Tom.

But I think even more importantly, it's the storytelling that we need to do as leaders to talk about how we're embedding AI in the organization and how it's an enabler to allow them to focus on more higher value tasks, to add more value and bring more purpose to the work they're doing. So I think it's really around more around the storytelling than it is anything else. We have not replaced one person with AI and we have several different AI solutions that we've embedded into our business. But it has allowed us to grow more efficiently and allow people to focus their energy and efforts on more high value tasks, adding more value to their customers and feeling like they're accomplishing more, you know, in their work.

Paul, this is Mike. I used to be chairman of an ESOP company and the thing that surprised me was the high level of trust that the employees had by being owners. And I'm. Is that part of the reason that you think it's stickier is that when you talk about AI, there's, there's a shared trust that makes it a lot easier for people to be curious about it and learn?

Yeah, I think so. Although we still, you know, we struggle with adoption at the, you know, at the ground level of AI. And I think that's less about esop, less about anything else. It's more about hey, what's this tool that's different than what I've done before? I'm thinking about a, you know, order automation tool that we implemented and getting it through people's heads that hey, it's not about replacing you, but it's you typing into your keyboard isn't value add to anything. So let's allow you to focus on the, you know, the 10% of items that aren't a direct match into our system. And that's where you're going to bring value. And so it's not about replacing. You'll be able to do more if you allow that system to work. So I think part of it's that the other piece, you're right there is a trust, a trust piece I think embedded with, with ESOPs. And I think part of that is just the transparency. Transparency we have, you know, within our business.

Thank you.

So can we go just a little bit deeper on that as well? Okay, so let's talk about that trust, the trust in the company and the storytelling. Right. That AI is here to help you do more creative, more value added work. According to McKinsey, you guys, I just, I just saw this. 59% of workers are going to need reskilling before 2030. Okay, makes sense. But they also report that the success rate of that reskilling is only 20 to 40%. So think about that. So between 60 and 80% of the employees that were saying we want to give you more creative work, we want to take the mundane from you and we're going to reskill you. What McKinsey is telling us is that 60 to 80% of that is at the number is going to fail. So the trust, I believe, not only has to be in the company, but most importantly, trust in themselves. Trust that they believe in themselves that they have the capabilities, they have the desire, they have the drive, they believe in themselves to be able to grow, develop and bring a next best version of themselves to the organization. There's a gap that I don't think we're talking enough about.

Yeah, if I could add to that, you know, a couple concerns for me about AI because I think the jobs forecast is much more dire than a lot of people like to admit. Because, you know, first of all, we talk about freeing up employees to do higher order tasks. Well, when we, when, when AI can do most things better than humans can, and that's going to be the case here, pretty soon, those higher order tasks aren't going to be done by humans who get displaced by AI in their mundane tasks. It's going, the AI is going to do those higher order tasks as well increasingly. And the second thing is people talk about how well we're not going to lay anybody off, we're just going to not hire as we add AI. So we'll do it through attrition. But 2/3 of people who leave companies, in other words who attrit are going for other jobs. So if everybody is saying we're just not going to hire, people aren't going to be leaving and you're not going to have attrition and so you're going to have more headcount than you need. And I think with respect to ESOPs, I think that we do see this sort of dichotomy of reaction where the PE back companies are more likely to say hey, we'd like to use this to reduce headcount. The ESOPs are more concerned about preserving jobs for their people. And I would say the focus needs to be what Paul's doing, which is look, we are going to find other work for these people to do. The reaction you don't want is to slow down your AI adoption because you're afraid about the effect on the people because then you're just going to fall behind competitively.

And I think we're a long way away from what Elon Musk has been saying is that we're, you know, down the road we'll get to decide if we want to work because we won't need to work and haven't quite figured out how we're supposed to pay our bills in that setting. But because I don't think my electric bill is going to go away just because I don't have to work anymore. But I think we're a long, long way away from anything like that. And to your point I think Ian, is that what do we do with all these people? So let's jump ahead and look at Tom's predictions and my predictions from the year. I think we got through Dirk. So let's hit on what Tom's were. And Tom was focused on a true AI killer app for distribution will emerge. Not incremental improvement, but 10x capability. Readiness, not technology will be the differentiator. So Tom, you want to kick us off on some of those?

Yeah, I think I was a bit over optimistic on number one. So.

But you're working on it.

But I'm working on it. I'm working on it. But yeah, in fact one of the things, and maybe this, I don't know if we're going to talk about Low lights and highlights. But one of the kind of low lights that I related to that this year that I've seen is in the conversations with a lot of our prospects and customers is that AI is perceived as like the magic thing. And I'll get these conversations where people will say, well, can't you just do that with AI or can't you just put some AI in and take care of it? And so unfortunately, I don't know that we really matured in a lot of cases. Maybe if you went to Ian's conference, you did. But otherwise I think there wasn't a whole lot of maturity and maybe understanding what AI means and the infrastructure that's required for that. So hopefully. Yeah, I think I was a bit over optimistic on that one. What was my second one there? That was on the list there?

Readiness, not technology will be the differentiator.

Yeah. And I think that ties to. What I'm just saying is that readiness certainly has not improved significantly on what I've seen over the last year. I think there's still a lot more readiness that needs to go in. There's still not really a lot of understanding of the data and the importance of how you structure and organize data and how you do that more at an enterprise level rather than at a siloed level. So, yeah, I'm really hoping that this year we see more understanding of those two things. So, yeah, I was kind of a strikeout on these last year.

I don't think so. I mean, I think if you look at the. The closest thing to a killer app is probably the automated quote software. That is a 10x gain and it's pretty close to being a killer app. I mean, we're seeing very widespread adoption across all verticals and distribution. So it may not be on the scale of killer app that you were thinking, but it does fit the profile of a 10x productivity gain that's been widely adopted.

And you're saying productivity in terms of how quotes are being created and managed and so forth.

Yeah. Like Paul, you guys adopted one, right? And you're probably seeing that kind of productivity, right?

Yeah, we really are. And the speed at which we can respond. So not only productivity gain, but the speed that we can get a response back to a customer, which was a game changer as well.

I can add something to support your prediction, Tom, because I strongly feel that AI is not an IT project. It's an organizational change management project and IT needs to be run by leadership. And so readiness is all about the client. I can't talk about who the client is. But they have spent tons of time with readiness training, education and the IT department only provides a solid structure in the security socks two and it's all the subject matter experts that run the departments that are actually going to be putting all this together. It's a completely different deal. But it's all about, it's that people get stuck in these use cases and they can get them in, but it's really if the organization isn't going to accept it, it'll get sabotaged. Look at CRMs, which is probably the lowest utilization around, right, because it's crammed down for a lot of salespeople. But when they love it, it really works for them. So I think we're kind of in the same boat.

Well, I think it's interesting, you know, looking at kind of all of these comments is that, you know, I talk regularly day in and day out to senior executives and distribution and manufacturing companies and everybody quickly thinks about, you know, when they look at a platform like ours of a customer intelligence and smart CRM platform as this big heavy lift and it's I've got it this, that and the other. And I. It's really interesting because we look at it as this is a business project, it's not an IT project. And what becomes interesting as we think about it is, you know, I think a lot of people and it just makes me laugh. I talked to a gentleman a while back. He told me that he had just finished an ERP implementation that was like, you know, 36 months. I think that they went through when all was said and done, you know, something like that. And he said he would rather have his spine transplanted than go through another ERP implementation. Well, that's the pain then when we bring another enterprise solution that go through people's mind. But when we start thinking about it, I mean we have a large customer, they've got 250 people I think on our, on our platform that's a large distributor in the Midwest. And Tom was sharing this with me a while back that because things were well planned, their entire implementation, their IT department probably doesn't have 20 hours in with working with our team because all they needed to do is provide the keys to the kingdom to get the data that we needed from the silos within their organization. And then the business side of their company is the ones who got active in how they were going to execute and implement using the tools. So it's, it's an, we're in an interesting time where even AI is Helping those things move even quicker. Yeah, yeah.

If it is leading. If it is leading this strategy, you're going to end up with a lot of solutions that you haven't yet identified, what problem you're solving.

Right, Right.

Point so far, the main concept of this conference.

Yeah, yeah, that's right. So my, my takeaways or predictions from last year were channel collaboration will improve materially due to technology, better data sharing between manufacturers and distributors. I don't know that we've materially improved that. In fact, I was reading a post this morning from a gentleman that's an industrial distributor not far from Ian, and he was touting the struggles with those partnerships. And so I don't know that we're quite there, but hopefully we're moving in the right direction. I think what I nailed on this one was that physical AI Robotics will begin entering distribution environments. If you had an opportunity to watch any of the videos coming out of CES this week. Pretty close. I had told my wife that in 12 to 18 months that we would have. I think I said 12 to 18 months. Maybe it was 18 to 24. That we would be able to have a humanoid robot in our house that could clean it better and wash our cars better. And if you watch some of the videos, we are very, very close to those things happening. But we can talk about that more as we move ahead later today. And I also had a comment and prediction that distributors that fail to embrace technology risk shrinking dramatically. So, you know, I've said this for a long time. I don't think that people are necessarily at risk of going out of business. But I was literally messaging this morning with a prospect that we're talking with at Lead Smart that's looking at adopting our technology. And he is surrounded right now in his marketplace in the Northeast with his three of his probably five largest competitors are using our platform to understand the same customers that he's calling on better, but they're not on our system yet. So I think that is a company that wins not just our software, but across the board with people that are embracing technology, have the ability with a smaller number of people and great warehouses that are full of product that can get out and take market share. So those were my thoughts of the year. Anybody have any thoughts and comments on. On those?

They're just brilliant.

You sound like when I asked Chachi PT Something, right?

That's right. How insightful.

Very, very good. So, okay, well, I guess I nailed it then. Bing.

Go.

So, Tom, you weren't expecting that I would have my Jim Cramer, soundboard here. Did you.

So I didn't hear anything, but that's.

Oh, you didn't. Okay. It's supposed to have gone through my speakers. I've got the little soundboard here, so maybe John can tell me how to use that. So let's jump ahead. And John, if you'd go to the next slide, number eight, there. There was one thing that everybody agreed upon. It was that distributors that combine AI, human empowerment and proximity based value will accelerate. Everyone else will feel the gap. So everybody's still in agreement on that?

Absolutely.

Good. John, let's jump to the next slide before we get ahead and look at things. So this was what a little AI model talked to us about, about how good we were on all of these. So it says that Mike Marks had a high level of accuracy about contractor tech adoption. Again, Mike talking about that AI would reduce internal friction. Says it's early, but trending roll compression is evidence with efficiency pressure increasing. And then Ian's comment about competition would shift towards scale and physical proximity. And Ian refined and it kind of enhanced that a little bit. Spot on about what's going on there. Ian, it says you're correct again with your discussion about embedded infrastructure and so forth. And it looks like we did pretty well across the board. It says, Tom, that we partially realized that killer app. So I think we've got work left to do there. And then my comment, it says is mixed about channel collaboration. So we'll continue to do this kind of, it's nice to kind of use the tools that we're talking about to kind of analyze what we talked about previously. So any thoughts on that, gentlemen?

I think we were lucky.

I think we're lucky. Okay, good. Well, you know, what was that? Yogi Berra, Better lucky than good.

Exactly.

I think that's. Who said that.

But good.

Well, let's, let's take from that. Let's kind of go around the horn again with our. Do what we did last year. Let's talk about what highlights and low lights were from 25. And we'll do that fairly, move fairly quickly with that. Mike, do you mind if I start with you? What were your highlights from 25?

Well, number one said, I'm still here. Being 76 years old, that's a special thing. I think one of the things that, I don't think people have paid much attention to it yet. I mean they haven't broadcast a lot. But I think one of the highlights is the new business model the QXO has put together with Brad Jacobs and they just raised another whole fund in terms of acquisition. Yeah, this is. This is not the old. This is actually the opposite of the old PE playbook. Because what, what Brad Jacobs is doing is he's saying if somebody. Everybody's so used to getting part of partial orders, we're building a business. And they're a digital first business. If you look at who they've been hiring and staffing, and they're saying if somebody needs 14 or something, and they're so used to, you know, nine show up, he says, we're not going to take the order unless 14 show up the next day. And they. Designing the business. This is a true orchestration project because they're designing their decision processes and quote processes so that they can actually manage that. And they're building AI. They're doing what Domino's did. They're doing exactly what Salesforce did. It's a true orchestration. And I don't think it's had any visibility yet. But when you can. If you go back to the proximity thing that Ian talked about and said, when anybody can find anything, then it really becomes, how can you take the drama out of my life? And I think this, to me is one of the highlights of 25. And I think it's going to be kind of the shock value for a lot of people, people in building materials in 26 as they start to deploy this capital for acquisitions. And. And so anyway, that's one of the highlights. The other thing I was excited about is we have. The experimentation with AI has gone mainstream. We're. We're doing a rework on a book we did on how markets are made and H vac markets, we wrote. We wrote one 10 years ago and the industries asked us to rewrite it. And one of the things that's coming out of that is that a lot of the loyalty, unthinking loyalty of contractors to both manufacturer brands and distributors is a lot less over 60%. When we recently just did a survey, we presented the results three weeks ago. 60% of the contractors surveyed basically felt loyalty was less important, which means purchase concentration. So we're starting to see a lot of things and people are experimenting and the world is changing. I think we're looking at a fundamentally different deal. The other thing. And to me it's a small highlight, but basically because of my involvement with NAW and mdm, you know, anytime you see one big organization acquire a small one, you're never sure what's going to happen. And I have been really pleased with what NDW has done because they haven't heard mdm, they have amplified it. And I think in terms of the value they're bringing to the industry, I think they're doing a much better job. That to me is one of the shiny spots. So those kind of, those are kind of the highlights for me.

I like those. Mike. Mike, will you be at NW's executive conference later this month?

Not this year. Well, I got off the hook and. And I've actually got a spade peaking speaking gig that gets me out to Arizona and then Marilyn and I are going to go to national parks, so.

Very good.

I'll miss you being semi retired. And I'm probably going to get in trouble because I don't think anybody noticed that I'm not going to be there. And now I've just said it publicly.

Maybe I shouldn't have asked the question. I was just going to, you know, try and corner you for a, for a beer. But while we're in D.C. but I'm.

A manufacturer's rep so I never pick up a tab. So if you're going to buy it, I'll meet you wherever you're going to be.

Well, that's a struggle because I owned a rep agency for 10 years. So we're going to need somebody else to join us, I guess Tyrannosaurus Rex.

Arms reaching for the chick.

Hey, Mike, for those national parks you in Maryland are going to go to.

Well, we're going to do Monument Valley, we're going to do the Arches and we're going to take a whole week and then end up in Vegas. Do a couple days in Vegas, which will basically burn up the speaking fee. I'm going to get in Phoenix and then we'll come home.

Well, I've got an RV if you want to use one.

I, I don't want her to know anything about it because then I'll need one.

And there's no shortage of vehicles already. Right with you.

No inventory in the channel. Right.

Very good.

Although I do, I do. My one weakness is I love depreciating assets. That's why I have all these cars.

Very good. Tom, let's go to you. Highlights from last year.

Highlights from last year. I think I agree. I think Mike just said this. Right. Is that the AI conversation is reaching the mainstream and that there's certainly much more visibility and understanding that this isn't a fad and that this is something that's going to be around and so forth. I think on the flip side of that is what I said earlier is My lowlight is, I think the maturity of the understanding of what that really means. Not just right now, but long. You know, what does that mean to my business in five years? What is about being to my business in 10 years? What does it mean to everything we just talked about related to employees and all of that? And rather than looking at sort of a holistic strategy. Right. There's been a lot of silos going on. So I think the good news is, as I said, it's the understanding is there, but I still think there's a lot to mature, I guess, and how we go about it and how we look at it. And not that it's just some something magic that is. I'm going to wave a wand and we're going to have all this magic. There's a lot of work under the surface that has to go on to kind of get to that readiness in that next point there. Good. So.

Hey, Tom, go ahead.

I'm just going to ask, Tom, do you think that that just that residence you were talking about from a low light perspective, you know, being able to attach an ROI to AI investment as you're looking out five years.

Right.

How much of that is kind of causing that uncertainty or that kind of tenuous approach?

I think it's certainly a big ingredient. Right. Because. Right. Traditional, especially IT or technology product projects, you want to attach an roi. I think it's really hard to do because it's so transformational. Right. That some of the value isn't necessarily something you can just put into a spreadsheet. I do think there are some things for sure you can put into a spreadsheet, but I think there's. We've hit on some of these things today. Right. Just the philosophy. Mike, you brought up qxo. QXO is investing big time in AI all across the entire business.

Right.

In fact, it may be looking at how do we become kind of that AI first business. So, yes, I agree, Paul, that I think ROI is, or the lack of a clear ROI approach is an ingredient to it. But I think again, that should just be a small piece of the overall strategy.

Can I chime something in here? Because I think. Paul, hit it. And it goes back. Paul, you started it because you said it's really more about a business strategy than an AI strategy. And when you teach people how do you calculate an ROI in school, it's typically an event. Right. How are we going to, what are we going to get on this bulldozer? Whatever we're buying. But when you actually start to Talk about transformational things. The math is different and you have to build scenarios about I think my revenue is going to increase faster than the market by X or margin. My customer churn is going to drop down. And what you basically do is you build the scenarios optimistic, realistic, pessimistic and have a margin of error so that you actually say if everything doesn't go well, what am I doing? But people just look at the cost and what they think they're going to have and they do a lousy job on the improvement side so they can't get any decent math.

Agree.

Yep, yep. And I think it's interesting too. You know Paul, you had commented about having a handful of AI related tools. Ian, I think you had, what was it, 41 vendors, roughly 40 vendors or so at the last year's applied AI event. I think half of those were related to order capture and order entry. But that's the crowded space there. But I think there's two components that come to this discussion that Tom started us with is one is can I drive some top line revenue from it? Right. Which there are tools very specifically I can wave our hand about how we can help companies do that. Then the other part of it becomes is do I need some one off software tools? Which is what we're seeing. A lot of people are buying software products versus platforms. That's a whole nother discussion. The other side of that is, is there a strategy behind it? And that's what I think, you know, in I'm, you know Paul, when we were together in both Denver and Chicago a few months ago, I was on five weeks of event after event after event and probably back behind me is the corner is all my lanyards from last year and there's probably 25 of them from events. And my wife keeps saying, why do you keep those? And I said those are badges of idiocy or honor. I'm not sure whether it's, whether it's ignorance or honor, but in looking at that is the vast majority of companies that I talk to that are thriving businesses with very bright people, great employees. Their tendency is, if I had to kind of put people into a bucket, the typical tendency is to I'm going to buy a shiny object and I'm going to put a few of these into my business and I'm going to. What's the old saying? Hope is not a strategy, is hope that it helps them in some way in their business versus going into it with some expected return on investment. There may be some intrinsic value of things that it adds to the business. But overall, ideally looking for what is my return and how am I going to capture that and how does that tie to my business strategy for my technology roadmap as well as my growth projections for the future. And very few companies I think are really doing a really good job of and I don't want to say there aren't companies out there because there are people that are at you know, Ian's event, people that Mike's working with and we've all met many of them. But in general, day in and day out, when I look at if I were to take a buying group or a trade association, having just been in many trade association events this year is the vast majority of companies are grasping at things versus putting strategies together.

I'm in violent agreement with you Kevin.

It's great to see the outliers, right you see the outliers again at Ian's event and affiliated distributors event. But the vast majority of people out there right now I think need to do and I think it's really what Tom was kind of talking about is really having this understanding of I think Tom used the term readiness ongoing. He talks about that all the time is you know in and I have a in fact Will Quinn, our good friend, all of us I think no Will just commented on here he's a liar because he says what a good looking crew. But the, the Will is. Is great. He puts posts quite regularly these prompts for creating Cartoon images from OpenAI and I made one using one of Will's prompt prompts a while back and I was the anti silo data crusader was my this little image that I made And I think one of the struggles right now that most people both in manufacturing distribution are seeing is they've got disparate data across their organization. There's not a strategy to say how do I bring that truly that disparate data from across my organization into a unified tool that now I use AI against. Because what we're seeing for the most part right now is where people are buying AI tools, right? Varying levels of true AI in them. They're buying those tools but now they have siloed AI. That's I think one of the big things that people are going to need to figure out what's next is how do we get move from Tom uses the term all the time about point products to platforms where we can see all of our data across our business. I think those will be some of the game changers. But anyways that was me pontificating There for a minute.

Was that your predictions and everything or your.

I guess maybe I could say that when we, when we get there. So, Ian, let's get to. Let's shift over to you on highlights. Lowlights of last year.

I've got four. I'll go through them quickly. One is, I think for a lot of distributors, AI got real and that was uncomfortable. So there's a lot of testing, but there's this sense that it's not going away. I don't think anybody now believes this is just a fad. I do think that some takeaways from most distributors were that one, AI is not plug and play. You really got to work at IT and integrate it and use ipaas servers, et cetera. Bad data kills good models. You talked about data a minute ago. And I think that they realize if you don't have, if your data's not right, you can't leverage AI properly. And then finally, the technology is easier than the people part. So that's all part of AI Got Real, but it was uncomfortable. The second one is the distributor divide became obvious between those who are really serious about AI and those who are not. And I think you're beginning to start to see performance differences. For example, if you put in quote to order automation, you're just winning more bids than your competitors who haven't. First of all, you're responding to more of them. And secondly, you're responding more quickly. And third, in many cases more accurately, Part three, jobs did not disappear. Work has changed. AI doesn't eliminate roles first. It eliminates tasks and friction and sort of excuses for low productivity, if you will. But I do think there are some early warning signs. I saw, I think it was the CEO of Bank of America who said they had 200,000 applications for 2,000 jobs recently. And so I do think for early college graduates, people who are in computer programming, I think the law profession and some others are starting to see AI eat into it. But for the most part, that wasn't the case last year. For this is the fourth one. This one is just a little different than the others. But it was interesting to me that E commerce really stopped being the technology conversation. And you could argue that was 2024, but it was definitely in 2025. It used to be if you said, boy, that, that, that distributor is really technology forward. You were talking about their E commerce capabilities, now you're talking about AI. But I don't think that makes E commerce less important than it used to be. I just think that it means it's got to be table stakes now because you can apply AI so much better when you're digitally enabled. So Those are the four big trends I saw in 2025.

Hey.

Hey, Ian, quick question. Interesting point about E Commerce. Do you think that agentic commerce is going to start to replace that or become kind of front and center or, or do you just think the whole online buying thing is getting pushed to the back burner for the time being while we deal with some of these other infrastructure issues?

Yeah, I don't think it's pushed the back burner. I think it's become more important than ever. It's just not as big a transformation as AI. So it lost the spotlight. I do think agent E commerce will become a very important way of, very important part of the purchasing world. But I think we're a couple of years away from it showing up on the, on the, on the graphs. What do you think?

Having seen, having seen that last week, Doug McMillan's a new CEO of Walmart and one of the very first things he did is he did a joint venture with OpenAI and was quoted last week of saying, you know, up until now E commerce has always been going to a website and then scrolling through and he said that's past the best buy date and it's. And it's going to look very, very different based on what they're doing because he's there. They're making a major, this is just talk at this point, but they're making a major investment trying to actually get that to work. And if Walmart does it because they're doing like $1.4 billion a day in revenue, it probably will have some impact.

Yeah.

$1.4 billion a day. Think about that.

Wow.

Yeah. That hurts, doesn't it?

Yeah. Tough to get my head around, you know, so. And I, I like everything that you said there and I think the E Commerce thing that you brought up is really important and it makes me think back to the, the very. I think it was other than you and well, for first year of your big event, you had Covid, right?

Yes, I missed the event from 100ft away in my room.

Yeah, Yeah, I can't even imagine that. But, but the. So I think after Jonathan introducing things, the first, the first speaker was Zach Cass, is that correct?

Right.

And how powerful was Zach was the former. Top. Early, early, like first 50 employees at OpenAI, something like that. And they're go to market guy and he was using the. There's just. I still have so many takeaways from that. But he commented about AI is as important to mankind as the ability to use fire, I think is what he related it to. We've heard all of these things and all these big comparisons too. But I think what's coming out of a lot of that is that's why E Commerce, to Ian's point, I think has become the secondary backseat. I think E Commerce right now for a wholesale distributor. I welcome anybody's thoughts on this. Is kind of table stakes now to be able to do some level of E Commerce. I have a philosophy right now that I've kind of embraced in the past year is really that there's a minimum of four journeys that a customer can take with a distributor. There's the ERP journey, which is. Tom used made a great point a while back. We were talking about this and he said ERP is a rear view mirror of a singular transaction that happened at a certain time. We have after that we have a marketing journey that people are taking with us so we can see their transactions in erp. But our marketing team is interacting with people, whether it's the promotions that people are taking advantage of, the events they're coming to. So we have that. We have then now an E Commerce journey in most organizations. What are people doing with their shopping carts? Are they sending us orders through that? How are they interacting with us? So we've got a third now journey that the customer is taking and then we have that interpersonal journey. And the interpersonal journey is the truck driver that's dropping things off at a job site that's working and interacting with our customer there. There's the salesperson's interaction, there's the customer service person that takes a phone call or an email or about an order being run. But when brief can bring all of that data together and then AI becomes this wonderful catalyst. Now we're seeing all those four journeys and we're really seeing what's happening at the customer in a holistic view versus in these individual journeys. And that is, I think, where E Commerce has now become. This is just something that we need to have in our business because it's what our customer is expecting and it is one of their journeys.

Kevin, you think about what you were just describing. Sounds like omni channel from 10 years ago, right? That was really what it is. Is AI going to bring Omnichannel or give us a different view into Omni Channel and much more informed view in Omni Channel?

Right. What I'm thinking about that goes through my head related to that. Paul is And I think you're spot on is omnichannel term. I think really kind of came around for us because that was what we were going to call the. That's what we were going to call what E Commerce is doing for us. Well now E Commerce has just become part of the puzzle for us and how we go to market and it becomes interesting at that point. So that's good. Dirk, let's jump to you. Highlights, lowlights of last year.

Cool.

Before I go to highlights and low lights, I'm going to go somewhere that I'm not sure I should. But that's like me, I'm going to do this. All right, so I think Mike Marks, you mentioned the Industrial Revolution earlier. Right. And then Kevin, you just mentioned the speaker at Ian's conference about AI being as important as, as fire.

Yep.

Let me, let me tell you guys just where some of the thinking that I'm doing. And you mentioned that you have a philosophy, Kevin, as well. Let me share with you part of my philosophy and that's this. If you really look at it, what I believe, what I've seen is that from the Industrial Revolution on as a society and generally speaking, not the businesses on this call if you will, but generally the Industrial revolution has driven an anti humanism throughout business. If you even just take a look at what we all talk or how we talk about our employees, everyone listening here will have said that they see their employees as one of their greatest assets. And you think about that. All right. Where did that come from? It came from the industrialization of the labor force. It came from driving efficiency and productivity at all costs through the individual. It came at as a result of by design or not. Well, it was by design, but if we wanted it or not of employees, generally speaking, truly becoming just a number, becoming replaceable and becoming a cog in a big wheel. A I'd like your guys input. Do you agree with that premise? Second, now we look at AI and the way I look at this is I'm going to talk about inflection points in just a little bit here. But when we look at AI I believe we are at an inflection point where we as business leaders have a real decision to make a real decision to make and say what is the world we want to live in? What is the business that we want to create? AI has an opportunity to drive us further in this anti humanistic perspective, this anti humanism world, this anti human business. Or are we going to rally around and ask different questions? Look at technology truly as a Tool not just to drive efficiency of the business but to drive human flourishing and human thriving. This is a significant, significant philosophical question that I believe we need to ask. And it's, I think it's absolutely imperative that leaders on this call today start thinking about those types of things. Number one. Number two, my year in review. I'm going to go back to inflection points if you don't mind because this is the way I looked at my year in review.

Love it. So.

If you look at over the last 40 years some of the inflection points that distribution and manufacturers have gone through. Let me go back to the start of my career. Forty years ago there was an inflection point in terms of how we're going to design sales organizations and sales processes. Mike Marks, I can still see you and I 40 some odd years ago, 35 years ago down in Orlando with Morgan Distribution, right?

Oh my God.

Yeah, I can still see us. And I brought an LMS system before LMS systems were real. We designed it with Vic Springer and we introduced because this inflection point of going from transaction oriented sales to consultative value or value or value oriented and solution oriented and those organizations that truly have move towards that are the ones that are succeeding. So that was 40 years ago. 20 years ago there was another inflection point in terms of this innovation, disruption and technology. And that's when we led conversations with you all on this call about the importance of bringing this innovative mindset to the organizations. And Ian man, I can see you and I on webinars together driving this message home about disruption and innovation, technology and the like. Then five years ago, another inflection point coming out of COVID Paul Kennedy, you mentioned on this call already the importance of storytelling, the importance of narrative. And so five years ago, right, we went out to champion the noble calling of distribution to drive the narrative of what's going to drive organizations success. So a little history to what's happened in 2025 and even where we're going to go. I believe we are at another inflection point this year. However, I see two distinct inflection points. Number one, everything that 90% of this call has focused on is AI. Absolutely a significant inflection point. But while everybody's asking about AI and its impact on the business in the last year I've been asking a different question. What about the human being? What about the human being and the way that they are going to fit into this work and these, these organizations going forward and how they are going to live? You guys talked about it earlier. In a way, are individuals going to thrive in this new world? So as I look at last year, where we're looking going forward as well is I believe we are at an inflection point where we have the opportunity and the responsibility. Our employees spend 50% of their waking hours under your roof. We have a responsibility and an opportunity to double down on what it means to have a people first and a human centric business, to truly build a first principle around what are we. At its core, we are an organization that serves people, employees, customers, society at large. And I think we need to rethink and think deeply about the fact that a focus on people helping them thrive, grow, flourish, step into the best version of themselves. It's not opposed to business performance. In fact, it's the foundation of business performance.

Love it. Thanks, Dirk. That's got. It's going to have me thinking for the rest of the day about that because I've been kind of trying to work through this as I read your posts, as I talk to you. I think, how would I say this? That sounded too sappy. Dirk, I think the work you're doing probably might be the most important work you've ever done right now based upon where we're at in the world and the things that are going on because guys like our friend Paul here are, are getting inundated with people that are wanting to bring technology to him that reduces the number of people he needs. And keeping the balance of what's important as humans is probably as critical an issue as we could be dealing with right now.

And Kevin, one last thing on that issue, because I agree with you and I can get sappy as well. But it's really amazing to me when Bethany and I started to down this path to create the Fully Alive movement, right, to empower a million people. Where our hearts were drawn to are the 80% of our employees who are underserved, overlooked and underinvested. Those hourly workers, let's just say the warehouse workers or others, right?

Yep.

And so that's where our heart is. That's where we were pulled. But when we look at who we are attracting right now, 80% of the individuals who are coming into our fold, into our community of this fully alive movement, 80% are at executive level and leadership levels. And they, these individuals are wrestling with these human issues to a great greater degree than we thought when we started down this journey. So this is truly an issue that if we're going to lead our organization, we got to help our leaders as well. As those underserved individuals truly understand and focus on what it means to be self empowered in today's day and age so that they can take control of their life and truly rise from just getting by, which so many feel like they are, to living fully alive.

That's great. So, Dirk, favor before we're going to jump to Paul. So here's what we're going to do. We're going to jump to Paul's highlights, Low Lights of last year. Then we're going to go one to two minutes each on what we see for the coming year because we're. Mike's going to need a bathroom break before too long. Mike, I don't know if you remember that last year you were medicated. You're like, hey, you guys keep talking, I'll be right back.

Well, there was some urgency at that that I still recall.

That's good.

I'll spare you the details.

Very good. Dirk, favor to ask you though with this. We've only done it twice, but Tom and I developed last year a kind of a second show, we just call it around the horn 2.0 where we go away from our typical newsletter format that we discuss on our typical show. I'd like to get you and maybe a couple of the people that are here with us today, these good friends of ours, and do a show or two even where we have the conversation about this push pull place we're at in the world right now with technology that is potentially going to reduce the number of workers that we need. And then what are the issues that go with this challenge that's there and how do people like Paul Kennedy and others like him around the world who are going through those struggles, how do they manage through that? So would you join us if we pull that together?

We'd love to.

Okay, we'll make that happen. Paul, highlight Low Light from last year.

So just real quick on, on that conversation we just had. And I'm, I'm looking at today's newsletter that you guys published this morning and an article from Ian's team at Distribution Strategy Group around the Human in the Loop and, and would encourage everybody to, to kind of read that as you think about this, this dichotomy of AI replacing people. But do people in a different form, and I don't mean different form.

From.

A human perspective, but you know, taking on a different role and how that then becomes a competitive advantage in, you know, in our businesses and the real differentiator as opposed to a 100% technology drive. So the highlights and low Lights, you guys covered a lot of them. I think just around AI acceleration and I'll use the term resilience and the resilience of people adopting and leaning into. I've seen NAED has created the Digital center of Excellence that Scott Wagner's leading to really help distributors along this journey. And the level of engagement that I've seen with that group has just been phenomenal. So I think something has been sparked around, hey, there's this technology out there and how do we use it to enable our employees and our businesses to continue to grow and stay relevant going forward? So resilience, I think is a big one there. The. Resilience and the change adoption. And Tom talked about this earlier, just that I think is as we think about 26 is going to be a really important one, is continuing down that path for people. You know, if you don't like change, you're not going to like, you're really going to hate extinction. So I think the, you know, the real key there is continuing to storytell, as Dirk put it, and creating that narrative around how we can enable technology from a low light perspective. Just, and this is purely from a business perspective. The, you know, the tariff uncertainty, the tariffs and the uncertainty that that created in business, I think was a drag on the overall, you know, push forward that we had here in the US So I would call that a low light. And some of that uncertainty still exists as we think about 2026. The one last thing, but this is a 2026 highlight, is this call with all of you.

I love it.

Hey, can I, can I comment real quick on something, Paul? Thank you. I love it. I loved your comment about resilience.

Right.

And the need for resilience going forward, both from a company and the individuals. I think you were alluding to the individuals as well.

Right.

And I think there's an opportunity to reframe that as well. Because at the very nature of resilience, what does it do? Resilience means something has impacted us probably in a negative way. And resilience says let's get back to where we were while the world is advancing. So there's an opportunity to I think reframe this from resilience to anti fragility. And what is antifragility? Antifragility is when as an individual I have the mindset, I have the ability, I know who I am. Right. That I know I'm clear on who I want to be and what I'm going to be. And so I become not resilient, but Antifragile. And I use these challenges of life AI displacing me. A fight that I had with a co worker, whatever it happens to be right. A fight that I had with my spouse. And we have the mindset and the ability and we feel empowered to use that challenge not just to get back to where we were, but to use it to actually strengthen us. There's the opportunity for individuals, there's the opportunity to help leaders reshape these change initiatives in our organizations. Resilience says I just want to help you survive. Anti Fragility says we not only want to help you survive in this changing world, we know that you have it within you to actually thrive. And that's an anti fragile mindset rather than a resilient mindset.

Interesting. Okay, I would have never thought of that. I got to think that one through.

Kassim Talib wrote a really good book on the subject and I'm in violent agreement with Dirk on that.

Correct.

That's great. So Paul, before we hit everybody else, we'll stick with you for a minute. You grateful for your thoughts about being with us today and that being a highlight. Any other big highlights, your forecasts you have for the coming year?

Well, I think, you know, kind of the geopolitical instability is going to, you know, intensify and create more economic uncertainty. So I mean, I think that that's just, that's going to continue and we've been resilient or antifragile as we think about that in 2025 and I think we'll need more of that in 2026. I think we're going to see AI continue to move from hype or kind of buzzy to monetization. And Tom and I think this is going to help with people being able to attach ROIs, because I think it's going to start to show up in the business how AI is enabling and how you can draw a direct link between a return on that. The speed of tech advancement is going to continue and I think that acceleration is going to widen the gap. And Ian, this might have been your comment from last year between the early adopters and the laggards. Maybe that was Mike's. I can't remember who, but I think that gap is going to continue to widen as we move forward. And I think the biggest obstacle is going to remain kind of this change management theme that we talked about earlier from an adoption perspective, particularly as it relates to AI.

It's good.

So we'll have those recorded into history and we'll See this time next year how we did with all that. Question for everybody, real quick. Is it safe to assume for the conversation that we're in today that we can kind of plug the tariff component into the geopolitical piece of things going out there? Is that fair?

Yep.

I think there's one extra little wrinkle there because I don't think we haven't dealt with the actual cost of tariffs yet. Tariffs just raise costs for everybody.

Sure.

But what's happened is things have worked through the pipeline. I think a number of meetings this year and webinars this year and conferences. How does the distributor pass on supplier price increases when customers don't want them? There's no choice. And those that do it well will thrive. And those that don't know how to get the price increases through will end up failing. I think it's going to be a bigger issue at a tactical level.

So Mike, take that and continue if you would on your predictions for the year.

Well, don't have. I think the tariff is going to be a large pain in the posterior. I also think that our supply chains are going to continue to be unreliable, viable in surprising ways. I, I think that the experimentation will continue. I don't think we're going to see an AI bubble bust. I think there's going to be a lot of bubble adjustments. But the big thing everybody's talking about, we're a long way from that yet, at least in 26. And, and it's just there's going to be a lot of Vuca, you know, large events that people didn't expect like capturing the president of Venezuela. But, but, and we'll see more and more of these strange things and they become distractions. They cause people to sit on the, on the fence. My, my view is that the leading distributors are the ones that are going to just be resilient and anti fragile and just move ahead and, and create initiatives and change. Those distributors that put their, tuck their head back in terms of tail being a turtle and just sort of waiting for this to go away will end up be taking a large risk that they probably won't be able to recover from. So that's basically it.

Those are great. I love that. Dirk. Just quickly before I'm going to head over to Tom here in just a second but I think maybe we need to get the hashtag antifragile movement started, maybe T shirts. I think there's a whole movement that can go with it.

Hey Bethany, are you listening? Bethany, are you listening?

She way ahead of me. Okay. Tom Tom Predictions for the year Killer.

App pardon Killer so from the business perspective, I think the tariff situation is going to get more disruptive. I believe the Supreme Court is going to rule against the legality of the tariffs and they also are going to have something related to the conversation about refunds. I don't think it'll be 100% clear. I think there'll be a lot of ambiguity and I think it's going to create even more questions and disruptions into the whole tariff question here over the the question is obviously when they actually make that announcement but was supposed to be today or they thought it was today, didn't quite happen. On the technology front, I think this is going to be a year where we're going to not just talk about data, where we're going to talk about context and the contextual way that data is used and the way that we need to organize data from a contextual perspective. Because AI really doesn't thrive without context. And we have a lot of data, but we don't have a lot of context around that data. And I think that's going to be an important topic for this year technologically. So those are my two good Ian.

So I agree on the geopolitical stuff. Let me give you four more quickies. One, I think AI will continue to move from tools to strategy. So like that video that you shared with us from the Nvidia live conference of Jensen Wang talking about AI as substrate. So I think people, including distributors are going to stop treating AI like it and start treating it like management infrastructure. Second, I think agency is going to change the game. Are you going to see increasing number of AI agents that execute workflows, including customer facing stuff with distributors who are going to have increasing usage of AI agents doing customer service tasks and other tasks. Three, I think that's going to make the workforce question get harder. I think it's the we're going to start running into some of these limitations where not everybody can rely on attrition to grow without hiring people. So you're going to start seeing increasing impacts on harder choices for management to make on headcount. And then fourth, I think boards and owners are going to start asking better questions. And there used to be a lot of boards early on were saying do something with AI and CEOs were scrambling to try to figure out what that meant. And then it was like, well maybe we can find some specific problems that we can address with AI. I think now boards and owners are going to start asking, hey, if we were to Redraw the company as an AI enterprise, with AI as a substrate, what would our company look like? And I think those are better, smarter, more useful questions than do something about AI.

Okay, so we hit Paul, we got Tom, got mics. Dirk, did we get your projections for the year? We didn't. Let's do that real quick.

And I'm not a procrast pro. I don't predict.

So what I'm gonna do is. You're not a prognostic either.

Yeah, that's what I'm. Rather than a prediction, I'm gonna. I'm gonna share a commitment with you. Okay, guys, before coming on, I took a look at what the individuals who are coming into the fam community are telling us now. Again, remember right now, 80% of these individuals are in a leadership position. Here are 10 conditions, human conditions that we are hearing. I'll go through them quickly. One, our people are feeling stuck, stalled, and on autopilot. Two, they feel the weight of time pressure away from their family, for example. Three, they're exhausted and they're burnt out. Four, they're searching for purpose, meaning and clarity. All you talked about that.

5.

5, they are looking to become that best version of themselves. Six, they tell us that they have a fear of missing what's important to them in their life. Again, family, for example. Seven, they are feeling a burden of leadership unprecedented in their career because of all this chaos that you just outlined.

Everybody.

Eight, they're concerned about their legacy, the impact that they're truly having. Nine, they are craving balance, peace, and emotional relief. And then 10, there's an overall fear of the future. So this human condition is real. And I commit, I will predict that those organizations who survive and thrive in this environment, they're going to rethink, deeply rethink the role of how the human being can thrive and flourish as a result of their work. There's the difference. That's what I predict. That's our commitment to it.

Gentlemen, I need to go recycle. So, Kevin, I'll let you make your. Your famous final speech and I'll see you guys next year. Or maybe the other one. We talk about the next meeting with Dirk.

See you, Mike.

See you, Mike.

Take care, guys.

Have your weekend.

I hate being the old guy.

I think Kevin froze. So. So we won't get his predictions. It won't be right anyway, so it doesn't matter.

Shots fired.

That's right. I can do it. He's. He's frozen over there. Hey, John. As we wrap up here, was there I know a couple things we wanted to share was the newsletter. If you're not getting the newsletter that's coming out every week, please do, please sign up at or let us know@hello leadsmarttech.com around the horde around thehordpod.com you can sign up there as well. Gentlemen, I know we've run over so I'm going to let you go. And there's a newsletter. Well, yeah, that's an eye test there. But yes, it is a newsletter and we have a lot of good, a lot of good topics each week and then of course we talk about those each week on the weekly show. So about the news and things that are going forward. There's going to be, I think, no shortage of news over the next few weeks here. But anyway, guys, thank you very much, really helpful. I'm going to go listen to this a couple times. I've got some driving this weekend, so. And Dirk, I want to, I'm gonna send me your 10 points. Those 10 points were awesome that you just went there. So sorry guys. Your predictions weren't going to be right anyway, so it didn't matter.

My, we have a huge windstorm going on where I'm at and the Internet went out. So my apologies to everybody here. I will hit just very quickly. Well, you know what, here's my, here's my quick ones, okay. AI adoption will continue to improve, but it's going to take people understanding how to reduce silos in their business. Technology platforms are going to take the forefront over the course of the next year. Physical AI versus just the AI that we're talking about. Consistently physical AI is going to become more and more prevalent. We're going to start seeing both manufacturing robots are going to continue, but I think we're going to start seeing humanoid robots that are walking around distribution facilities taking counts, having sensors in them that can test for carbon monoxide, fire, whatever it might be, and be able to look at a stack of pipe or a stack of lumber and update inventory levels. I think organizations are going to look too much more for understanding return on investment before they make large technology decisions. And companies like ours are going to have to really help people understand what that is. I think the geopolitical issues and the tariffs are likely here to stay and organizations are going to need to be anti fragile or resilient to be able to overcome that. And I think that we're going to continue to develop relationships with great people like those that are here today for a fantastic year. That's me.

Awesome.

Listen, my apologies for dropping out. I see we lost Mike. I can't thank you guys enough for being with us.

Thank you.

It's meaningful. It's not just hey here we had another podcast and how many people showed up to it. This is great. Human beings. I consider each one of you good friends which are much more important than the business relationships that we have. So I thank you guys for being with us. So Tom, anything to add before we kick out? Oh, thanks Dirk. Dirk, just with a big heart. Love it. I wish all of you a fantastic year and success to you, you and your family and again for being with us. Tom, anything to add before we drop out of here?

I pretty much done that before you.

Got back on so great.

Okay, we're good to go.

Thanks again gents. We'll thanks everyone. Just recap out and we're going to keep this going. Year four will be here before we know it.

Thanks guys.