Around the Horn in Wholesale Distribution - Episode 93 with Eric Hoplin of The #NAW

Sam, save that music, huh?

I was dancing in the background. I don't know if you guys saw that, but now, Now I'm gonna get serious.

Okay, that's fantastic. Tom, you go ahead with your commentary on dancing.

Hey, I like Derek's dance a little better than yours.

Yeah, perfect. There we go. So that's just been a long time favorite song of mine. And, and I usually come in dancing and Tom just shakes his head and you know, he does that a lot with me. Eric, is to be honest, but good. Hey, so welcome everybody. So happy that we're together this morning. Kevin Brown, Tom Burton with Lead Smart Technologies. And we have Eric Hoplin with us today from naw, national association of Wholesalers and Distributors. And first off, Eric, thank you for being with us. It took us a while to get you and we've been working on that and we're really appreciative.

Am I a hard get? I didn't realize that, Kevin. If I had known, I would have hopped on the next day.

So, you know, I, I don't.

Your audience.

Yeah, I, I, for one second, I didn't think it was lack of willingness. I know you're a really busy man. I had an opportunity last month to visit your offices in, in D.C. and, and it was what a, what a buzz going on around that place. There was a lot of movement, a lot of people move. I think it was just like the city, actually. D.C. is just such a great town. It's one of my favorite towns to visit. And there was a buzz in the city and your offices were moving fast. So it wasn't a desire. I know. It was a scheduling issue. So that's good to have you.

I'm glad you had a chance to come by. Naw. And meet our incredible team who they work every single day tirelessly on behalf of the wholesale distribution industry. So it's really my privilege to work with them and to help lead this industry.

That's fantastic. And we appreciate all the work that you and your team do. In fact, it's. I Love watching Dan's LinkedIn post.

Okay.

I mean, he, it doesn't seem like a night goes by of the week or the weekend that he's not out representing wholesale distribution at some event or whether it's a Saturday morning run. So I love, I love how he does his, Dan does his, his LinkedIn post because he's out.

He's a busy guy. In fact, you know, just last night we were at Dan's house on Capitol Hill in Washington hosting a fundraiser for a great charity in Washington called so others might Eat. And so you're right. Whether it's serving the community or helping the industry, Dan is, Dan is non stop and we love that about him.

No, that's great. I had an opportunity to meet with Bart and with Dan and with Adam while I was there. Just great folks all the way around. So we're looking forward to further conversations with them. But before we dive in and kind of talk about the news today, let's welcome those who are here. We've got Will Quinn is with us. I see the lovely Darlene Brown who's with Us Weekly. That's my, my wife who works with a lot of wholesale distributors and manufacturers and marketing and printing joins us regularly. So it's good to have her. But we'll see more folks coming in. We'll look forward to folks, people commenting today before we dive in, got a little bit of housekeeping that we do each week. And before we kind of get started, we like to just introduce the show. So again, Tom Burton, Kevin Brown with lead Smart Technology of our wonderful guests today with us as well. But we get together every Friday morning, unless someone's on an airplane. We get together on Friday mornings for around the Horn and Wholesale Distribution and manufacturing. And the goal of what we do each week is to just kind of take a look at the news that's going on around the world, mostly in the US And North America. Look at that news about the economy, about supply chain issues, mergers and acquisition sales and marketing, AI E commerce, general technology, and bring that news all together and then kind of wrap it up in a bow of how does that impact wholesale distribution and manufacturing. So we do that each week. We're here live. We are going to be reviewing a newsletter that we send out each week. It again is called around the Horn and Wholesale Distribution goes out to about 10,000 people every Friday morning. If you don't get that and you would like to, it's two simple ways to do it. You can just reach out to us@helloadsmartech.com or you can go to the website for the podcast, which is www.aroundthehornpod.com and fire us off a note there and we'll get you that newsletter. Two ways that we come at you each week. The first one is when we're live this morning. We're live on YouTube live, Facebook live and LinkedIn live. We'll go through our session this morning answering some questions, getting great insights from from Eric as well. But then later in the day, our producers and editors will take all of this data, they'll format it, It'll go on to all of the popular podcast formats. So we'll have Apple podcasts, Spotify, Odyssey, whatever you listen to that's available. The reason I share that is that if you're listening on the podcast, you won't be seeing on the screens what we'll be seeing, which is that newsletter. So, again, if you'd like it, that would be great. Finally, in closing, if you like what we do each week, Tom, what are we, 93 today?

93?

Yes, 93 times we've got together to do this, Eric. I don't think I shared it with you about. Well, 93 weeks or so ago, I mentioned to Tom and some of our marketing group and said, you know what? Why don't we do a little newsletter? We get great information from NAW and from Forbes and Reuters and everybody else, and let's consolidate that and get that out to our customers and prospects and subscribers, and let's do that. Tom said, well, why don't we give it a try and talk about it on LinkedIn Live? And here we are. So we're coming up on 100 soon. We got to get that party planned. But if you like what you hear each week and you see some value to it, a couple things you could do. If you're on YouTube, hit the subscribe button. If you're on LinkedIn, follow Lead Smart technologies. You'll get this information every week. If you're listening on the podcast, share it with friends or leave a review. Be great. So, Tom, before we dive in, Eric, would you give us a little intro to you, maybe your background and a little bit about NAW for those that may not know you.

Sure, yeah. If you're not familiar with naw, we're the trade association that represents the entire wholesale distribution industry. That's every line of trade from health care and MRO and everything in between, food, you name it. We represent all the lines of trade. And there's about 30,000 companies in the distribution industry. And all told, we account together for about one third of the American economy. And so there's a lot of things that NAW does to help support that industry. First is we are a place where we bring people together to talk about technology, talk about innovation, what's around the corner. And so that's one Second is this is a really powerful network. It's a community of the leading distributors that want to help each other to succeed and to be better businesses and build better businesses. So we've got A number of programs nested under our networking arm that helps to facilitate that. Third is we are an educational place where we have incredible partnerships with Texas A and M and Ohio State University and some online education where we bring that direct directly to leaders across the wholesale distribution industry so they can sharpen their skills and be even better. And the final thing is we're the sword and the shield for the industry in Washington. There are things that come at our industry every single day that make it harder to run businesses. And so we talk some sense to the politicians in Washington and help let our leaders put their head down and run their businesses. So in a NutShell, that's what NAW does. But I'd also like to add that recently we acquired Modern Distribution Management, mdm. And so many people start their day with mdm. It aggregates and publishes the best news across the industry, things impacting the industry and the economy. And so we're really excited to be partnering now with the folks at MDM as well to better support the industry.

Tom has done a wonderful job. Tom Gail over the years in doing that. I think I start most days with some of their content. Mike Hockett, when his, I think, executive editors, Mike's title has been with us on the show multiple times as a guest. So we're, we're big fans there as well.

One of the things, both great guys, really, really smart and glad to have them with us now.

Yep. One of the, the things that I'm really appreciative about NAW is and I don't know that everybody catches this all the time, but you know, people, if you're in a specific vertical, maybe you're an industrial distributor, you might belong to isa, or if you're in the H Vac world, you might be belonging to Hardy or ASA or one of those other groups, but all of those groups are members as well of naw. Correct me if I'm wrong here, but I think, you know, tip of the spear, top of the pyramid right in our wholesale distribution world would be naw. And the members go across other associations, buying groups and members as well.

Yes.

Yeah, that's right. And you know, it's a great community as we combine all of the trade associations together. You know, you mentioned Hardy, for example. You know, they do incredible job on H Vac. And our specific experts in and around that H Vac industry. So we don't touch H Vac. And so we, what we focus on, so we complement what Hardy and all the other trade associations do, is we focus on things that matter to every wholesale distributor in the country. And so if you're dealing with technology challenges or innovation or leadership or, you know, economics and, you know, financial issues, legal issues, workforce issues, anything that cuts across the entire industry, that's where people tend to come to naw for.

That's great. That's great. Good. Well, that's a great overview, Mr. Burton. Why don't we dive into the news and, and start that chatter away as well.

So now we have news today because I, Eric, I could sit here for another hour asking you some questions about all the things about in. Aw, it's, it's pretty amazing. But we will follow the format, Kevin.

So ask away, you know, because that's the, that's the beauty of what we do each week. We don't have to do anything. I, Eric, when we, Tom and I first got this started, I said if, if we ever have to be super scripted and organized, and I said, I'm out. So we just want to get together and chat and bring some, some value to the, the audience that we have. So maybe weave some of those questions in throughout the day, Tom.

Yeah, in particular, I'm throwing my script.

Out the door, guys. I've been reading the whole morning so I can go unscripted. Great. I like that.

Yeah.

What I was really in, one of the areas I was really intrigued about that you brought up, Eric, was the educational aspect of it and the things you're doing, you know, with the universities. I mean, I spend my life working with distributors as it relates to technology and our technology. And I'm seeing that things are happening so fast. It's so hard for a lot of these companies to keep up on what's going on. And having a source of that education, I think would be super, super valuable, which it sounds like you're doing with some pretty big industry player or, you know, educational players.

Yeah, you know, we've had a partnership with Ohio State for 40 years, goes way back, and, you know, it's kind of like an MBA on steroids.

Yeah, that's what it sounds like.

Preparing kind of the next generation to step into the executive roles. You know, it's a great program, but, but it's targeted at wholesale distribution. You know, you can get an mba, an executive MBA in lots of places. But, but coming to us, it's, you know, how do you apply those principles to our business? But, but you know, the other one that we do that our members really love, it's called Goal Makers. And so this is completely digital, so you can do it from the comfort of your office or, or your home. But we have a great faculty that puts together training in a variety of different ways. And part of what we do is we bring in guest speakers from the membership. So, for example, we'll have CEOs or CFOs or COOs from some of the great companies in distribution that will take different topics and work with the different cohorts. And so it's been incredibly well received and that's something we started just this year.

Fantastic. And then you mentioned partnership with Texas A and M, which is their huge industrial distribution program as well there. We have met a number of people at some of the trade associates or some of the buying group, I should say, meetings. They'll oftentimes be there as well promoting that program. So two great programs at Ohio State and Texas A and M. So good.

Yeah, for sure.

All right, Tom, let's. What are your thoughts here? We've got more. So we start each week on the economy and supply chain consumer confidence rises. We published two articles here, one from AP and one from Yahoo Finance. Any thoughts to take us away on this? But maybe, Tom, you should preface and get Eric up to speed on our differences that we have on the economy.

We have a running bet, Eric, that I say there'll be one cut this year and Kevin says there'll be two or more rate cuts this year. And we debate that week in and week out. I'm sure everyone's tired of hearing us talk about it by now.

Well, I think your average investor thought we would have had cuts already.

Yeah, six or seven, right? Yeah, exactly.

So the Fed is watching that inflation number and I think continues to be surprised at how stubborn it is. And so it's not even, it's not only having an impact on markets and the economy, but also continues to impact our politics. And so inflation, I think we're learning once again, is definitely tough to control.

So, Eric, do you have an estimate or a thought yourself on the number for this year?

Look, I think we're going to get a rate cut. The question is, is how soon It's, I think if you were President Biden, you hope that we're going to throw a bunch in between now and before November. Yeah, yeah. But that's the beauty of the separate separation with, with, with the Federal Reserve. So, you know, I'm, I'm not going to settle your, your dispute, guys.

Oh, come on.

I'll see who's who's right at the end of the day.

Well, I heard you say a great count that means one to me. So I'm just going to take it.

As I, I saw that happening when you said a. Tom was like his face just started to glow. Eric, I don't think one of, one of the things. Go ahead.

Well, I was just saying, you know, the thing to put this in context is as people are looking at the rates today, saying, oh, you know, can you believe where, you know, how terrible this is? You know, I talked to my dad who lives in rural Minnesota and he reminds me of our family home that he bought in the, in the late late 70s as he went to the bank, you know, the interest rates were 19%. You know, so it's, we, you know, we're nowhere near that territory. And so as people are talking about interest rates, we could be in a much worse situation. So I think it's also always good to put that in context where we are historically.

Yeah, no, I think that's right. You know, Tom and I banner about this each week. We banter about a lot. I don't think I shared this with you, Eric, but Tom and I not only are the co founders of our company and our sponsor, Lead Smart Technologies, but we've been friends since kindergarten, so.

Oh really? Oh, great.

Yeah. So we poke at each other a little bit, but there is a, there is, there will be stakes involved regardless of which side wins. So I look at it as we're gonna have a nice dinner at the, come the end of the year regardless of this. But I'm still a little more bullish than, than Tom. And you know, but what was interesting about this second article, one from Yahoo Finance, you know, was talking a little bit about there's a, you know, the title was it US Consumers show the Fed its Backward Problem with Higher Rates. And you know, I've said this for a long time and in fact I'm not even going to fully say it. I'm going to ask you an opinion in just a moment on this. But you know, one of the things here was they were talking about the fact that, you know, someone that's not even necessarily high net worth but, but people that are doing well, I think they may be targeted a hundred thousand dollars or more of income a year. You know, they can get four and a half percent on their money right now. They probably have a great mortgage. High interest rates are actually looking solid for them. Right. And then the higher net worth you get, you've got that much more earning that you've never been able to. And then the stock market's doing what it's doing. So this article I thought was kind of interesting because it you talked about a little bit of a tug or a push pull related to things. I love to ask you and I don't mean to put you on the spot with this, but what are your thoughts and maybe you need to be careful because you're in D.C. but what are your thoughts on the tools that the Fed uses or the metrics that they use? I sometimes comment, I think maybe some of those are, are need to be revisited or maybe identify and find some metrics that are more in line with today's economy.

Yeah. And I, I guess you know, I would say that, you know what you outlined Kevin, is, is, is accurate. You know, some people are seeing some financial benefit because of, of higher rates but at the same time you flip that around and you know the cost of food has doubled over the last last couple years and so you know what you might be accumulating in your savings and account, some other vehicles, you know, you're, you're spending it across the economy. And, and so I think, I think taming inflation for, for the Fed to get right so we can reset the economy. You know, some of the political leaders are talking a lot about how well you know, we've slowed the rate of inflation and how incredible is this slowing. But what I don't think that they're acknowledging is well it's not going, we're not having deflation and so you know we're not ever probably going to go back to those prices that we had pre pandemic. And and so I think you know, that's part of the reason why we're having such a instable if you were a politics is because people are, are really feeling the pinch around, around the family family table and I, so I think they see that more Kevin, you know, their costs have gone up so much more than maybe what they're seeing the benefits on, on, on, on the, on the rate side.

Yeah.

And I think, I think that is that really hits that kind of middle America person in that setting what you're describing. I think when you probably get the, the high net worth individuals that fluctuation at the grocery store that hits my household may not matter as much to them because yeah, you know they're, they're, they're gonna buy prime beef and, and you know, 95 point wines regardless of the economy. But that four and a half percent and what the stock market is doing. It's interesting this particular article and I don't know if I'm fully in alignment with what it's saying. But it made a quote and it says the fact is that the Fed policy may be accomplishing the exact opposite of what it intends. And this was from a Guardian Harris poll that they talked about and it said, anyways, we could go on and on. I just think. Go ahead, Tom.

No, I want to bring something up on this because, Eric, what you just said, I think you have to separate out purchasing power from wealth.

Right.

Purchasing power for the average person has gone way down over the last three years or two years since inflation and it certainly hasn't kept up with wage growth. Wage growth and inflation have not kept up. So if you don't have a lot of wealth, a lot of accumulated wealth, then all you really have is reduced purchasing power. If you have wealth on the other side, whether you're getting that in interest or savings or you have money in the stock market and the stock market is driven by different dynamics. Right. Then you're less affected by those things that are there. And if you read that article, both those articles, the consumer, the people that had the highest consumer confidence were people who rate had over a hundred thousand dollars of income and were younger on top of things.

So I think being younger, too.

Yeah.

Yep.

Go ahead, keep going.

So anyway, I just think it's important to separate out that. Yeah. That, you know, we all have reduced purchasing power. For some people, it doesn't matter so much, especially if you're on the wealth side of the equation because your wealth is growing faster than the cost of living and your purchasing power is reducing. So I think you have it very much depends on who you're talking to.

Yep. Yep. Well, I think it's going to be the second half of the year is going to be interesting to see what happens with all this. You know, obviously it's very clear we're going to have two rate cuts. At least that's, you know, a given at this point. So, Tom, I'm getting the ribeye and probably, probably a 1984 Jordan cab is probably what things are.

So the question will be is that one rate cut, is it going to happen in September or December? That I don't know yet, but we'll see about the politics of it.

All right, Eric, we'll, we'll get back.

To you on this.

Okay. As okay.

Yeah, we're talking, if we're talking about, you know, wine from 1984, this sounds like a pretty solid vintage. So maybe I'll have to come over and join you guys.

Yeah. Or maybe we do it in D.C. and your team joins us.

Yeah, that'd be great.

That'd be fun. Yeah.

Kevin will be buying dinner for all of us. Right.

So that's. Yeah, there you go. There's. There's no shortages of wine lists and steakhouses in around the capital. Right.

That's for sure.

Good. Well, as we kind of move through our economy and supply chain section, we posted an article today about from Supply Chain Dive and it talks about east coast port labor talks spark shipper contingency plans. And you know, the reason that we posted this, we've been kind of staying for the last year or so, you know, on, on the topic of following pretty closely what's going on with the ports. And we do that for a number of reasons. One is that obviously everything coming in on a ship and in a container is, you know, typically we know 75% at least of that is going to go through distribution to get to the end user of some sort. So it impacts distribution. But what we, you know, we watched earlier last year, we had the risk of a strike on the west coast ports and there was some movement of things to the Gulf coast into the East. Then there we saw Western Canada actually have a strike, some impacts there. Then just a few months back we had, we already had a threat, which is this particular article about all across the East Coast. The union that covers the east coast ports as well as through the Gulf Coast, Gulf coast as well is, I think the article was saying September is their contracts are up and there's big risks with those. But then we had the Baltimore accident as well. So we've been watching these. And Eric, I want to kind of throw this out to you and maybe get your take from your members. And the reason we look at that is what I mentioned before. But also it's tied to the fact that we have, we're having a lot of a resurgence now of onshoring and near shoring. Some of that's taking place based upon some of the Biden administration's programs for manufacturing and so forth, but kind of wanted to get a little bit of your take on the ports. Those issues, what you may or may not be hearing from members. And then as well as near shoring or onshoring.

Well, look, strikes at ports can be catastrophic for, for the economy and you know, for, for consumers who are watching this. I think the union's really been emboldened over the course of the last year. You know, Kevin, you mentioned the strike in Canada, the potential strike in on the West Coast. But you think about The UAW strike that seemed to be successful for them. You think about the UPS strike that was successful, even, even the Hollywood strike. I think the unions are emboldened and so I think that they're going to bring harder terms to the table and make the possibility of a strike even more likely. Now, we can get into commentary later on what we think about the unions holding the economy hostage, but that's maybe for a later day, but it's one of the reasons, one of many, why most of the wholesale distributors that I'm talking to who source their products and materials from around the globe are looking to de risk their supply chains, you know, for them. You know, I don't know that it's, you know, Biden policies, as you mentioned, Kevin. I think more they got the experience during the pandemic where, you know, some of them, they just couldn't get to the materials that they had sourced. You know, in some cases I'm talking to CEOs where, you know, the materials that they had purchased were on ships heading our way and the Chinese government turned them around. Right. And, and so as, as our members have done an analysis of, of the percentage of goods that they might source from China in particular, you know, they're looking to bring that. I don't think they're going to zero. But you know, for example, one distributor I talked to a couple of weeks ago, they're sourcing 90% of a particular product from China. And so they found a new source in Brazil and you know, they're hoping to bring that from 90 to 70% and you know, build some confidence with that new supplier. But, you know, things are. Well, you know, that case in Brazil, still half going to come through the, you know, probably the Port of Houston. And so ports are going to continue to be important whether you're moving things to Malaysia or Vietnam or Brazil or Mexico or Canada. And of course, whenever they can source things in the usa, you know, that's, that's always best and they want to do that. But you know, they also are, this is a not a high margin business and so they also have to be very mindful of costs as, as they're sourcing. But, but, but I would say it's a huge trend in the industry. Everybody's looking to de risk that that supply chain, you know, boards are demanding it from, from, from companies. And, and so I think we'll continue to see that trend. One, one challenge that we hear a lot of things, especially in China in particular, is as companies have moved their supplier maybe just somewhere else in Southeast Asia like Vietnam or Malaysia is six months later a Chinese company will come in and buy that company in Vietnam. And so while they have geographic diversity, you know, the Chinese, the CCP government, you know, largely still has, has that control. So it's been hard for them to get away.

Yeah, they didn't get rid of the geopolitical issues.

Right.

That they, they just, they just moved a little bit further in Asia. And I had a couple of conversations this past week with some distributors and very similar piece of that discussion. The other thing that we've been talking about quite a bit recently related to this on our show is as we look at things near shoring, so to speak, going to Mexico and other parts of Latin America is there's a couple of issues with that. One is getting that if it's being trucked, we only have a certain amount of ports of entry into the US by truck. Those are, I don't, I live about 70 miles north of the Mexican border in Southern California and I'm down in Baja California pretty regularly. And you know what, it can take you three hours to get through that. And yes, there's a lane for the trucks, but it's a lane. It's not a thoroughfare. And so we have those issues. But the other side of it that we are, we published in a couple articles recently and related to the fact that now we are seeing, and it's exactly what you described with Vietnam, Malaysia, Laos and some of those other countries that you've seen manufacturing shift to where China's coming. Now we're starting to see Chinese investment in Latin America, some of it to get around steel tariffs. So I've commented and I throw any rocks you want at this, whether you think it's right or wrong. I've mentioned on this show a number of times recently that I think the biggest, I don't want to say challenge, but something that needs to be monitored closely to the near shoring concept is China and Mexico's relationship. If, if Mexico gives a big hug to China in this setting, that geopolitical issue, and it may have an impact based upon, you know, which administration we see after November how this plays out. But I think the Chinese implications in Mexico have got to be watched very closely.

Kevin, One thing I'd add there is there's a growing consensus in Washington on both the left and the right that the China seems to be more than a competitor. You know, China seems to be more moving along the path of an adversary. And, you know, for a while there were just you know, some people on the right who were talking about this, but, but if you look, you know, President Biden has upped many of the tariffs that President Trump had put into place during his term. So it's becoming a bipartisan issue. And as you read some of that classified information that people like Peter Schweitzer and others have been uncovering, that coming from the Chinese sources and where the Chinese said, you know, 10, 15 years ago that they were going to build a steel making capacity, the Chinese government was going to underwrite it so that way they can do it at much lower prices. And their goal was to bankrupt the American industry. At the time, America produced 60 or 70% of the world's steel. Now we're down to 10%. And guess where most of it's produced now? It's in China. So they're looking at our critical industries, and using government subsidies and government support, they're trying to decide, well, how can we take those industries and have them be global leaders in China? And so I think people are waking up to the fact that we've got a real competitor, perhaps a rival on our hands, but yet we source so many materials from them. And so finding what that relationship with China is moving forward, I think is really important for the business community to start thinking about. And I'd say that a lot of the conversations in the C suite around wholesale distribution really are centered on that now.

I think those are fantastic points. And you know what, what comes to my mind with this is, you know, we should all be ready to compete, right? I mean, that, that is, that is great. But if the rules are different in your, your competitors playing by different rules and doing different things, that, that sway the tables a little bit. It becomes challenging in that setting. And I think that's a lot of what we're seeing is, to your point, right? Well, if the government just decides we want to take over steel making and try and squash another economy, that's not necessarily just competition. That's playing a little bit of a different game that goes with that, which, you know, that's got to be a concern. So I think if I. My takeaway from what you were describing there, Eric, is there's. I think we. A lot of times people are thinking the big issue. And I think it's just because what you're seeing on CNBC or, you know, Bloomberg or whatever it might be about chip makers in Taiwan and the geopolitical threat there, I think what my takeaway from your comments is it's a whole lot bigger than Just that particular segment.

It sure is. And you know, as I, I think about our politics, you know, it's really, really fascinating as you look, you know, particularly on the right, wants to be increasingly isolationist, it seems, you know, return to, you know, a different era. And the reality is American engagement around the world is vital. And so, you know, you made the point about. Kevin, Kevin, you made the point about Mexico. One of the reasons why the Chinese are able to build that infrastructure and those relationships there is because we haven't been supporting them in the same way that we have in the past. And so they're looking for investment. And if the Americans aren't going to make it, they're going to take it from some other places. And as a result, we're seeing many more deaths from fentanyl in the United States. And a lot of that is coming from China via Mexico. And so, you know, if America wants to, you know, hide behind our borders and you know, that's, I guess that's one approach a lot of people are looking at. But you know, I continue to think, and I was really, really proud of Speaker Johnson when he passed that legislation recently, support our friends in Ukraine and Taiwan and Israel and others because I think American engagement in the world continues to be really important.

Yep, very good. You know, Will, Will Quinn from Informative comment there, Tom. I don't know if you saw that being in an expo in Mexico City recently and there was a lot of Chinese vendors there. It makes me think, Eric, I don't know if you're doubt, you know, my background, I started right out of school. My first kind of so called real job was working for a national distributor of safety equipment and then later became a manufacturer's rep, left that business and got worked for, invested in and worked at a manufacturing company for a number of years as well. And so I came kind of through those ranks on, on both sides of the business. And you know, forever when you would go to looking at safety equipment, you start thinking about respiratory protection and, and different types of gloves. Everything was offshore. And all of a sudden, probably in the early 2000s, the factories that were selling, the Chinese factories in particular that were selling through U.S. manufacturers that they were making things for and even private labeling for distributors, they started popping up themselves more than happy to work with distributors directly than the private label arrangements they have. And so to Will's point, you know, we're seeing more and more of this, of, of of that Chinese influence there. So obviously something to keep our eyes on.

So Tommy wants another quick anecdote I had dinner recently with the, the Uruguayan ambassad to the United States and he said, look, you know, we are politically aligned with the US we have been for four decades. We want to be the number one trading partner with the United States. But you know, we can't get anyone's attention for investment in Uruguay. But you know, the Chinese are knocking on our door every single day. And that really resonated with me as we think about, you know, longtime ally and partner who wants to have more investment, more engagement, more trade with the US and just is having a hard time making, making some traction. So I think there's an appetite as we want to onshore and nearshore, but we might just have to explore some different vendors, different suppliers that we haven't used in the past.

And I would assume that if you would look at, have the same conversation with Mexico, Paraguay, Chile, Colombia lot, Brazil, a lot of other Central and South American countries, they'd probably have the same exact conversation.

Yep, for sure.

Yep. Very good. All right, Tom, you want to take us away? What's next? Manufacturing?

I'm wondering, you know, in the, in our interest of our schedule here if we should jump ahead, if there's some couple highlights you want to touch on real quick on these.

And yeah, this is the, this next article. We can bypass a few of the other ones if we'd like. This is probably the most relevant one to our discussion today with some of the surveys and you know, MDM that, that Eric was mentioning earlier that was acquired by NAW does a phenomenal job of surveys. There's other groups out there as well. But this, this was the 77th time that industrial Distribution magazine did a survey of distributor operations. And I think there were some good points in here. There's, you know, there's a lot of discussion and this is, I love seeing one of the things, the early quotes that they made was that in fact this is from some additional research that a Fortune magazine has done was talking about the amount in the U.S. 87% of American businesses are family owned or controlled. I don't know about either of you either if you want, if either of you caught that piece. But that really, really stood out to me. And then I start thinking about some of our largest customers at Lead Smart that are using our AI enabled customer intelligence and CRM solution are quarter billion, half a billion north of that and are still family owned and family controlled. And that one piece for me triggered it was a, it made me feel good because I didn't realize the number Was that high? I don't know if either of you had a take on that.

Yeah, I would say that most small business, I mean, I don't. That was, that, that wasn't just distribution. Right. That was all of business.

Yeah. The Fortune piece was about distribution in particular. Yep.

But yeah, I mean a lot of small business. Right. I mean you think of just restaurants or local business or all of that are very much family owned. But yeah, I think there's probably a predominance of it even more so in the distribution industry as it relates to some large family owned operations that are there.

Yep, yep.

And we've got a, we've got, I would say more than half of the NAW membership. I should look at this, the, the statistics, but I would say more than half is, is family owned. And you know, there's, there's one company I think is in, in your newsletter later on in the show, First Supply, Katie, Katie Seymour Paling is, is on our board. And you know, she's the sixth generation CEO from that family. You know, imagine how many years that that went back. And you know, they bring, you know, something in the culture and the DNA and their service of customers that family businesses bring that I think is really special.

Well, it's great you mentioned First Supply like that because I connected with Katie on LinkedIn and watching her travel. She has her little girls with her, the next generation of that whole family. She travels with her little girls consistently. I think she has three, if I'm not mistaken. So great, great example of that as well.

Hey Eric, quick question related to that. You know, I hear a lot in working with our customers or with some of our family owned customers when they're doing succession planning, is that technology is really a critical foundation for that next generation to be willing and excited to come in and take over and make it happen. Do you see the same thing? Do you see that technology is really the carrot in a lot of cases that kind of drives that, you know, younger generation to want to jump in, which has historically been kind of an old school business.

Yeah, look, I don't want to cast aside all of the, you know, current generation as old school in Luddites. But you know, I think the story you often hear when you're talking to the next generation is that they want to advance the technology, the business far past what maybe their mom or dad or uncle had done, Uncle Arnold had done. And I was meeting with a distributor just yesterday up in New York. And you know, I was thinking we're going to get into A conversation about generative AI and other practical applications. And he said, well, hold on, you know, as I'm taking over, you know, we haven't updated our website in five years. So, you know, we got to get the basics. I don't have one common ERP system where, you know, we've got. We have a good understanding of our inventory. So, you know, for some people, they're looking at just upgrading the basics. You know, what's worked historically for distributors, they've done it well for a long time. But I think this next generation is looking at, you know, how can technology help us to better serve our customers better, better know our customers? And so, yeah, the next generation is going to bring a whole new wave of ideas. They're already doing that and we're seeing that across distribution.

Totally, totally.

I'm really appreciative of the comment that you made related to that because we see that as well. And in fact, even later in this article, it talks about, you know, AI and generative AI being on everybody's mind. But then we also see more often than not what Eric, what you're describing is, hey, I got issues with my ERP system and the data. That's my ERP system. So, yeah, I might be going to a conference or listening to some webcasts or whatever it might be about all the things that AI can do. But what we feel and see in we're on the phone, you know, daily with either our customers or prospects is they understand they've got to get their arms around some other pieces in their business to prepare themselves for that. But they know it's coming.

Yep, yep, exactly.

I had a bit interesting. I've had, I think in the last 45 days, I've talked to two of our customers, large companies in the H Vac world who are, you know, 40 to 50 branch organizations who have a very clearly defined path to double their size in the next five years. And doubling the size of that organization of five years, to me is astounding accomplishment to. But they've. The roadmap is in place of how they're going to go do that. So it's impressive. So kind of recapping, though, last thing on this particular article is I thought there was some interesting information there about the M and A side of things. And they were talking about the same audience. They asked about mergers and acquisitions, how that's impacted their business in the last 12 months. It says fewer than half were not involved in any related conversations. It said 6% merger were acquired, 22% were approached but a deal didn't take place. I'm sorry, 22%, 26% were a pursuer of a merger acquisition. They were looking to gobble Somebody and 36 said they'd be agreeable to a buyout, which is the same percentage of respondents as the previous year. And they said 19% cited mergers and acquisitions as a top business concern this year. So it's interesting that how aggressive the M and A world is right now as well. Obviously the PE folks are chomping at the bit on the sidelines with a whole lot of dry powder.

Yeah, Kevin, I'd respond to that is I talk to members about this every day and a lot of privately held companies are very valuable and they tell me that they're getting someone knocking on their door on a daily basis that want to buy them and they've got no intention to sell. They're running incredible businesses and they're going to continue to do that. And so I think there's great strength there. But there's a lot of companies that are looking for that buyer. And so there's a lot of M and A activity. Penn PE rather is, is, is very active in the space, but, but more than pe, you know, great distribution companies that are looking to grow not just organically, but through acquisition. You know, who've got great cultures, great, great technologies, they know how to integrate companies effectively are, are very active in, in this space as well. And, and you know, as I talked to CEOs, you know, if you're a company out there and you're thinking about, well, what, you know, what was, what will an acquisition mean for us? You know, one of the things that I hear most often is, is they care about the people. You know, that's the number one thing that they want from these companies. They want their people, they want the talent. And so you might have a new system to work with, you might have some new SKUs that you're pushing out. You know, maybe you've got a culture that, that you're going to adjust to. But, but, but for the most part, I think that these companies as they're looking to integrate are, are looking to, to help those people service their customers even better.

Well, and you look at so many of these companies, whether it's Border States or Dakota Supply Group and so forth, that are employee owned now as well. And I think, you know, depending on the reason that the original owners went the, the employee owned or the ESOP related program, some are just to get their money off the table and others are you know, we don't have the next generation to come run this company but we have a wonderful group of people that are almost family and so they went down that ESOP route with that as well.

So it's, we've got a lot of members that are ESOPs and you know, DSG and border states are both, both NAW members. And one of the things that I love about ESOPs and you know I'm not here to advocate for one business organizing model or another but one thing that I love love about ESOPs is the number of millionaires that I've met when I walk into, when I walk into an esop. You know, people that are pushing the broom and clearing out, cleaning up the warehouse, they've been there for 20 or 30 years and you know, people who are loading the trucks, driving the forklift and you know, we're building the American dream and you know you can do that through any company that you work for. I know our members are all very, very generous but you know, those employee owned definitely are making an impact for the people who work there.

I love that comment and that's huge. Before we move on from that, it also reminds me, good friend of our show and personal friend now gotten to know well over the last few years Dirk Beveridge just kicked off this week his We Supply America tour. So he started off in his, in his RV and has travel in the country and most of what he's working with in his interviews is family owned companies and or employee owned companies. And so the work that Dirk does with that. I don't know Eric, if you've had a chance to watch any of his videos over the last few years but I think this is.

Yeah, yeah, yeah, we like Dirk a lot and you know one of the things he does that's really special is celebrating the distribution industry and the people within that. You know, we naw, do that as well and MDM does it as well and that that's something we need to do more of because most Americans don't know what the distribution industry is. You know I said at the top we account for a third of the economy but people are scratching their head and so you know, whether it's you all or MDM or NAW or Dirt Beverage, you know, know all being part of the ecosystem. To tell the story of distribution is important for a lot of reasons but, but I'd say probably the most important reason is we want to attract the best talent in America to come to the industry. You know, we need coders, we need technical people. So you know, we need the cybersecurity experts and, and you know, we need people to drive those forklifts and drive those trucks and lead our marketing departments and you know, people of all stripes and all kinds and, and, and, and to do that and to attract that, that talent. So they're not going to Google or Facebook or some of these other brands that they've heard of that they've grown up knowing about is, is we got to tell the story of distribution. And so we're, we're glad that the Dirk is going on his, on his fourth tour and, and I'm glad he's telling the story and we're going to continue.

You know, that's a, that's a great point Eric, because you know, I come from the tech background tech industry, right. And there's a lot of turmoil and a lot of tech companies right now, VC funded companies, layoffs, things like that. And a lot of people that historically would have continued to look for their next job in the tech industry are being saying, you know, is there other places for me to take my talents basically right. And to go into other industries? And I think you know, obviously the, this industry is a much more stable and it has different challenges but that it's a lot of the challenges that exist in the tech industry don't exist in this industry. And it would be a great place I think for a lot of top talent to be thinking about where they could go. I think that's a really interesting point.

The noble calling of distribution, right?

Yeah, that's right.

That's it, that's what they're hearing. And it's interesting, you know, I, I, when I talking to people in social settings or whatever it might be and they'll ask me what I do and they'll first think oh, you're CEO of a tech company and like we are. But, but my customer is very different than the, the customer that you think about, right. Typically for in the tech world. And I had last year I was went from a tech conference in Silicon Valley and was home for two days and then went to an affiliated distributors national meeting for one of their divisions. And, and it was just that it's not that there's anything wrong with Silicon Valley or the people or there, but going to the other side was just so, so different. And I'll describe to people sometime, they're like well who's your customer? And I said, you know Mike, my customer might be a independently owned business where you've never heard of their company. But if I told you about the name of their company based upon where you live, you'll now see their trucks going up and down the street or you'll be driving by their facility that's over here. You never thought about who they were and what they did. And you might think oh well that's you know, pipe, valve and fitting, whatever. And they said, you know what I'll tell people? I said the owner of that company, he might be getting up in the morning in his three million dollar home, walking past his two hundred thousand dollar boat in his garage to put on a pair of boots and get in his Ford F150 to go to a job site and see a customer. So you don't have any idea about what's going on. And let me help you, help, help you understand that because it's so, so valuable and so important. So what, what is Adam saying there, Tom? Let's bring that up real quick.

He says in distribution you can thrive and create any, in any aspect finance, sales, operation, you know, basically M A hr. Right. He's basically building on what we're just saying is that you can bring your talents into this industry and thrive in any number of areas depending upon where you're, your talents are coming from. So I think that's, I think that's really interesting because there's a lot of talented people that are looking for and I'm just speaking more in the tech space, they're looking for something different than another tech company and another startup and another VC funded Alphabet soup type of scenario that tends to churn people out over the thing. So I think there's some real opportunity here.

That's great.

Well and if you think Adam's comment was really smart as I did, he's a great member of the NAW team. So Adam, thanks for the comment.

It, yeah, he, I, I've really enjoyed all the conversations I've had with Adam over the last year, plus that I've known him. So I would expect nothing less from that. Thank you Adam. For, for.

So Kevin, where do we want to go in our, our final 10 minutes here?

You know what, anything of these other articles that we have about E commerce, marketing, Amazon's footprint, Chief AI Officer.

I would love to talk about this one a little bit. Eric, do you have a favorite in here you'd like to hit on before we're.

No, wherever you guys go, I'm happy to provide some comments.

Let's talk about that Tom, because I think it's interesting because I, I don't know if he made it or not. But Stefan Fulop, that's the new, he's not the chief AI officer, but he's the Chief Digital Officer at Dakota Supply Group. I think accepted our invite, was going to be here today. I don't, I'll have to text him later to see if he came. But we're really seeing a shift across the board now and a lot of organizations looking at AI officers and, or digital officers. And I would assume you're seeing the same thing in your travels and discussions there.

Yeah, absolutely. You know, AI has been an important part of the industry for decades. You know, you talk to different companies that they, they've implemented this across multiple tech technologies and, you know, so it's now coming to the forefront of the lips of, you know, most consumers. But really in the last six, eight months, we've been talking about generative AI. What are some of the practical implications, practical ways that we can apply this to our business? And so whether or not you're going to have a chief AI officer or this is going to be an important portfolio, what we're seeing is from CIOs to COOs, CFOs, the people outside of the technical space, they want to develop knowledge because they know that they're going to have to lead. One example is DG McPherson. He's an NAW member, the CEO of Grainger. He went to school and he's a busy guy. And we went and took a class on generative AI and what are its implications for distribution. And I said, dg, don't you have people who understand this? And he said, look, as a leader of the company, if I don't understand it, I don't understand how this can best apply to help our customers. Then I can't rely on others and I can't make smart, smart decisions. And so whether you're looking for a chief AI officer or not, I think everybody in the C suite needs get, get smart on these technologies to figure out how they can really help us move our businesses forward.

I love that. Tom, you know you had some thoughts on this?

Yeah, a lot. Well, I, I like the, the concept for sure. I agree that, you know, we've talked about this over and over over the shows, right. There's a lot of dynamics that you need to be thinking about as it relates to AI and in particular the future with generative AI. There is the, you know, quote unquote regulatory issues, there's the security issues, there's the use case issues, there's how am I going to get a return. One of the things I found interesting in there is they were talking a lot about fractional chief AI officers and I was laughing because I feel like it's a lot of what I do every day with our customers, right, is that even though they buy our technology, I would say 70% of what I end up doing or we end up doing with them is helping them figure out how to best use that as the foundation then to come up with the right AI strategy, the right way to use AI. And so I think as vendors we have a big responsibility, I believe to bring some of that to the table and not just drop in product and go, here's our product. You guys go figure that out. And I think that's going to be a big differentiator for the vendors and the service providers in this space is helping. Even if you may not have that title, you're actually acting as that fractional person. And then I do think that over time it's going to be imperative. Whether you call it a digital officer or AI officer or whatever, I think it's going to be pretty imperative.

And Tom, I think depending on where you are at in the audience, I think if you look across NAW membership, people are on all ends of the spectrum, spectrum, you know, from DG at Granger leading the charge on AI to you know, the, the, the leader of the company I talked to yesterday in New York that I mentioned who said, look, we're so far from figuring out how AI is going to apply because we're back here. But, but I think the point that you made that's really important Tom, is so many solution providers today have AI built into their products. You know, I think about MDM has an analytics tool called Market Prospector. We just launched a version 4.0 which is powered by AI. And so whether you know it or not, whether you've got an AI strategy or not, or an AI officer or not, if you're working with the right vendors and the right solution providers who have that technology can help you use it in a way that's going to impact your customers. And so I think that that's a really good place to start.

I love that comment and I'm appreciative of it as a AI enabled solution. That our technology is in that setting is at, you know, I've attended a number of conferences related to AI and distribution and so forth and many, many, many webcasts and so forth. And what we're continually hearing is people just saying, well just get started, just Go give it a try. And, and you know what, there's, there's some potential negative ramifications to that in an organization as well that, from a, from a security standpoint, being cautious with that. But I don't think there's enough discussion about, and there's a difference between leveraging service providers. As an example, MDM's tool that you just described is great. I was talking with your team when we were back there about how we might be able to use some of that data and bring it into even our platform. Yeah. And so because what we do, one of the things that we do with our technology at Lead Smart is within the CRM and customer intelligence arena is we're able to visualize data from other areas. So we bring in ERP and E Commerce and other data in. So bringing those market statistic data would, would make great sense. So it's easily visualized in a tool that's being used every day. And, but what I'm seeing is what we're trying to do and we're, we're seeing distributors embrace it is the idea that says, you know what, I'm not sure what to do, I'm going to all of these events and you guys sound like you reasonably understand this, maybe I should lean on you a little bit for that support. And I think if you have a product vendor, and I think MDM is a perfect example of this, we like to think we're in the same place is that we're consultative and want to truly see the growth of the distributor. And our side of it is our success is when the distributor that's using our platform is successful because they're a long term customer, when we can work with them on, help them drive their roadmap. And a big part of this, this article was about getting a roadmap in place and somebody developing that and owning it and moving forward with it. So I think to your point, leaning on vendors is important. The ones at least that are there to do more for you than just try and sell you something.

I'd add there, Kevin, real quick is MDM published a survey a couple of weeks ago that when comparing AI adoption between distribution and manufacturing, distribution is significantly behind. And so that's a trend that we're concerned about because you know, Tom, to your question earlier about, you know, what, what generations of leaders are at, there's a number of leaders that I've talked to said, look, I'm going to wait for this technology to mature. I'm not sure how this is going to impact our business. I was with one of the founders of AI a couple weeks ago and I kind of pose this to him and, and he said, well, Eric, let me put it this way. If, if in the early 90s I told you about this great thing called the Internet that was going to change your life and if you told me, well, I'm going to kind of, you know, to wait to see how that all plays out. And you, and you haven't fully embraced it, your company's dead by now. He said, AI, is that on steroids? And, and so you've got, you got to understand it, you got to embrace it and you got to start thinking about how is this going to help drive our business forward.

Well, and I think what we're going to see, and I brought this up Eric, a few times on the show, right. We haven't shown or we haven't demonstrated to this market yet that killer app from the AI perspective. And I don't know if the Internet, was it E commerce was the killer app or you know, there's, there's these things that cause everybody to go, oh my gosh, I've got to be part of this. But I think we're very close to seeing some killer apps in the distribution world that are based around or driven entirely by AI. That a C suite person go, wait a minute, I can't wait. I've got to move faster. We tell people is it's coming probably faster than you think. So what you can be doing now is making sure you have your data act together, you have your frameworks in place so that when that killer app happens and you need to jump on it, you're not light years behind and getting ready for the whole thing. And I think it's coming every day. I think it's coming sooner and sooner. We're going to see that killer app here, maybe even this year or early next year.

It'll come. You know what it's going to be here, Tom? It's going to be right here with the second rate cut.

That's right. That's right. Yeah.

That's when it's going to come in. You know, it's, it's as, as we kind of come to the tail end of our discussion today. I think it's powerful. You know, Eric, you had made the comment earlier about, you know, the Internet comparison. I think that's really valuable. Distribution Strategy Group is hosting an event next week in, in Chicago about AI for distribution and they're having back again, Zach Cass, who was one of the Earliest employees at Open AI and the chat GPT folks. I was at their event last fall. I won't be at this one because there's crutches next to me and I'm not, not traveling right now. But one of his comments was. And he used a few different ones, but one of his comments was, think about the Internet's impact on our lives in the world and what AI is going to do is going to exponentially surpass that. And he used the example of. He said this might be the most important thing to mankind since fire.

Yeah, well.

Well, that remains to be seen, but I think it's powerful there. And you know, I did want to, Tom, before we leave today, catch that comment from Stefan. They're talking about employees. You know, so much of this, what's going on out there's people worrying about losing their jobs. And that was just a great quote. Right? It's in reality, it's that employees who leverage AI Velocity there for a second time. I was trying to read it. Leverage AI will replace employees that choose not to embrace it. And I think that's the similarity to businesses.

Right?

I always say, look, listen, if you don't have a great tech stack in your company with er, great erp, great CRM, great E commerce, great marketing automation, if you don't have those four pillars, with the fifth being AI as a distributor, I'm not going to suggest you're going to go out of business, but your business is not going to be the same and people that do those things are going to be running circles around you.

And I want to hit Kelly's comment too, real quick before we go. She was talking about, you know, some example here of taking pictures and having AI evaluate those pictures, find out what the products are. I did a little test actually last weekend where I took a picture of a job site. I just took a picture of a construction job site. I put it into AI and I said, what safety products are required in order to be able to facilitate or work on this job site? And it came back with a whole discussion of the whole safety products that should be required or you should be thinking about for that job site. I mean, these are the types of things that are what I consider to be things that will become the foundation of these killer apps where people are like, holy cr. I never thought that this was possible. Yeah, some of these things.

Well, that's the multi.

I told you, Eric, if you got me excited about technology, we would, we could go on and on and on.

And that's the multimodal. Side of it, right Tom?

Yeah, yeah, yeah, absolutely.

Well, I think that's about it on our articles today as we wind things down. Quick reminder, we do this every week. Kevin Brown, Tom Burton, get together with our wonderful guests like Eric that come and join us. People that are changing the marketplace, changing the distribution world as we know it. We love all of our guests that come as well as all of the folks that subscribe to the newsletter. Last kind of plug for that we can couldn't do this show each week without the sponsorship of the company that Tom and I work for. Lead Smart Technologies have developed an amazing platform of AI enabled customer intelligence and CRM. And so we're appreciative of that sponsorship and support. But most importantly, we ask if you like what you hear each week, subscribe to the newsletter, follow the Lead Smart technology page on LinkedIn to get alerts and updates, YouTube channel and so forth to stay with us each week. And we want to be doing this getting approaching 200 episodes down the road before we wind down. We've gone a little over today, Eric, I appreciate you giving us a couple extra minutes.

Sure.

First, thank you for being with us to maybe share with us if you can, briefly, what does the rest of the year look like for Naw, well.

We'Ve got a busy year. We got a calendar that's jam packed. We talk about our educational programs. We have coming up our Innovator summit where we bring together some of the founders of great startup companies that have technologies that are directly applied to the wholesale distribution industry. And this is a great way for companies that are either are members that are looking to explore new avenues, they're looking for the right vendor to solve a particular problem to come and in about 48 hours see some of the best technologies and solution providers that are new and upcoming and and to build a relationship with them and see if they want to bring them onto their platform. So that's a big one coming up. And we also have our Shift conference, which is MDM's flagship conference that's going to be in Colorado coming up as well. So a lot going on. But we're really excited Tom and Kevin to be partnering with you and so appreciate you having me on the show today.

That's great. We're looking forward to expanding our relationship with. Naw, had some great conversations going on with your team about some of that and and some of those upcoming events. So as we wind down again, Eric, thanks so much. Tom, thanks. Thank you. And thanks for all the comments that we had today. And the attendance there. And we'll look forward to next week. And Eric, hopefully on my next DC visit, we get to shake hands in person versus digitally. That'll be great.

That sounds great. Come by. Naw, anytime.

Great to see you guys. Yep. Thanks so much. Appreciate it. We wish everybody a fine weekend. Be kind, do good things and be safe.

Thanks everyone.

Thank you.