Around the Horn in Wholesale Distribution - Episode #154

Sa.

Sailing. Don't hurt yourself before playing golf.

I know. Can you believe that? We're gonna take a little time this afternoon and. And play some golf. It's gonna be great.

I don't know if that's what you want to call it. We might call it walking around and embarrassing ourselves.

What do they say that. What was it, Churchill that said that golf is a good walk? Spoiled.

That's right.

So. No, it says it'll be fun. So, you know, where are we at? 55, 56 years we've been friends. So we're gonna get together later today with a couple of guys that we've been friends with just as long and. And I'm looking forward to the wine drinking that's coming later in the evening. But we're gonna go to one of our buddy's clubs and hang out. And fortunately, we're only gonna play nine holes, so. I hit the driving range the other night and it was not. Spectacle would probably be the. The appropriate word. So. But one of our good friends that's coming is a wine collector and there's going to be some great wine at dinner tonight, so that's good.

So good. So you have to earn your wine. Yeah.

Maybe I should just carry his clubs or something. I don't know. You know, one of them belongs to a golf club and plays consistently and has game and you and the other. One of the. And the other guy in the foursome played on the high school golf team. So I'm the odd man out.

Yeah. Well, my game is gone away by the wayside.

So let's go sailing. I'll make the boat go fast with the news.

We don't need to talk about our.

There's nothing in the news today. I just thought we'd banter about golf and our weekends. There's nothing going on this morning. It's Friday morning, August 22nd, 9 o' clock, Pacific. It's like there was people in Jackson Hole talking about the economy or something.

Today Paul says, don't let the golf game get in the way of good wine. So I agree with that.

You know, Paul is. He's a wise man. I had a really nice bottle of wine with him a couple months ago in Chicago, so he's. I would agree with that fully. So. Hey, before. Oh, man, we got a lot of folks here. Just.

Good morning, Bob. I want to say good morning to Will. You're right. I am very good at whining. I am an excellent whiner, Bill. Well, there's no doubt about that.

You Know Will. Will is a lot, a lot smarter than you might give him credit for. Just from that one one comment. So I'm good at. You're good at whining, I'm good at consuming and collecting. So although we don't drink that much compared to the wine that we used to drink, Mrs. Brown keeps saying, why do you keep buying? I said buying versus drinking are two completely different things. It's a habit, right? I, I can own it and, and store it. So anyways, good morning to Bob. Bob's lamenting the Cracker Barrel logo change this week. Tom, you don't watch the news except for Thursday nights and Friday mornings, but Cracker Barrel changed their logo which to native Southern Californians like us, probably doesn't mean as much as it does to some other people, but because they're few and far between here. But yeah, big, big challenge with that. So before we dive in, we got so much to discuss about the economy and some, some supply chain issues and some acquisitions.

We have an article about Cracker Barrel this week. I didn't remember seeing that in the newsletter.

Yeah, sorry, missed that could have been under Scuttlebutt. Yeah, I should have added that in. I mean, nothing about in the Scuttlebutt section. It probably could have replaced the B2B sales numbers of Amazon that are posted there. So yeah, that could have replaced that instead. But hey, let's do our quick housekeeping. I'm Kevin Brown, this is my lifelong friend and business partner, Tom Burton. We get together every Friday morning, 9 o' clock Pacific time, and we chat about the news of the week. And we do that through means of a newsletter that we publish each week. The newsletter is called around the Horn and Wholesale Distribution and Manufacturing. That newsletter goes out to 10,000 plus people each week, which we're excited to get that out. And what we do is we curate the news of the week regarding the economy and supply chain manufacturing, distribution, mergers and acquisition sales, marketing, AI technology, robotics, you name it. We put that newsletter together in all of those sections. We get that out very, very early Friday morning we get together on this show which is live on YouTube live, Facebook live and LinkedIn live. And we discuss some of those key topics and key articles and really relate those how they pull together and impact wholesale distribution and manufacturing. We've got some good guests coming up over the next few months and we like to have guests off and on that can bring their insights. But we also have quite a few folks with us today that can bring their insights by commenting in the Chat looks like the majority of them are on LinkedIn this morning. If you don't get that newsletter and you would like to get that, we would love to send it to you. Three simple ways to do that. You can send us an email@helloadsmartech.com we'll get that out to you right away. Hello, lead smarttech.com. if you're active on LinkedIn, you can go to the Lead Smart Technologies page and click on the newsletter button. It'll be there. You can subscribe to it there and get it through LinkedIn. You can also just search around the horn and wholesale distribution on LinkedIn and it'll be available. Plus we have a website for the show. It's www.aroundthehornpod.com and you can subscribe there later in the day. Our editor, John Taylor will take that as he does his production and editing and he will put this whole show onto Apple and Spotify and all the other podcast formats. I think there's like 25 or 30 of them now that we're on and that'll be recorded and available. So if you're listening, you won't be seeing that newsletter. So if you'd like to get that again, please let us know. We couldn't do this each week if we didn't have the support and sponsorship of the company that Tom and I work for. We have a pre production person and a post production person that like to get paid on an ongoing basis. And the way we're able to do that is through the sponsorship of Lead Smart Technologies. At Lead Smart, we've developed a product that we call Channel Cloud. And Channel Cloud is an AI enabled customer intelligence and CRM platform solely developed for wholesale distributors and manufacturers. And with that, what we do is something very different than traditional kind of your, your I'll call it your father's Buick, so to speak, or your father's CRM is very much traditionally a hey, big brother wants to know what sales calls you did and how many emails you sent this week. And we take the reverse approach to that. We looked at things where somewhere between 60 and 80% of the data in the CRM should be coming from the company to enable a better customer experience and accelerate growth within the company by understanding the customer. We do that by taking corralled or corralling siloed data from across your organization. So your ERP data, your marketing automation, your e commerce journey that your customer is taking other data sources from across your business, we bring them together in a single platform, we consolidate those together where we can use artificial intelligence and other tools to. To help gain never before insights into what's happening your customer. So your company is digitally transforming and expanding and looking to gain one accelerated sales growth and dramatic accelerated sales growth as well as understanding your customer and servicing them better reach out. Happy to work with you guys. So Tom, want to dive into the news?

We can do that. Where would you like to start?

Well, I think I'll start with Will's comment. Will says while you guys are enjoying your wine tonight, I'll be taking my youngest daughter to a White Sox game. So he too will be lamenting a poor performance on an athletic field.

How are the White Sox doing this year? I have no idea.

I don't know. I haven't even looked. I just. Historically, I think it may be better than you think. Okay. Well, I hope so. I hope for Will's case, you know, there is, you can have probably more fun in Wrigleyville. Wrigleyville though.

All right, so we have this thing here. He set to deliver the big Jackson Hole speech on Friday. Of course, the big Jackson Hole speech has now taken place. The market likes it. It's up as of right now, 947 on the Dow and 377 on the NASDAQ. So big, big jump.

Everything's green except a couple of my holdings. I see 2, 2, 3 reds. In fact, I gotta have a chat. Sprouts is down. Farmer's Market is down today and you want Sprouts. Well, a good friend of mine, in fact I saw him at Bible study last night is the chief stores officer for Sprouts and so do you have.

Some inside information or.

No, I don't and I should and I sell that. So. But anyways, the. Yeah. NASDAQ is up almost 2% this morning.

Yep. So where do you want to start here? There's a lot I think to.

Well, let's dive in and let's just kind of talk about this. Right. There's so much we talk about this, you know, we. The last few years and. Right. So I think it's the way to maybe preface this, Tom, is we've spent close to four years, you know, in the two and a half to 3% inflation rate and we've had a Fed chair who's pretty much a data driven guy and limited philosophy of his own and thinking that he's going to get that rate down to 2% and the economy doesn't seem to care what the number is. So maybe let's start with that. As a baseline and then kind of talk about what happened and kind of go into some of the other data that we have.

Yeah. So if you haven't heard. Right. So he spoke this morning, I think around 7 o' clock our time, so probably around 10 o' clock eastern and long. And I read the whole transcript all the way through, but long story short, it looks like, you know, the comment that he made is based around predominantly the job report that we had earlier this month that had reduced jobs and, and the reduce and the reductions from the previous months that we're in a place where we should potentially be. What is, I don't remember the exact word he said, but reevaluating our, our stance on, you know, our monetary policy stance. Right. That's there. And you know, that opens the door to rate cuts basically. Now, he didn't say anything specific. He didn't say, hey, September, we're going to do this or anything like that. It was just what way, way more of a, a dovish conversation than we've heard from him.

Sure.

In the past, which is when the stock market spiked up. At that point, my poor poly market situation went also crazy. It's, you'll see here it went 21 higher after that. 21 higher from a, that of being an 80% chance now of a 25 basis point cut in September, a quarter point. Right.

And what last week we were looking at this, Tom, and you, what were you going to put 100 bucks on and did you.

Well, it was slightly different. There was one that said no cut this year. So any cuts this year. And it was like a 8% chance of no cuts this year. I tried to do it, but it wouldn't let me.

It's.

I, I don't think you can use this in the United States. I think there's some legal things. And so, and I didn't, it stopped me and I didn't have time to go try and unpack why it stopped me.

But should be a polymark on whether we believe you or not.

Well, I would, it's probably saved me 100 bucks, so probably a good thing. But anyway, it definitely jumped here. My, my question is, and, and we were kind of talking about this earlier. My question is, okay, what happens in September if the job report comes out maybe better than expected, hotter than expected, and they revise previous months higher. Does that short circus his whole argument here about, well, the job market is, you know, basically cooling, so now we have an environment for rate cuts. I mean, he, I think he clearly put himself out There saying rate cuts are coming. Whether. And I think it's pretty clear to everybody from that the rate cuts are coming in September, which is a very different. Again, he's using the job data as a way to justify his actions or his position, I guess I should say. But it's still a very different position than just a couple of weeks ago.

Yeah. So we're going to play some snippets of a video here in a minute in discussion that I think we will talk a little bit more about an interesting thought process on looking at jobs. So I think what we have to consider. Oh, by the way, the White Sox are fifth in the American League Central with a 0.354 percentage.

So not worse than I thought. Okay.

Yeah, yeah, but sorry, Will, but still, it doesn't change the fact that I love Will and he is a die hard Bears fan and, and White Sox fan.

And it's always fun to go to.

A game, never a bad thing, especially with one of your kids. So that's, that's all the better. Good. So anyways, I, I think that the challenge here, right. Is what we're looking at now though, Tom, and I'm interested in your thoughts on this or anybody that wants to comment on it. We have a mix of economic data, but we also have a mix of pressure and there's a whole set of political pressure.

Well, I think the third element, there's a third leg to the stool. Which would you call philosophy or strategic philosophy. Right. What is the strategy?

He doesn't stand for anything. You know, and, and we, we, I mentioned this a couple of weeks ago and, and I said it to you before we went live today. Right. I'm sure Jerome Powell's a great guy. Right. Probably be fantastic to have dinner with and chat with. Right. But, but he stands for nothing, I guess, is the point. Right. Bernanke, Yellen, who's the other one I was thinking about just a few minutes ago, they all had something that they stood on. They had a philosophy that went with the economic viewpoint and they, they came in with everyone knowing what they stood for and when they were elected in that setting or appointed in that setting, they elected or appointed, they came into that with an understanding of their viewpoint of economics, the markets and, and the data that was going to be used and how to apply that. Powell solely looks at statistics and what we're learning. Right. And as we look to this video, in a minute we're gonna see this even more. Right. He's looking at a lot of rear view mirror Stuff that you, you have to be able to act quicker on. And if you don't have a philosophy or, or a, it's a better term, Tom. It's strategy and it's, it's philosophy and it's, it's, it's a viewpoint. Just put it that. Right. I stand behind my thinking that says these are the components versus this broad scope of components that Powell has had that he is looking across and he kind of bounces back and forth at which he feels like is most important to support his position at the moment.

Yeah. And speak. We've been talking about baseball, right. I think he's been playing the Moneyball analytics game.

Yeah.

Good point of looking at all the analytics and not necessarily looking as closely as what's going on on the field.

Well, there's a whole game going on around him while he's looking.

There's a lot of dynamics on the field. Right. And speaking of baseball teams, my Dodgers for several years. Right. The Dodger manager could not get out of his own way with all of his analytics mistakes that he would make by not really taking into account what was going on in the field and the chemistry of what's going on in the field. So I think we have a similar situation here. But maybe, maybe that pressure element that you just said is maybe causing that to rethink and go forward. Anyway, bottom line, I think, look, unless there is some ridiculously hot job reports over the next couple months or some really spiked inflation, like significantly spiked inflation, what he's basically saying is, I would say minimally a half a point between now and the end of the year and possibly more. That's what he's, he's, I wouldn't say saying that is what he is positioning as he goes.

Yeah, I, I, I think I messaged you this morning about that. I think it's 0.25, potentially 0.5, and then another 0.25. I think we got to get, get a whole percentage point. And here's, here's my, part of my thinking related to this as well is, and, and again, let's, or you're ready to jump into this video. Right. I'll prep it in just a second, but we're, we're covering some of the points there. But I wanted to get this coming from somebody that, like, you know, other than, you know, two, two knuckleheads here in California and spewing their thoughts is getting a, a PhD, a doctorate in economics from Oxford University. And we'll talk about this gentleman in just a moment.

But is he going to be a guest on our show?

He keeps calling, but you know, we were kind of booked up, so. Yeah, well, I figured the fact he doesn't live in Newport beach here anymore, he lives in England now. But the point being, before we jump into that, Tom, is that right now, right, the economy is saying it's fine at 2 and a half to 3% inflation, right? So you need a huge jump in inflation, right? I mean you'd need to get to three and a half to four probably to say that the economy needs the change.

Right.

And that's where my concern lies, is that to your point is if he were to try and back off of all of this stuff because of a jump in inflation, it better be a big jump because again, smarter people than us are going to talk about this in just a minute about what this means. So why don't. What we're going to do, friends, is we're going to play some snippets. There was literally while I was having lunch the other day, I had CNBC on. And this gentleman, if you're watching, you can see on the screen Now, Muhammad El Reign is Ph.D. in economics from Oxford. He's currently Allianz chief economist. He was the CEO and co chief information officer at Pimco, the large bond fund for many years, chairman of Microsoft's investment committee, has some really interesting things to say. So literally if what you're watching this, you're watching me from my iPhone recording my television in my family room with this. But there's some good points. We're going to play a little bit of this and stop along the way and chat about it a little bit.

That it would be a mistake to maintain this optionality. Why shouldn't he do that? We just came off a week in which we got some, you know, size. It goes at least a little bit hot sticky if nothing else. How's he wrong?

So now we're starting to see the problem with excessive data dependencies. He got two different inflation levels. He got softer than expected cpi, he got hotter than expected. He got a Umich survey that is flashing yellow.

University of Michigan survey is what he's working.

By the time you get a clear indication of what you should have done a few months ago, it's too late. And that's the problem with this data dependency.

But I mean, why don't you pause right there for a second, Tom? So what he's talking about there, right, is the risk of data dependency. So what did he, he mentioned that we had lukewarm PPI and Luke and Hot CPI reverse. Yeah. So we had these conflicting data sets and by the, what he's, I think what he's really trying to say here is that by the time that all starts to really shake out, you're too late, right. You're late to the game. I missed something.

Oh. Bob says, when we freeze an image on tv, why does it always look like the person's having a stroke?

Yeah, right. Let's just, you know, for those of you that made it through last week's show with a giggle fest that went on, I, John, John Taylor, our editor, was texting me. He's like, man, this was a fun show. What were you guys on? No drugs here, John. Just a little bit of giggling, a.

Little bit of wine.

Yeah, that's it.

All right. Should we keep going?

Yeah, Well, I mean, let's, let's talk about this for a minute. And Paul just made a great comment here, right. He says paralysis by analysis. And this is, this is where you get stuck. And this is where, you know, Dr. Ellerain says here, right. You, if you get stuck in that and you don't stand for anything in particular, then you don't have any basis points. So you're just vacillating between these reports and these reports come in and they're conflicting. You have to have something, some basis to make decisions upon.

You have to have a subjective, a viewpoint to align with the objective data, which is I think we're going to get into here and just very good.

Feds for decades.

No, it's not. Most Fed chairs had a strategic view of the economy. Greenspan had a view of productivity and.

He had that view.

Bernanke had a strategic view of the economy. Yellen has a strategic view. This is the first Fed share that is almost wholly backward looking. And that's a problem.

We can't make the argument that Powell's the only. The reason why people say the Fed is always late, let's be honest, has more to do with this current chair. You don't think so?

No, I think there were times when the Fed was early. Greenspan was early in recognizing the productivity boost. He didn't tighten at a time when he said, you know what? The supply side is changing. And he was absolutely right.

Okay.

Bernanke waited and waited before he raised rates. So there is, there has been a strategic view of where we're going this Fed and I understand why. The one strategic view they took, 20, 21, inflation is transitory. They made a huge mistake. And because of that they become really shy about making that.

They don't want to make a mistake again.

They don't.

But they may end up making the mistake by being too late. By being too late.

You think, you know, that's interesting point, right? I hadn't really thought about it. Is if you just even that transitory thing was a future looking viewpoint, right. It was saying that, okay, we believe that this is how things are going to play out and they were wrong. So now do you reverse and say, okay, I'm only going to look at things that have already happened. I'm no longer going to proc.

Prospect.

Procrastinate what it is that's going on there? So.

Well, I think, I mean this is the, when you're running scared, right? And, and, and that's, I think part of the conflict with this current administration and president is he's not afraid to take bold action. And then you've got a Fed chair who is, you know, vacillating is probably an understatement.

Yeah, right.

That goes, goes with that. I thought it was interesting. I can't remember this, this CNBC host, we can't remember his name, but he, he likes to be bold and hard hitting and maybe a little, I don't want to say controversial, but, but strong in opinions. And this guy's like, no, I have a PhD in economics. I'm gonna, I'm gonna explain to you what's really happening here.

He holds his own very well.

Yeah, he should cave to the political pressure from the President.

I don't think he should cave. I think he should cut for the economy.

So don't cave. Cut.

Yeah.

The only indicator that allows me to sleep at night is the unemployment rate. 4.2.

Evidence remains steady.

It has remained steady. And that's the number he's looking at. But if you look at other indicators of the labor market, if you listen to what the companies are telling you, if you look at what's happening to people graduating from college, this is a labor market that is softening at an accelerating rate. And you have to be careful about this.

I mean, I listened to Brian Moynihan when he was last on our network and he said there's a difference between job growth slowing and job losses. So the labor market growth rate is obviously slowing to some degree. We haven't seen any, anything to raise any kind of alarm. Not even a yellow on layoffs, have we?

So we've seen the start of a yellow. Scott, history will tell you this is not linear. Think about it. When job code Stops. And when, when people start making layoffs, other companies use that as the opportunity to do things they should have done for a long time.

And that's why Tom hit pause here. So that's, I think that's just such a critical point when we look at jobs. Right. And I'd never thought of this, and this is why I recorded this piece. And I'll have John put the link from CNBC in our show notes. You can see that you can go anytime to the lead smart technology website, so elitesmartech.com and click under resources. You'll see a area there for the show. We have every week's show, the transcript, everything from the show is there, including the recording. So we can put that there. But I think this is really a powerful point, right, Is when you're that data dependent on jobs. And that statistic may not be as valuable as we might like to think, because what's happening when the economy suggests, well, you can do some layoffs, those numbers that go high are artificially high because there's companies that are coming in, and I'll just use the term right, sizing, because they can get away with it and not look bad, right? So maybe a company says, hey, we need to cut 5% of our workforce. They're vacillating on how and when. And what does it look like to the rest of the company? What does it look like to whoever it might be? Well, now this pops in here and they see the opportunity and the time and they take advantage of it. And now we see an artificially high number.

Well, he also brought up two points, right. He talked about job reduction and job growth. Right. So job reduction would be layoffs and people losing their job. Yeah, job growth would be hiring. I think what his point is is we haven't seen tremendous amount of job loss, but we've seen a reduction in job growth, which is what you would have seen in the, and the piece. I do think there is a bit of a lot of companies and just even, you know, my friends and people I know that run companies are saying, hey, I'm holding or I'm going very slow or holding on hiring for a couple of reasons. One, I don't know some of the tariff ramifications and things along those lines. But secondly is, you know, I'm going to see if this AI thing, right, kind of plays out and do we really need to hire as many people? So I think there's a lot of, maybe a slow and a much more deliberate approach to job growth, which is what you're seeing there as well. And I think, yes, that is a trend I don't think anyone's going to get, especially at a large company going to get penalized by slowing down their job growth at this point. And as you said, yes, maybe it's also an acceptable thing to do layoffs at this point because there have been some. At the, at the same time I.

Can get away with it now, right? I won't, I won't get. I won't get dinged. I won't look bad. I can do it because. And maybe, you know, even publicly traded companies will do it because they're likely more likely to get away with it during this time frame.

You know, this. Or is. There's still a couple minutes. I don't.

Yeah, there's. Well, let's, let's. Yeah, let's just. There's a couple more points because he's going to talk about his suggestions on the, on the, the statistical data.

We can move on to the next.

It doesn't change in a linear fashion. It changes a while and then you tend to get these steps down.

And that's what I'm worried about.

Okay, so they should cut in September.

They should.

They should have cut in July.

Okay, but they didn't that July's in the rear me now. They should cut in September.

They should.

Absolutely.

By how much?

I would cut by 25. I wouldn't be super surprised if we get a repeat of last year. Remember last year they absolutely didn't want to cut in July and they cut the 15th of September. It changes the 1 and then you then to get these steps down. And that's what I'm worried about.

Okay, so they should cut in September.

They should.

They should have cut in July.

Okay, but they didn't that July's in the rearview now. They should cut in September.

Should absolutely come by how much I would cut by 25. I wouldn't be super surprised if we get a repeat of last year. Remember last year. They absolutely.

I think we're repeating.

Here we go.

Is that we have stick inflation at 2 and a half to 3%. As long as inflationary expectations are anchored, we can live with this slightly higher inflation because the structural side of the economy is changing. It's changing in so many different ways.

Okay, so you're saying it's changing to the degree where 2% doesn't matter anymore. It's 3% is the new 2%.

I'll go further. I say it's changing the way that 2% is the wrong inflation target, unfortunately.

Wait, wait, somebody said this for the last two years?

Yeah. I don't know who that was, but another brilliant economist, I'm sure.

I, I, I mean, he's just, he's laying it out and basically what he's saying here, and it's not about, you know, anything we said here because we don't know, but the, he's saying that 2% is the wrong inflation number. And the, and I think if you look at the markets, you look at everything else that's going on around us, and we're going to talk about it in a few moments here, that the tariffs aren't having the same impact that people were thinking about and so forth, that the economy has just been doing fine. And what he goes on to say is, you know, two and a half to 3% with this stickiness. And he said this structural side of the economy is different than when they came up with these numbers and should basically, should be reevaluated.

Yeah, and I, and I agree, but I think you also have to take into account that you're now saying that you're, you're okay with inflation, yearly inflation growth, 50% higher than we were before. Right. Two to point to 3% is a 50% increase over where you were before. So, you know, it's, it's, you have to look at that and go on the compounding perspective and whatever. What does that do over time? What is the ramification of that over time? What is the ramification to our debt? What is the ramification to those things? So maybe I don't, I don't necessarily disagree that, especially in the world of tariffs. Right. That you could have a, you should be thinking of maybe a higher bar for that inflation aspect. But you also have to, it's not, it's not in a vacuum. Right. It's just not a black and white thing.

Well, let's talk about that a little bit. So what if inflation, what if an acceptable inflation rate was 3% and interest rates were at 3 and a half percent, we dramatically drive down the, the national debt. Right. And we stimulate the economy with a lot more spending.

Right. Well, that's, that's the, the wild card right there is. Can you basically outrun this through the economy and the growth of the economy?

Well, the economy has been saying for the last four years, yes, it can certainly the markets.

Yeah, well, the markets, yeah, but the economy, I'm not sure the economy has been.

Well, but the broader, I guess maybe the point here is those a broader component of the economy that's looking at these factors. But if you can bring down just the interest payments one of these days we'll do the exact calculation. But if interest rates came down to three and a half percent versus four and a half five percent plus right. One, one if you could get interest rates back in the fours or even low fives for more home mortgages, right. You're going to greatly improve there. Housing starts will go up. You get all of that component of it. If the real rate in the economy is three and a half, say interest rates, what does that do? Right. We the trillions of dollars to debt starts coming down and the taxes can balance out and it's part of what you know this you know and then we'll see if that stimulates on shoring more manufacturing, more jobs. And it certainly as we talked about, we haven't really referenced this today too much. We preface the show every week that the reason we're here is to talk about this and how it relates to wholesale distribution is you know, people like the companies that Will Quinn that's with us today work with and consults with about warehousing and distribution and Paul Kennedy who's running a major distribution company in the electrical and H vac and related spaces. Those dollars start freeing up the willingness to go open new branches and be able to sleep at night because we were willing to take some, you know, borrow some money or strengthen our own balance sheet because of these things happen. So I don't know. I just, I think we might be talking if we're fortunate enough to a year from now still be doing this show. I think we could be in a spot where we could see significantly lower interest rates and we'll see what they what they have. The economy balances out to me again, you know, not knowing enough. I wish I had a Taylor St. Germain or Sean Dubervack, one of the economists that we've had on the show was here to reference this in my mind is cut a point, wait three or four months, see what the feeling looks like in the economy and then talk look at cutting more. If you need to raise a quarter point, raise a quarter point.

But well here, here's what's going to happen, right?

So I'm always wait, wait, you heard it here, now stand right.

I'm like a contrary indicator. I think too much. But it's you're not going to have 2% in the next year, right between now and the end of 26, we're not going to hit 2000 or 2 2%. So we're going to be way, we're.

Not going to hit 2% inflation.

2% inflation, right. We're going to be in the threes, most likely. Okay, 3ish. It's also very likely that, yes, rates are going to be cut. Okay. At least a point or maybe a point this year, maybe a point and point and a half over the next, say six months or somewhere in that neighborhood. Right. So you can count on that. Obviously that will, I agree with you, that's a stimulus to the other things that we just talked about here. So the question will be can the economy over the next year. And there's no signs that it couldn't. There's no reason that we can see at this point that it shouldn't really kick ass over the next 12 to 15 months until the end of the year and then see where we're at. If you could maintain that end of next year. End of next year, sorry. If you can maintain that 3ish level, you can maintain the lower rates and you have a kick ass economy over the next 12 to 15 months. Man, that's the perfect storm for a lot of good things. Right. However, what if that inflation rate ends up closer to four than three or four and a half than three. Right. Which is. And then we might as well use that to bridge into this next set of articles which we're talking about tariffs. Right. There's all these articles that so far tariffs have had no impact or relatively low impact. Right. Yet the. I think the number is here, I want to go back and double check it. The average number here of tariff, the average is now 18.6%. The average tariff rate across all the countries is now 18.6% or China as it, as it stands right now.

As it stands. Okay.

Yes. So that is significantly higher. That's the highest tariff rate that we've had since 1934 and much higher than what we've had, you know, in the past. So look, we're talking about, maybe we haven't seen that.

Can I hit pause on that for a second? I'm sorry to interrupt you, but you know, I think back 2025 to 1934. I, I don't want to be too contrarian on this, but I kind of struggle with is that a reasonable comparison of where we were at and the again, going back to what are our reference points?

It's not, it's not a comparison. It's just, it hasn't been that high in a long, long time.

But is that an indicator, is that a reasonable indicator? Of anything.

It's just an indicator that prices are going to have that pressure that they have not had in the past of the tariff rates. Right now we have a bunch of articles in here about can that be mitigated in different ways, does that get passed on? But let's assume that at least a reasonable percentage of that gets passed on to the consumer. So then 3, 4% or 4 getting closer to 4% doesn't seem absurd. And the fact that we haven't seen it yet, a lot of it is because the articles we have here where there was a lot of front loading of inventory and things like that that haven't tried trickled over I think it'll be interesting to see in the holiday season, right. What kind of prices we're actually, we're actually seeing or early next year. So look, I'm not, I'm just saying that if you could accomplish what you said, right stay around 3, have that 3% GDP which is one of the things there have lower interest rates and a kick ass economy and you can pull that off for the next year to 15 months and stay in that area in that zone. That's a wonderful place to be.

Well it's, it's what kind of that. It's very similar. I can't remember the 333 exactly what it is that Scott Besant's been talking about, right. Wanting to get and it ties to what the administration wants to do. Right. They had some critical points and part of this is also lowering taxes. And if you could do those things right if those things that you just described fall into place, you could potentially see 1 growth in manufacturing growth and better paying jobs and a potential cut in taxes. And you have that and you have lower interest rates. You have to assume it based upon watching the American consumer for the last four years spend like they're drunken sailors. Even with the inflation where it's at and the interest rates are that you have to assume with lower interest rates, potentially higher wages and a tax cut, there's a lot of stimulus that happens at that point.

No, there's a lot of resilience.

I mean there could be and I again and it's. I don't want to promote this administration because there could be all kinds of stuff that could go wrong with this. But things do seem to somewhat be playing out a little bit according to plan. Now if I think the wild card.

Is will the tariffs really make an impact in the next to inflationary impact in the next six months.

So if you let's just what's the target rate for China is 30%, I think. And then everything everybody else is say, balancing out around 15. Right. So if we ended up with that and you, you know, and I, I comment on this last week and the more I think about it, the more I believe it to be true, is that part of this kicking the can down the street with China is allowing people to find better options than China. Right. Every, every 90 day, the days that the cans kick down the street, you've got purchasing managers and supply chain of procurement people working on new suppliers. Because so much of this is right, is it's tied. It's not necessarily just tied to what is the cost of a dust mask that comes from China or what is the cost of a, you know, a piece of tubing or whatever it might be. It's all of those pieces that are a component for OEMs of other products is such a big factor. So if you're a product manufacturer, we don't always talk as much about manufacturing here. But if you're a manufacturer and you're able to move, let's say three of five components of something that you build out of China and get it from 30 to 15%, the impact is, I don't say negligible, but obviously it's half right. So I think that's, that could be a component of this is let's just find that balance and you know, threat, threat, threat. And you know, and again, it's, you have to think through who we're dealing with, right. We're dealing with a guy that wrote the book about the, what is it, the art of the deal or whatever. So he's gonna be, you know, unreasonable, outrageous, you know, throw stupid stuff out there. But what we could see settling out is, you know, hundreds of billions, if not trillions of dollars over the next course of the next couple of years coming to, into the country to help lower the debt. And if we see interest rates come down, the debt is going to. Debt payments are going to go down that much more.

Yeah, well, we're just going to have to have to kind of see how it.

I just get excited about it because then, you know what, manufacturers and distributors are going to hire more, open more plants and open more branches and hire more people and then they're going to buy more software.

Yeah, I mean, certainly the market, they're.

Going to buy more software. I just putting that out into the universe over and over again. Buy more software.

If there's ever been a time to buy software, now is it.

Well, but yeah, before interest rates go up, customer intelligence and smart CRM and AI all in one place, you know.

It'S, it's, it'll be interesting to see how this actually, you know, plays out over the next, next period of time. But I, I do think that how we end this year, because I think by the end of the year we will have enough data. I mean, the end of year is what, so four months away or four right there. So we'll have enough information, I think, on some of the tariff things. Are the tariffs starting to take hold? Obviously we'll know more about what's going on with the interest rates. Well, I believe we'll have a lot more data to work with and understand. Certainly the stock market has been pricing in all the things we've been talking about. I mean, if you look at the, the multiples now, especially in the tech world, but the multiples are way higher. They're way back up to, you know, highest level areas. You could potentially call it a bubble. But if you believe that, you know, all the things we just talked about, then maybe it's not a bubble, you know. So anyway, let's move on to another set of topics.

Let's, let's. There we go.

The remedy to pray. No, no. I see a lot of paralysis by analysis, Paul, in the software world.

Well, yeah, you have to have the right software with the right data to give you business decisions. So good thing we have this. Recording this. I'm sending this off to some, some of Paul's team. So. Stefan, look out. So the. No, but you know what the reality of it is, is we, we have. And if you stop and think about it, and I'll go off on a tangent here for a moment, is when you think about it, right? And Tom, you've said this, right. I've spent my whole career in wholesale distribution, manufacturing. You've been around it for, you know, nine, 10 years, I think now some of the consulting work and other projects we did together before starting Lead Smart. But you know, the, the reality of this, and I think you've said it a number of times, is that it's funny. Paul says that was a softball. Thank you. Thank you for that. Well, appreciate that.

We're like the White Sox. We can't hit.

Paul, dinner on me in Chicago in October if you're, if your calendar is available. So the, My point being, right, Tom, you said years ago you've never seen an industry in all your years in technology where companies have more data available to them. And when you start thinking about, you know, you've got, we've got customers that, you know, we have, we have a customer that you were visiting last week in Maryland that was founded when Abraham Lincoln was president. So imagine the data that a company like that has of, you know, all of those years of, of invoices, the, you know, thousands of spreadsheets across their business. The, you know, now working with E commerce and tracking buyer journeys in E commerce and buyer journeys through marketing and buyer journeys through invoices and so forth. The abundance of data that's there is astounding. The problem is, is it's in silos, right? And we talked about this last week. Early last week I had the privilege of speaking about corralling data silos and digital transformation to affiliated distributors in one of their divisions. And we talked about this and one of the biggest challenges when you have that siloed data across your business and now everybody's getting excited about AI and they want to bring AI into their business and now they have siloed AI driven data, which is horrible. So when we can bring, use the right software, which brings all of that data together in a single platform, whether it's our product or if you could find something that did something similar, which might be hard but to do. But now we get out of that paralysis by analysis because we're analyzing one central source of truth, right? And historically wholesale distributors in particular have looked at their, their ERP data is their central source of truth. And really that's one of three customer journeys that they have, if not more. We've got an ERP which looks in the rearview mirror for data that's just a past transaction. All it is is a, a record of a financial transaction. Two is we have a marketing journey. How are they responding to our emails, watching videos, coming to our events? Second buyer journey. And the third buyer journey is as more and more distributors and manufacturers get involved in E commerce is we have the E Commerce journey. Now when we pull all the data together about all three journeys and you arm a salesperson inside, outside, whoever it might be with that, that on three different journeys, it becomes powerful.

You know, I don't want to go down a rabbit hole because we got still a lot to cover here. We're 45 minutes into this. But that's all one of the, and it's an interesting trend. I was just thinking about talking about software. So one of the trends that I've been seeing with customers in the last month is they want to track the velocity of how quotes and or opportunities are moving through the system. So take a, like a sales opportunity. Maybe you have stages in the opportunity and you know, or even a quote that you may have stages that follow up and so forth. They're wanting to track that velocity of that and know the velocity of how long things are sticking in each place and which is new. I've not. This is not something that we have been asked for up until probably the last couple months. And I was talking to one of our customers about this just this week and I was like, why is velocity all of a sudden become more important? I guess for you to understand because she said, our management really believes that going into next year, if we can speed up and we can really start to take advantage of this opportunities that are here, we can outpace some of our competitors along the way by understanding how fast and how nimbly we're moving through these different things that are here. I think that is a bullish, right, That's a bullish viewpoint of saying, okay, hey, there's opportunity here. How do we make sure we take advantage of that and how do we, you know, maybe over, you know, get ahead of some of the competitors that are there?

It's very good. All right, let's slide ahead. Our friend Mark Gilliam, that was with us a few weeks ago, put an article together for Industrial Distribution. Six Strategies to Navigate Pricing Meant tariff volatility. Now Mark works with Enable, which does rebate management, but he's got some pretty good points that he put together. So, Mark, we appreciate that. I should have messaged you that we were going to share your article here.

But Mark commented earlier, so I'm pretty sure he's on.

Yeah, yeah, well, he lives, you know, he bummed me out is that, you know, he moved to the US so I can't comment him now about being in the UK looking at all of this. But good, good article that he put together. He talked about, number one, mapping your tariff exposure. And I think, you know, sophisticated organizations are doing that. You know, we've talked a lot of some of our customers and prospects and industry people that we've talked to quite a bit are, you know, they have whole teams that are working on these things. But not everybody is looking, you know, deeply in and you know, doing harmonized tariff schedules and so forth that go with that too. He said model, model, scenario based pricing. Now this is an interesting thing, right, when you think about scenario based pricing that is typically so manually intensive by spreadsheets of doing that. Now some ERP tools might have some scenario planning capabilities, but it's few and far between to the level that you'd want to be. It really speaks then in my mind when it talks about modeling, planning, scenario planning is the beauty of digital twins. You know, we're not really there yet in this setting but where we're headed with AI with digital twins is, you know, you could look at pricing models about any way you want to slice and dice them and take data from systems as an example, systems like ours that say based upon all these criteria of how our customers behave in E commerce transactional data base that against the pricing data you come up with some beautiful things. When we get to the point of having digital twins in the business. Any other thoughts on that, that component?

No, I mean just again, how do you model? Right. How do you model, how do you look at things? I also thought some of his points about and you know obviously that's the business marks in but the. How do you use rebate strategically? Right. How do you use some of the different pricing strategies right there? And, and I think AI and this is an interesting application of AI is you know, plug this in and get some feedback from AI. Right? What are some of the things that are that are there?

So yep, yeah. So he talks about layering cost driven adjustments, segment customers for targeted price strategies, harness rebates and incentives strategically and understanding that inventory is king. I think this ties a little bit and I should ask Mark when I talk to him next. It really stuck with me and I think John Gunderson is with us today. Who's going to be listening in. I don't know if John's here or not, but John was on this show with us and John's a, you know, hundred year veteran of the, of the electrical distribution world and he works with David Gordon now. And we've got one of David's articles coming up here shortly. But he was saying early on to all of this is that you know, this is less risky for companies that the tariff initiative is less risky for companies with strong balance sheets that know how to plan and organize and they know how to purchase.

Right.

So you can leverage your balance sheet. Right. People are. And we have the right technology in place so that you can manage your inventory correctly. You've got a lot of people in markets that are just coming out and they're quickly throwing okay, I've got, I just placed this order and this order has this tariff associated with it. I'm changing my price as opposed to balancing that across existing inventory, incoming inventory at a different price and so forth. So a lot of opportunity with technology and good planning. So resilience, Resilience. Resilience is what we keep hearing. And that's kind of how Mark ended on that article. So I thought that was a good one.

Yep.

Good.

I wanted to hit one comment here real quick because I think it's relevant. Right. We were talking about speed, and he says the issue with increasing speed is to become efficient with people and really we need to be focusing on becoming more effective with them. I agree. And Bob, what we're seeing is.

It's a great point.

And this is what I, what we're seeing actually in these conversations about velocity I was talking about is not only are they looking at, okay, yeah, how fast am I moving through, but what am I doing at each step along the way to get to the next step efficiently and effect. I'm sorry, Effectively. Right. So what can I do to improve my sales team's effectiveness so that we can be more efficient along the way? And then can we measure that? And we're seeing that again more and more. But again, it seems to be related to kind of this, hey, I want to take advantage of, of the opportunity and not let it slip by. No pun intended. So. All right, where do you want to go now?

Why don't you tell me?

Well, let's go. I know we're. There's so much we could talk about, but I wanted to move this article here in our E commerce. E commerce and marketing using semantic clarity to engage B2B buyers and Gen AI. And that article, really, if you're a marketer and you're listening, I know we have marketers that listen quite frequently, but I, I think really, if you're an executive in a business, what this is talking about is if you're looking at AI as far as like, you know, AI search. Right. So perplexity and.

Right.

And OpenAI and ChatGPT and, and all of these things that are doing, you know, whatever, gen AI optimization instead of search optimization, if they look at your website or they look at your marketing materials or they look at your data and you have jargon, you know, marketing hype, jargon, all the things that unfortunately.

We see over the bad SEO stuff that they've used for years, Right.

That the AI doesn't understand it. Right. And they, it basically looks at that as like noise and then it discards it. And then therefore you are not going to be relevant to the AI engines and to the LLMs that are there. And if you look at marketing material and even white papers and brochures or whatever. Let's face it, we still see a lot of hype. Right? I mean, honestly, it's an area we need to improve on. I think, I think we need to be even more clear and more clarity on exactly what we do. Right. And, and how we do it. And that's what this article talks about.

Is, I think that's the lead up to the fact that we're posting a job for a new head of marketing and marketing director next week.

We are.

There we go.

Good lady. But the, but the, the point being here, right, is what is what they call it? Semantic clarity, I think was the word that they were.

Yeah. Title the article.

Right. Is you have to. And there's actually a structure which is really good. In this article they talk about how do you take your existing content? And I think there's an AI tool for this as well that should exist. How do you take your AI content? You know, combine that maybe with your ideal customer profile with really clear specifics of what your products and services do, whatever, and rewrite all of that and retalk about it in a much more semantically clear, clear way that actually any. The AI will understand, but your customer will understand.

Well, it ties the article talk too about tying this in. Right. It's just we redid customer Personas years and years ago as we started doing more SEO work and online search work and so forth. And now it's time to rework those Personas to go ahead and make sure that we're messaging correctly so that the both agentic tools and just generic search through AI tools are going to capture those. You know what came to my mind? I don't remember if the article comment on this or not, but you know, sometimes when you're working on trying to do some prompt engineering, the best way to do the prompt engineering is to ask for help from the AI tool in the prompt engineering. And this is a great example of that, is if you want to get this semantic clarity that we're talking about here is to use that in, in helping. Helping having the AI tools, whether it's a perplexity or cloud or OpenAI's chat GPT or whatever it is, you can ask it for help as well.

Yeah, yeah. But I think, yes, if you, I mean think about that. If you really identify. And again this article kind of talks about this, identify your ideal Persona, your customer Persona, how do you articulate your products or services? How do you articulate what you do? You get that down, let AI help you with that, and then incorporate that into all Your forward materials, your website, your digital brochures, things like that, then your chances. Well, there's two benefits, right? Your messaging to your customer is more clear or your prospect is more clear. But the gen AI has a much higher probability of picking you up and positioning you properly in how they return some of the stuff that's there.

You were talking about some of the needs that we have internally at our company, Lead Smart and I did this about two months ago. I was on a Saturday, I was driving and had a long drive going to visit my mother and I had almost a 30 minute conversation with ChatGPT without ever looking at my phone. Just got the voice conversation going and literally I have some agents or what we call helper agents built in Chat GPT so it understood the our company, our product offering, the market we serve, it already had some good data that was working from but I had this conversation that went on for 30 minutes. It was just literally a conversation. Working on buyer Personas and first we started on our ideal customer profile. In the discussion we refined and enhanced our ideal customer profile and then from that we started working on the individual buyer Personas. Because a good example is, and you could apply this in any way you want to do your business if you're a distribution company or manufacturer is who do you, you know, who do you sell to and who are the buyers within that? Right? Because just like we have multiple buyers typically of our software, right. I mean I was on the phone yesterday with a huge electrical distributor and getting ready to move forward using, using our product and their decision process is their VP of marketing and their CEO. They're going to get a little feedback from some sales leaders, but they have a team. So our buyer Persona is oftentimes C level executive senior sales under marketing person with the support oftentimes of a IT or technology person. Rarely is the technology person the buyer. So we just worked on that and like I said, I spent a half hour and then now we are able to start incorporating that data into some of the additional things we're looking to do within the company. So great tools out there if I can, if anybody wants to know what I did. It's fairly simplistic. Reach out to me. Happy to help the other guy that I think is listening with us today too. I don't know if he's here, but Brian Hopkins with distribution strategy. Brian is one of the sharpest guys I know about figuring out quick and easy agents to go do these things. Nick Pericle with Profit Optics is great at this. These are just People that I know and are friends. But you know, Hoppy went from being a Granger operations guy to running operations for a lot of large organizations, Hisco and AZP and others, and used our software for a while at one of his stops. And he's just done a phenomenal job of building some really cool agents to help with these types of things. So he's always a great guy to reach out to. Too.

Good.

Hey, so we'll roll on from there. The next article that we had there is from our friend David Gordon from Electrical Trends. David runs the Channel Marketing Group. I mentioned him earlier and in fact I've got a call with David and John Gunderson there next week. But he did a really nice Electrical Distributors marketing summit. You don't need to be an electrical distributor to benefit from the recap of that Marketing summit. I'm going to take it a little deeper, dive in it. I'm Speaking at. On AI and marketing@ Hardy, another trade association for the H Vac Group. I'm speaking at their marketing summit that they're having in New Orleans in about. This is about three weeks. Probably get that presentation finalized. So some good, some good takeaways in general from general marketing for distributors there. So then the next article we have there is. I just mentioned him from Brian Hopkins. Put an article together about how B2B distributors are winning with automation. Talks a lot about some marketing engines and automated tools that can do things while you're sleeping. So that was a good one as well. What do you see next that you like?

You know, there was one I really wanted to hit here. I want to find out, I remember what the actual article was. It was the. I'm just going to go ahead and we'll find it.

Just keep scrolling and hope that the dead. That silence doesn't hurt. Yeah.

This right here, the B2B buying trends. This one.

Right, the sales and M and A segment.

Yeah, there's a sales and M A segment.

So you're going to completely skip our AI and technology segment.

Well, we've talked a lot about AI. We can hit this one here about, you know, companies have invested vested billions in AI, 95% getting zero return.

So this was a big one. Tom. I think let's spend a few minutes on that and then jump to the next one. This was an MIT study. Right. And go ahead. Why don't you hit some of the points in and I'll give you a takeaway.

Bob. This is red meat for Bob. This is like right, you know, Bob saying not AI not AI, but this is, you know, they're saying AI is a waste. I, I think, look, I read the article a couple times. I think it was. I think it was biased.

And you think the research was biased?

I just think the positioning of it was a bit biased.

I don't. Let me just ask you. I'm sorry, I don't mean to put you on the spot. Do you believe MIT's research was biased or do you believe the article about it was biased?

I don't know enough about the MIT research to say. But the bar. The article seemed a bit biased and how it was put together, you know, and because it's hard, how are they measuring? Right. And I was thinking about this after reading the article this morning. Is my personal productivity through using just AI. I don't even feel like I'm using it as well as I could. My personal productivity has probably improved 30% in the last. I mean, even yesterday, the things I was able to get done, sort out, figure out some technical things I had to deal with. Right. That would have taken me days, or I probably just would have not done it because it was overwhelming.

Well, that was one of the biggest factors with that. Right. Is people are doing things they wouldn't have got to.

Right.

Or they wouldn't be able to do.

Because it's just too hard or too overwhelming. Yep. Right. And so, you know, things like that that I'm sorting through and getting through and even completing maybe in an hour where it's. I wouldn't have done it at all, or it would have taken a long time, or I would have gotten in the procrastination list and due down the road, whatever. So, look, I, I can't imagine that even if we're just using AI in a. And just, you know, the chat bots and the conversations and whatever, we're using that to help facilitate our jobs, whatever it is, we're not seeing a significant improvement in just productivity and results of what we're doing now. They obviously went further about, you know, agents and all these types of things that we've talked about, but, you know, I just thought it was a little bit sensationalist with the zero return.

Well, I, I think, I guess you'd have to dig into the research about that. I think there's another component that's very important to look at here and, And I think it's part of what we're seeing, and we're in a little different place here. We can speak a little more freely than a lot of the other podcasts. That are relying on advertisers and software vendors to support their, their initiatives. We, we have only one sponsor and you're the co founder and I'm the other co founder so we could speak what we, what we see. Here's what I see and this is maybe a little bit controversial, I'll say. And I'd say there was others that rely on, on their, on their shows and events and relying on sponsors need to be careful. I don't have to do that. Here's what I see. I see an amazing opportunity for AI in both manufacturing and wholesale distribution. Amazing opportunities. It's gonna, it has the opportunity to completely change the future of what we're doing. I see lots of events, lots of shows, lots of articles, lots of interviews with people talking about some very, very generic things using AI being done. When I say that is, you know, using now AI versus optical character recognition for identifying orders coming in. Right. I think at an event I was at a While back of 41 vendors, probably eight or nine of them were using, you know, AI related tools for, for order entry. Great stuff, right? Big help to an organization. But what I'm also seeing is people that are reading a lot of content, they're going to events about AI, they're seeing all of the future. They're buying some one off maybe things or some tools to try and work with their existing data that they have, but they don't have a plan. They might have gone out and bought ChatGPT with a company license for 100 people or more and not put guardrails on what they're doing. And there's no big use case that we're seeing yet that is exponentially changing the game like we will be seeing. And I think that's just a big challenge right now. And that's what I think what you're seeing is. And I don't remember, you know, 95% getting zero return, let's say 95% getting no return on investment versus zero. They're getting something is helping their organization but it's not truly return on investment. That's what I think is really what's going on. And you've got some companies that have done some big initiatives but not seen the return yet because they didn't really have a plan, they just went and bought something.

I think that's true. Look, we've talked about the holistic strategy to AI and holistic strategy and what's involved there. In fact, I've been really making some notes. We need to do a show at either a 2.0 show or a webinar on the subject because it's just, it's coming up so often. I'd like to have it to be able to share with others. It comes up all the time. But it's like what is the readiness blueprint if you will to really be thinking about this in a holistic way. Yeah. And I do agree right the point products and it's not just in our industry, it's at all industries. But I on the other hand I do see look, I pay what 20 bucks a month for chat GPT and the return that I'm getting on that or, or and I'm just speaking for myself, I is you know, it's almost. Yeah. Calculatable. Right.

No, look at, look at the value our software developers have with the tools that they're using for inexpensive tools that are doing those things together. I think where, you know, where more my struggle with this is and I think what we're seeing out there is, you know, I was looking at a LinkedIn post from from a gentleman the other day that I'm very fond of and very respectful of that was talking about the big game changer of AI and what's already being seen within the distribution world. And you know, again he's one of those people who you know have need the sponsors from the companies that do those the sponsorship from the companies that do those things to run his company. So I fully respect it. But I think that the group of people that are seeing some significant changes are infinitesimal number a percentage of the broader group of wholesale distribution in particular and I'll push manufacturing aside for a second. Just talk about distribution is the vast majority of companies are seeing very little yet. Now you might have a few people that are doing some really cool things with ChatGPT but the average. And again we talk to distributors day in and day out within our company. The challenge for them across the board is how do I make this work across my organization in a structured way. And what we're seeing on the podcasts and the events and so forth are a very narrow band of people. And oftentimes and I go to these events and I pay to go to these events and I'm seeing a very narrow group of people that are doing some very generic things now. They're, they're having some success but the vast majority are not quite there yet. And I, I think one of the challenges is that what. And it's. I'm gonna. Tom. Hit. Hit mute on me since you control the show If I speak too much. But you know one of the, one of the big things I think people are challenging with is challenge with is what do I use right? I hear people constantly talking about oh I have, you know we have Copilot. Copilot sucks. I mean everybody thinks Copilot sucks. It just can't, I mean it can't even look through my emails for me yet it's a Microsoft product but when you start looking at do I need, do I in my organization I need to use Llama from Meta is Claude Claude from Anthropic the right tool? Is it Chat GPT? What do I make a decision on? One of the things that your team is working on right now is you know hopefully launched by the beginning of the year. I'm going to go on record here and put the pressure on the product team is Genius GPT where you can push a button in our software and you can go in and you can have different agents based upon what your role is in your company. In your company you'll have agents available to you and, and the right model is pre selected. So if you're going to be more successful in getting data about supply chain or purchasing by using the Llama model from Meta that's the model that the system will use if it's OpenAI and right now companies like large distribution companies are in a position where they have to go in and kind of drop anchor on one in that setting. So I think this is my challenge with you know it's not a challenge it's just kind of almost support of that articles. I just don't think we're there yet.

I don't think we're there yet either But I do think it's again the headline of zero return. I think there's a lot of intangible returns and, and, and, and he, you.

Know again he's one of those people who you know have need the sponsors from the companies that do those, the sponsorship from the companies that do those things to run his company. So I fully respect it But I think that the greatest group of people that are seeing some significant changes are infinitesimal number a percentage of the broader group of wholesale distribution in particular and I'll push manufacturing aside for a second just talk about distribution is the vast majority of companies are seeing very little yet. Now you might have a few people that are doing some really cool things with ChatGPT but the average and again we talk to distributors day in and day out within our company. The challenge for them across the board is how do I make this work across my organization in a structured way? And what we're seeing on the podcasts and the, the events and so forth are a very narrow band of people and oftentimes and I go to these events and I pay to go to these events and I'm seeing a very narrow group of people that are doing some very generic things now. They're, they're having some success but the vast majority are not quite there yet. And I, I think one of the challenges is that what. And it's, I'm gonna. Tom hit hit mute on me since you control the show if I speak too much. But you know one of the, one of the big things I think people are challenging with is challenge with is what do I use right. I hear people constantly talking about oh I have, you know we have Copilot. Copilot sucks. I mean everybody thinks Copilot sucks. It just can't, I mean it can't even look through my emails for me yet and it's a Microsoft product but when you start looking at do I need, do I in my organization I need to use Llama from Meta is Claude Claude from Anthropic the right tool? Is it Chat GPT? What do I make a decision on? One of the things that your team is working on right now is you know, hopefully launched by the beginning of the year. I'm going to go on record here and put the pressure on the product team is Genius GPT where you can push a button in our software and you can go in and you can have different agents based upon what your role is in your company. In your company you'll have agents available to you and the right model is pre selected. So if you're going to be more successful in getting data about supply chain or purchasing by using the Llama model from Meta. That's the model that the system will use if it's OpenAI and right now companies like large distribution companies are in a position where they have to go in and kind of drop anchor on one in that setting. So I think this is my challenge with you know it's not a challenge, it's just kind of almost support of that articles. I just don't think we're there yet.

I don't think we're there yet either but I do think it's again the headline of zero return. I think there's a lot of intangible returns and, and yeah, but they're one.

Offs with it but I'm sorry Tom to interrupt you but let's look at what you described in our small organization in comparison. Paul Kennedy just you know used your term of incalculable uncalculable. Right. That's great if you've got some people doing that. But how do you put that into the organization?

Right.

And to your example of your improvement of 30%. I'm using ChatGPT in a lot of really unique ways. I I built an agent recently that has all of our. We have one of our major vendor contracts is 105 pages. I don't want to go scan through that. I want to ask an agent to help me look through that. But we don't have that organizational yet and I think that's the issue.

But I think taking what I what I was saying earlier I'll just take speak for myself. I'm deal and not just me but our my team and the people we're doing things that before we would be either too overwhelming or too fully agree.

We wouldn't have got to time and.

Resource intensive to do or even to to think about doing. Right. And so either they get kicked down the road right procrastinated or not dealt with or just not done with at all. Now how do you calculate and I agree I don't know how you calculate. This is my point. How do I calculate the return on the fact that now I was able or we were able to do something in an hour or two that we would not have been able to do.

At all before or, or one couldn't do or wouldn't have gone and tried because you didn't have the bandwidth to.

Do it and it wouldn't even have mattered if we would add a big team. I just wouldn't have had the team go take it on because the return of the investment for that team to accomplish it wouldn't have been worth it. But it's worth it if I can do it in an hour or a couple hours. So it's a really interesting way to understand again it goes back to statistics. Right. How are you measuring this? I do agree with the conversation that Bob and both Bob and Paul are saying around effectiveness versus efficiency I think that is something is I look at the improvement I had is around effectiveness on some of the things we're doing but it's also improved efficiency in other areas as well along the line there.

So anyway before we jump on that Tom but I so I we're in alignment and agreement on that. I I just in my mind I think I can support a little bit more about this research where we're it's where we're at today, you know, to Paul, to Paul's point here and you know, I don't know all the details but you know, there's 60 plus branches now at his company. Right. DSG Supply. 60 plus branches, I'm guessing 1500, probably to 2000, maybe more people. And so Paul is the president and CEO and his key leadership team. They've got to make the decisions about how do we do this across an organization versus do I have four people in a 15 person marketing department that are having some efficiency or do I have somebody in my supply chain or my purchasing planning group that, you know, I've got two people there that are getting some benefit from ChatGPT.

Right.

You got to look at it universally and that's where I think these things are failing is one, there's some of the tools aren't fully ready for prime time. Three is people don't have good plans going into this and don't have the right vendors in place.

So they're not. Well, there's an organizational aspect of it, there's a, a group and aspect of it and there's an individual aspect of it. So each of those can have different values.

You know, one of my favorite, you know, my favorite part of what we do here is sometimes in this, I don't want to say it's conversation, but when we, when we're live and we have people that are with us live and their side conversations going into the chat with people that just, I just love that.

So.

And they're unrelated to Tom's got a booger in his nose. Right. And they're talking about it over there.

I do.

No, no, not, not this time.

Okay. So. So I think this probably the last one we're going to have really time for here. But this was.

We got to go golf.

Yeah, we had to go. We got to go golf. You pick up some beer or something. So it makes it palatable. Yeah.

It's only going to be 90.

So the this is B2B buying trends that may change your go to market strategy. And this is from sales and what is there Sales and the marketing management is the name of the, the piece here. And I wanted to kind of go through. There were 10 trends that they did here. We've talked about some of these over the months, but I thought this was a great summary of all of them and I'll kind of quickly go through them here and we can hit on. Yep. So number one, millennials and Gen Z now account for 71% of B2B buyers. This is up from 64% in 2022.

In my slide from my presentation last.

Week is out of date. It's out of date already?

No, no, 70. I use the 70 plus percent.

Okay, 70%.

So it's been that way for a couple of months now.

Younger decision makers, this is number two. Younger decision makers under 40 involve nearly twice as many stakeholders, 6.8 as older executives who use 3.5 stakeholders in buying decisions. I mean, that's almost double, right? It is double. So in other words, younger decision makers are relying on more people in the organization to have influence on buying decisions, which translates to.

If you're a wholesale distributor salesperson. Right, you better know a lot of people in the organization versus Joe that you bring donuts to on Wednesdays.

Yep. Right.

And if you're a manufacturer, that same group is at your distributor that you're calling on.

Yep. Right.

Great point.

Number three. The average buying group for complex B2B solutions involves 8.2 stakeholders, up by over 1/5 since 2021. I think that that's. I mean, I, I think that's probably on the high end on what we see for our stuff, but, you know, there's a lot of people we don't even know sometimes are not on the calls or. Yeah, things like that. But I think that's fair. I think that's probably average on what we see from a technology.

I think it's a little. I think it's a little high. I mean, if you took the average. Right. I mean, we've got a. A deal, you know, closing next week that there's probably 20 people involved with.

Right.

Talk about paralysis by analysis. And then we have others that are, you know, two or three at the end of the day with the. Maybe there's, you know, I guess it depends on what you call a stakeholder.

Yeah, these are good.

Keep going.

And number four, over eight in 10 buyers know what product they want before starting research, and 70% buy their initially preferred solution. So what that says to me is there is a bias, a product bias or a vendor bias or a, you know, company bias before they even quote, unquote, start their research. Now, we do see this, right? We'll have people come to us and go, hey, we really want to work with you, but you know what? I got to do my due diligence and I've got to present three options and blah, blah, blah, blah, blah. Right. We see that. But, you know, for the most part, they've, you know, it's Kind of ours to lose, if you will. Sure. And, and, but this is not just in technology. Right. This is saying and B2B, these younger buyers kind of know what they want. Which tells me again stuff we've talked about. Well, why do they know? Must be your brand, the influence that you have in the, in the market, that kind of thing, the trust you built. Those are all things that are going to lead to that. Number five, three quarters. 75% of B2B buyers prefer a rep. Free experience. But here's. This was a great, great point but self service digital purchases are more likely to result in purchase regret, meaning nobody to blame. Well, and that they screw up right decision because they should have talked to a salesperson or they should have gotten some more information rather than just relying on whatever they found online. Which I do think in this next one. Oh, there's a couple of them up here. The number six, almost nine and 10. 86 B2B purchases stall during the buying process and 61% of buyers are dissatisfied with their chosen.

81%.

I'm sorry, 81. Yeah. And 86% stall during the buying process. Okay, we've never seen that. Number seven. Nearly two thirds. 63% of B2B leads take at least three months to decide and 1/5 wait over a year before purchasing.

Got that deal closing next week.

Yeah, yeah. The one year and then social proof dominates buying decisions. 70%. 77% of buyers read user reviews and more than 54% speak directly with current users before purchasing.

Tom, before you go on this ties. Well, the comment Bob just made, he said sellers and their companies are now facing confirmation bias rather than customers looking for help create crafting a solution. Right. And, and that's where when we, especially when we're talking about, you know, the wholesale distribution world is, you know, you've got this confirmation bias. All these people involved versus and and to the point earlier talking about they're going in looking with a. Having a product already in mind versus looking to get help with solving a problem.

Yeah, yep, that's true. That's true. Which then creates that buyer remorse and buyer regret and other things that are that are there. Although I think they try and balance that out by getting, you know, references and, and you know, social proof as they're calling here.

Yep.

All right. Number nine, email is the most preferred outreach channel with 73% of buyers favoring it and 64% opening emails based solely on the subject line. Which we kind of knew. But that's a. Yeah, it's a great.

Reminder for me, though, I mean. Yeah, right.

It's. It's what it's saying. It doesn't matter. The book is judged by the COVID as it relates to the email, and.

The COVID is a great point. Yep. And you could build an agent just to help you craft.

Yeah, right.

Just to help you craft subject lines that knows about your company and knows about your product offering and so forth. Simple to do.

Yep. Well, and if you go back to what we were just talking about, about the semantic clarity. Right. Semantic clarity can only help everything that we're going through here.

That's such a. Why don't you just say the right words?

Did I say the wrong word?

No, no. Semantic clarity is just gobbledygook for the right words.

Yeah. Okay. Right.

Choosing the right words.

It's jargon, you're saying. It's jargon.

Yeah.

All right. Yeah. Say the right stuff. Be clear. So, number 10, you sound so smart.

When you say semantic clarity, so that's really good.

Okay. Well, it's my word of the day.

That's right.

All right, number 10, this is the last one. Enterprise buyers spending over $117,000 show higher AI adoption than overall buyers. Gen Z buyers use AI twice, nearly twice as much as the average buyer. 15 verse 8%. And what they mean.

Sorry, I'm not sure I understand this one.

This means they use AI for their research. Right. I mean, you could. They go to Chat GPT or Perplexity or those types of places, and they use AI to do their research, find out about the company, find out about the products, find out all those things. Right. Which is, let's face it, a lot more effective. Maybe not more effective, but there's a lot more you can get out of it than just a Google search.

So anyway, which really ties into something that we're going to. This would probably be another good around the Horn 2.0 episode or, or sometime soon is talking about the shift in online buying from Google searches to models. Like a chatgpt being your place. Right. Chat GPT has, as does perplexity. And everybody else out there that's getting into this game with their own browsers has every intention of getting you to buy while you're in the Chat GPT browser, of course, versus.

Versus going through Google.

Yep.

So, yeah.

And that the, the, the potential impact of that on wholesale distributors selling directly to end users through E commerce is crazily impactful because at the end of the day, what Chat GPT is wanting to do is kind of be in a place where they can come back to you and say, hey, I have this order because I've captured the customer and I'll allow you to fulfill it, but this is the price I'm going to pay you.

Yeah, a whole nother discussion for another day. But the whole, the whole chat GPT AI thing could be more of a threat than, you know, Amazon's ever been.

Yeah.

But anyway, this all came from a report you can download called the State of Prospecting 2025. That the links here in this article. But I, these are. I thought this was just a great summary. You know, we've touched on a lot of these things over time, but I've never seen them all in. In one place.

So you're saying I did a good job of curating articles this week.

You did good. You did good. I think we need to wrap up. I know there's more here, but the.

Only thing I wanted to do. So we went through our sales and M and a segment there, but there's some good articles in the People in leadership segment, about 1 in 6 workers pretend to use AI amid workplace pressures. So they're pretending to do stuff, but they're not really. Anyways, handful of good articles there about compensation. There's another one about empowering teams and aligning teams. So you know, this is back to when we're at a 155. Right. So 55 episodes ago is when Dirk Beveridge, our good friend, called us out on the fact that we didn't have anything in, in the newsletter about people and now we're getting really good articles there each week. So Tom, if you'll scroll down to the scuttlebutts. Oh, you know what? Call out quickly in our Channel Leaders on the Move section, our friend Joby Strobo from Industrial Supply Association. Joby's super. Love her. She just got a great promotion there as the vice president now of Development and marketing. So she's super. We'll see her in November at their meeting in Memphis. Gets go to Rendezvous Barbecue in Memphis with my buddy Floyd Clifton while I'm back there. So anyways, industry scuttlebutt section, the one thing that I wanted to hit on there, there's an interesting article there about Home Depots, their, their professional side of the business. But it talks about Amazon business accounts for 35 billion in annual sales now. So we were just talking about that. You mentioned that earlier about them potentially. You know, what could happen with, I'll call it AI Browsers. AI Driven browsers. Yeah, well, yeah, commerce through AI Browsers, I. E. Perplexity has one. And they're. I mean, perplexity, you know, throughout this I. I just thought it was kind of funny. Right. There's been all this scuttlebutt in the.

Let's see.

Looks like Paul's gotta run. Enjoy golf. Hit him straight. Keep the beer cold and the wine flowing. Very good.

So the beer cold and the wine flames following. Not so sure about the other part. Yeah. Not so sure about.

Yeah, the. The making contact and straight is a whole. Another story. Point being here is that there's a whole. Was a whole conversation in the B2B or technology world, I should say, recently, about Apple being so far behind in AI that Apple should go by Perplexity. And then this week Perplexity went and threw an offer out there to Google to buy Chrome, which I thought was interesting. Point being is there's big shifts coming with AI tools regarding e commerce. Amazon though, now saying 35 billion in annual sales, B2B sales through Amazon business to the customers of our wholesale distributors that listen in many places. Tom, do you know how much Grainger does a year?

I don't. Do you?

Take a guess.

20 billion.

They might, if they're lucky, hit that this year. Last year was, I think 17.2. So stop and think about that.

Yep.

Amazon business, which used to start off as Amazon Supply, they stated it basically said, hey, Granger's doing, I think at the time would have been about 3 billion in E commerce. And they said we're better at this. We. We don't care what we sell. I, I had a. I think I've mentioned this on the show before. I had an Amazon executive, I'll never forget was having dinner with him at Eddie V Steakhouse in San Diego at a conference. We were out to dinner with a couple of Amazon executives and, and I think it was actually my wife Darlene was with us comment. And she goes, what doesn't Amazon sell? And his comment was he said, if it's legal and reasonably moral and fits in a box, we'll sell it. Right. So they're logisticians at that point and they can be in any market that they choose to be in based upon that. So now they came in to go after a market that Granger was doing so well in, B2B E commerce, but they're now already double the size of Grainger's total business. So talk about a force to be reckoned with. And I think there's some great strategies that distributors can use to look at and use to Partner with them as well. So Bob seems to like the. I think Bob's hungry too.

So we're going to wrap up here anyways.

That's good. So great show today. Thanks for your research. I thought our discussion about the economic stuff early was solid and we appreciate everybody joining us each week. Anything to add before we. I got it. You've got a drive down here which is going to take you a few hours. So I get to get a couple hours of work in.

Yeah. But no, good show. Thanks for the comments. Great, great insights and appreciate all. That's our next guest.

I gotta check. In fact, Lily was asking me about that. She does our pre show prep the other day. I've got a bunch of people who have committed and saying they want to be on. I've got to get them locked down on the dates. But who's coming next? I think it's a couple weeks before we've got somebody, anybody out there has suggestions on guests. We'd love to have that. And I guess we should start preparing for the 200th show because we're only 45 away. That'll be here before we know it.

We'll know what all the interest rates cuts are and everything by then.

I, I got a. A couple of weeks ago is great. We did for our 100 show, we did those aloha shirts for our guests. And Ian Heller, a good friend from the distribution strategy group sent me a text message a couple of weeks ago on a Saturday evening. I was in an aloha shirt, not the same one, getting ready to go to a concert. He sent me a picture with him and his lovely wife Penny at Red Rocks Amphitheater in Colorado. They were going to see a show and he did a selfie of them. And he was wearing our aloha shirt.

He was going to the Beach Boys, if I'm not mistaken.

He was. Well, it was the Beach Boys with like the Colorado Philharmonics.

Okay. Yeah. Pretty cool.

So anyways, that's it for today. I'm Kevin Brown. This is my good friend Tom Burton. We get together every week whether. Unless someone is in the hospital, on an airplane or on a scheduled vacation, as we say. And we talk about the around the Horn and Wholesale distribution manufacturing newsletter that goes out. If you don't get that and you would like to get that from us, we'd be happy to send it to you. Just send us a quick email@helloadsmartech.com or find us on LinkedIn or aroundthehornpod.com and you can get that and we get that out each week. So we do this each week with a great audience that that chimes in like they did today. Favor that we have to ask of you. If you like what you hear here with us each week, please jump on to whether it's Apple or Spotify. Subscribe, Leave a review if you're active on LinkedIn, go to the Lead Smart Technologies page. Follow both the podcast and our company page there. If you're listening in on YouTube, certainly hit subscribe and you'll get the alerts coming when we go, whenever we go live on the show. That's the best way that we can help get this message out to other people is we're triggering the algorithms of those organizations that will then share what we're talking about with others of similar interest. So we appreciate that. Again, we couldn't do this without the sponsorship of the company. Tom and I work for Lead Smart Technologies. If your company is looking to digitally transform and accelerate growth with customers through pre developed software tools made specifically for wholesale distribution, we would love nothing more than to take talk to you about that. So everybody, we wish you a great weekend. Be safe, be kind, do good things.

Yep, have a good weekend. I'm gonna go eat.