Around the Horn in Wholesale Distribution - Episode #170

Mike, it's your welcome dance.

I got no moves.

Yeah, yeah, no moves.

Mike, I know you're. You got to be tired, man. You long, long day. Get long afternoon. Probably getting back through Chicago back to Madison.

Yeah.

Whenever I travel back east from the west coast, so I lose the two hours and then, you know, I get home at 9:00 o' clock last night, but for me it feels like it's seven o'.

Clock.

So then I go to bed late and it's just a tough next day.

Right. Then you got to get up and come prepare for a show and come join us and all those hard things. Right. So we're good. Well, Mike Hockett from MDM is the executive editor there and part of the national association of Wholesalers and Tom Burton here with me as well. So I'm Kevin Brown and we're here and around the horn and wholesale distribution episode number 170.

Nice round number to it.

Who would have thought? So 30 weeks away from, well, a few off weeks, so say 33, 34 weeks away from number 200. And Mike, you were with us. You were with us for number 100, right?

Yeah.

That was a real kind of a nice All Star lineup there that you guys did a great job of pulling together a great panel.

You know what? We're. I feel so fortunate that we have the caliber of guests, including yourselves, that we're able to get. We've got to start promoting here very quickly. The January 9th, I believe it is. We'll be doing the 2025 in review and a look ahead at 2026. We've got, let's see, we'll call them infamous Mike Marks. And then the famous Dirk Beveridge and Ian Heller. And then we've added our good friend Paul Kennedy from DSG is going to be joining us, the President CEO there. So we. We do that. This will be year three of looking back. In fact, I saw Mike, I'm sure you didn't get the chance to talk to Mike Marks at the Hardy event this week, which we talking about today as well. And Mike's comment was, we're getting the band back together. This is awesome. This is like. What did he call it? He goes, now year three. He goes, now we're on a roll. This is. We're doing it forever. So it was really, really good. So it should be fun.

I'm not in forever, but you're not.

Yeah, well. But I also in that same conversation was joking with Mike's that the six, eight years that I've known him, he's been telling me he's retiring. So that goes the same way. So anyways, we're happy to have everybody with us today. Again, I'm Kevin Brown, we got Mike Hockett with us and Tom Burton and we get together every Friday morning and talk about the news of the week and how it impacts wholesale distribution manufacturing. Both Mike and I just got back a little easier for me to get back to Orange County, California from Las Vegas and Mike getting back to Madison, Wisconsin. But great week. We're gonna share quite a bit of things. I was just texting with Allison Green, senior marketing person at Hardia this morning earlier and by her and her team and Talbot G, the, the CEO there. And then our good friend, good friend Elite Smart, good friend of the show as well. Lauren Liu from Standard Supply did just a bang up week and a bang up event. So we'll talk about that, weave some of the thoughts of the week into today's discussion as well. So Mike, before we kind of dive in and Tom, maybe Mike, why don't you throw out with you if you had one key takeaway from the week at Hardy. And by the way, for those of you listening that might be in the office products business or our distribution or medical products or whatever, HARDI is the trade association for H Vac distribution. It's heating, air conditioning, Refrigeration Distributors International. That right. I think great group of people, great leadership team as I just mentioned a few of them a moment ago and a really solid event. We got our steps in, that's for sure because we're the, I think, I think I probably averaged 11,000 steps a day roughly, something like that. But that was, that was great. But you know, we have such a broad group listening into the show from different markets, but it's great to look at the economic data coming out of it. So any solid or specific key takeaways that you had?

Mike from Hardy, fantastic show, as they always do, a big show compared to, you know, a lot of the other industry association events out there. But the biggest thing I got was just how proactive Hardy is being in know, providing so many different services to its members in a time when they need all the data, all the thought leadership that they can get. So I just think it's, it's great for them to have a resource like Hardy and like a lot of distributor organizations do. But Hardy really stands out to me right now as far as what they're doing on the advocacy side, on the market research side and then putting together great events like this one where they had just awesome speakers like Mike Marks. It's just one of many there. So it just blew me away with what they're doing. Give the distributor members a lot of resources to do things more efficiently, more profitably, just with all the information that they can get. So kudos.

Tom, is. Is Mike going in and out for you?

He is, yeah. You're a little underwater, Mike.

Yeah, let's see if I can fix that.

Yeah, you know, just to kind of follow up a little bit bit on that is great group of speakers. It was really kind of funny. I had an opportunity in, I think it was August to speak at the Marketing Focus event and talked about digital transformation and then tying that into using technology and marketing is a great, great opportunity that I had. I again appreciate them having me there. And we had discussed having a couple of different sessions for me to do over time. And they typically don't have the same speakers two session, two events in a row, which is great. Makes good sense for any association to. To do something like that. But it was pretty funny because I ran into one of their executives walking down the hall who had not. This was the very, very first portion of the show. And on effect, they might have even been on like on the way to the reception Monday evening and ran into one of their executives. He said, hey, Kevin, it's great to see you. And he goes, I'm looking forward to introducing you for your keynote on that lunch on Wednesday. And I was like, not different Kevin Brown. And it was pretty funny. So they had, I didn't get to a chance to see it, but they had, I guess, a really heartwarming speaker that shared some life experiences and some things about helping each other with our journey through life. And his name happened to have been Kevin Brown as well. But I also got tagged in a couple of different people's LinkedIn posts about looking forward to my keynote.

So is that called imposter syndrome or what?

You know what, you must have read my comment. Actually it was. I won't say who comment on because I don't want to embarrass her, but dear friend and industry leader in this, specifically in the hardy space, and she commented on that in a post and that's exactly what I said. As I said, you make me feel like I have imposter syndrome because I spoke at the smaller event this summer, not on the big stage at the national event, so. Exactly right, Tom.

Imposter syndrome. All PR is good priority.

There's no such thing as bad pr. So I'll take Those tags that came across. So anyways, we've had quite a bit happening in the news this week from an economic standpoint. Why don't we kind of dive in? But before we do that, I'm going to do just a quick thing of housekeeping. You know, we introduced ourselves before of who we are, but we get together, Tom and I in particular, we try and always get great guests whenever we can, like our friend Mike here. And we chat about the news of the week and what happened in the economy and supply chain and sales and marketing and people and leadership and AI and robotics and all the big news in the week in some series of categories. And we try and apply those back to how those have developed over the course of the week or over course of time to impact wholesale distribution and manufacturing. We do this through the means of our newsletter. We're kind of a unique show. Mike and I were actually chatting about this yesterday. And our podcast and live show that we do here is really to talk about that newsletter that goes out each week, it's also called around the Horn in wholesale distribution and manufacturing, goes out to close to 10,000 people. And if you'd like to get that newsletter, we'd love to get it out to you because it is what we discuss on the show. So if you would like that just simple way to get it is to reach out to us directly. You can do it three simple ways. Helloadsmartech.com and you can do that simply if you're active on LinkedIn, you can certainly look for the show on LinkedIn. You can connect through it through its own page or through the Lead Smart technologies page on LinkedIn. And then on top of that, you can go to the website for the show, which is aroundthehornpod.com www.aroundthehornpod.com and sign up right there. If you're listening on the live show, we're happy that you'll be seeing our handsome faces as well as the newsletter. If you are listening on a recorded podcast on Apple or Spotify or Odyssey or wherever it might be, you won't be seeing that newsletter. So you won't get to see what's up on the screen or, or those of us here. So again, if you'd like to get that newsletter, please let us know. We'd love to get it out to you. We couldn't do this without the backing to support things that it comes from. The company that Tom and I work for, which is Lead Smart Technologies, we've developed a, what we describe as our product is called Channel Cloud, which is an AI enabled smart CRM and customer intelligence platform. We do a lot of work with sales enablement with that as well. And we bring siloed data from around organizations, erp, E Commerce, marketing automation, other data platforms. We bring that into our platform and we use artificial intelligence and other smart tools to bring the best out of that data to serve up on a silver platter through smart alerts and things like that for your sales teams, your marketing teams, your inside sales, your support teams, operations, purchasing, procurement. We bring all that data about what's happening across the customer through all of their different journeys into one place to make smart decisions, to help not only support the customer experience, but to grow, accelerate business as well within your organization. So we can help you in any way. That would be great. I guess I was just thinking we also kind of, I think have a second sponsor today. My good friend and former guest on the show, Mark Gillum from Enable, that was at the event, gave me a cool new Yeti Cup. So this is for my team, or T, I should say. So thanks Mark for that as well. So looking forward to a good morning here. Tom, you want to kick us off with some of the hellos that are there?

Yeah. So you know, I wanted to. And I do want to say good morning to Paul and Bob and if you're out there listening, please jump in, say good morning to Mike and welcome him. But I, I've come to the conclusion that CRM is dead. Yep, I have this week alone. I sent you another email, Kevin, this morning on this, I saw it. This email alone, I think we've had what a half not, this is no exaggeration, half a dozen prospects and customers saying they're going, they want to launch major initiatives like we of the things that lead Smart Channel Cloud does, but they will not call it CRM in their organization.

Yeah.

And so we've said CRM has been a four letter word in a lot of cases. But it's interesting, I've been trying to write down all the different things that people are thinking of calling it. So I don't know if I have a good one yet. But yeah, the word CRM certainly seems to be dead, but CRM capabilities like we've talked about are certainly alive and well. So.

Yeah, well, it goes back to the old thing. Right. And I've used this over and over again. You have to be a certain age for this to make sense of saying it's, you know, it's not your father's Buick. Right. I think was it early in Tiger woods career did that promotion with, with Buick about, you know, being a different, a different thing. And I think so many people think about CRM and even, you know, other tools, but specifically the term CRM is big Brother. And Paul says here customer enablement tool. And I think Paul's right on with that. I think the other side of it is, is when, when you're doing things right and using a platform and you know, most CRM products are what we refer to as point products, you buy it for, you know, a use case, just like you might buy a, you know, a returns management software or something like that. It has one use case. But when you're using a software platform, which is what LeadSmart is built on, then you can get the analytics and the data by having the connected data, the structured data and unstructured data that lives within an organization. I always use the term, you know, every organization has a Ralph and you know, RALPH knows where everything is. He's been around for 40 years, he's had five different roles. He's watched the owners kids grow up. And he can tell you that one spec sheet that you need is on the main street warehouse number three. It's in the back corner. Underneath, you know, a warehouse rack is three file cabinets. It's file cabinet on the left, halfway back right. We need to be able to replicate RALPH because ralphs are retiring and the young people that are coming into the marketplace and the work world are looking for technology and enablement, especially with AI in many cases. And from that standpoint, when we can replicate RALPH across the end the company, that's when we really win.

Mike, are you seeing any similar, similar evidence?

Yeah, definitely hearing that narrative and feel free to let me if I change microphone. So I'm hoping this one's a little better here. Definitely hearing that the components of CRM are being distributed among other, you know, platform tools that distributors are regularly using. So it's, it almost seems like. I don't want to say CRM is dead, but I am seeing this deconstruction of CRM and different pieces of it going to different places. I love Bob's comment here that CRMs are most useful to other people in the company, except for sellers and customers. So, you know, the ones actually doing the buying and selling. So yeah, we're seeing components of IT being infused into erp, being into just some of these other business intelligence tools. So it's, it's tough to see what the future of CRM is going to be or if it's Just going to be morphed into already existing other technologies. So, yeah, definitely hearing the same thing.

Yeah, I think it's good, Good, good point. I just literally a couple minutes ago got a text from a company that's just getting started with us right now. And one of the tools that we have within Lead Smarts called a revenue expander, where we really look at the white space or we have another customer, they use the term trapped potential. Of all the possibilities of things that could be sold to a customer, well, we, we identify much, much deeper with that. Tom and his team have developed some really cool tools using AI that can go beyond what you and I might see with the naked eye in the ERP data to really go deep. And we could talk for hours about this. But using the term synthetic data, that even comes deeper of not just what might they buy, but not only what might they buy, what's the percentage that they're going to buy it and how much of it should they really buy in that setting? We've got a new customer getting started with us with and have a few hundred people to get started. Probably go up to four or 500 people over the first year. And their CEO has said he doesn't for the first four to six months. He doesn't want his people entering anything into our platform. This is solely push notifications to their phones. Just like they would get a ESPN alert or a stock alert that says, go check this. Right. And from that standpoint that we use the term enablement. Right. Paul used it there. And we're not even enabling, we're guiding at that setting. Right. And then in this company's situation, they'll be rolling all of that data up into an email every day for the sales leader that can see all of those critical alerts that their team got that day and can coach, guide and direct them to the next level. So anyways, it's a good time to be alive.

As long as you're not CRM.

Yeah, that's right. Exactly right. Good. Why don't we dive into the news before we go to the first article and talk a little bit about the Fed. Mike, you posted a, a new article from, you know, by the way, shame on me. We've been Talking and talking 17 minutes in. Mike, I referenced who you are, how we know you, you've been on the show multiple times. Great guest in the past. Got to sit down with you yesterday in Las Vegas, one on one together for a bit. Tell us about you, your background, your love for losing football. I'm Sorry, your Wisconsin love for Wisconsin sports, I should say. And that's just because my USC Trojans are now in the Big Ten as well. I've got to throw the digs out here and there, but the. Tell us about a little bit your background, your journey with mdm. Now mdm, part of naw. Why don't you give us a little bit about that and then we'll dive into one of your articles you just posted.

Sure. I'll try to keep it short, but yeah, I'm basically the content guy here at mdm. So what if you're on the MDM website, if you're seeing our white papers, our podcasts, our webinars? I play a role in any of our pieces of content at one point or another. So at mdm, I serve as a researcher, you know, a market analyzer, just dissecting what's going on, kind of making sense of what's happening in the news. MDM posts a lot of economic news, a lot of distributor news, but our real value is the analysis and the market research that a lot of people can only get some of that research on MDM when it comes to the type of data we're putting out there. And we cover every product sector that the U.S. census Bureau identifies in terms of wholesale distribution. So we cover everything from fasteners to pharmaceuticals to oil and gas. Kind of up and down the chain there.

And.

But what we typically brand ourselves as is a business journal for distribution. Not only market research, but thought leadership. We're getting a lot of other voices in front of a distribution audience on. We're not telling them what to do or letting them know if they want to do something, here's how they can do it, and here's how others have done that thing. Yep. So a lot of case studies, a lot of things like that. And as you noted, we are now part of the national association of Wholesaler Distributors. As of early 2024, they acquired MDM. So we now operate under their wing as the content arm of NAW and the research arm. So we're still doing our MDM thing just as a part of naw. We got a lot of exciting stuff coming up in 2026 that includes our NAW executive summit at the end of January. That's our big tent pole eventually. A lot of other big things in 2026, but that's basically how we operate. I've been covering distribution as an editor for about a dozen years. I was the editor of Industrial distribution magazine for seven years and then moved over to MDM in early 2022. So yeah, I've been doing this for quite a while. I don't come from distribution. I started in sports writing, transitioned into B2B media. And yeah, I've been doing this for a long time and as the years have gone on, I only find myself more and more interested and fascinated by this giant industry that almost no one outside of the industry knows about. So.

Great.

It's just always interesting to write about. There's always interesting things going on.

I love that you describe it that way because I hear that from people quite regularly. In fact, I've watched Tom's journey. You know, Tom's been in and around distribution now for probably close to 10 years. And you know, he, I remember him making a comment many years ago that you know, he's never seen from his background in technology and work, consumer facing things and B2B and commenting about never seeing a more data rich industry than this. Right. Because especially at the distribution side because of the data, you have it on the end user side of things and it's pretty exciting industry. And when you own people that I meet and talk to and I'll share just something brief about what I do and mention wholesale distribution. Sometimes people scratch their head. If you're there at a restaurant or wherever it might be, just you can point to anything around you, whether it's a beach chair, a snowblower or a dinner glass. It came to, it came to wherever you're at through distribution. And then people start scratching their head. Right?

Yep.

Hey, by the way, my reference to. I did we have two comments here about Wisconsin football and I meant the Badgers, not, not the Packers. So I was. But, but I am excited to watch a bigger, bigger and better year next year for both the USC Trojans and the Wisconsin Badgers in the Big Ten.

Yep, yep.

And anybody that can out there, that can take down Ohio State will have me cheering for them.

So are the packers going to make the playoffs? They're. They're on the bubble, right?

I mean, no, they're pretty solidly. I think they're second place in the NFC right now. But they got some big games coming up against some top teams, so it's going to be. I, I feel pretty good about where they are right now and, and yeah, now we're getting into the cold season so there should be some good football down the stretch.

All right, Kevin, where do you want to go? We got to get started here.

You know, Mike had an article. Mike, why don't maybe just reference this? I Have it. I should have shared it with you. Tom, you just. We have got a number of articles about interest rates and tariffs and the economy of the week. But Mike, you put a an article up this morning that you posted@mdm.com and I caught it on LinkedIn to start with. But US wholesale sales slumped to end Q3, but inventories rebounded. We have a couple of other articles about inventory. Why don't we just kind of dive in that way? Mike, do you want to maybe share a little bit about the article you started with this morning? Then we'll kind of dive into kind of some of the other articles in our economy and supply chain segment.

Yeah, so it basically distills the latest figures out of the Census Bureau. They put out their monthly wholesale trade report that gives the sales and inventories figure for US Wholesale distribution. And as you noted, it showed that September sales were down 0.2%, which doesn't sound like a lot, but it is a decent deceleration there. And then with that August figure was revised down from a 0.1% increase down to also a 0.2% decrease. So it showed a considerable deceleration to end the summer to end Q3 with there. And it's given that the government shutdown is had a delay with all this data that we're getting. Usually right now we'd be getting the October wholesale data, so a little more recent. So we're having to take a little further look back into the economy that was, you know, a couple months ago, but it kind of showed what we expected. That orders and manufacturing orders I think we're going to touch on as well have definitely slowed as the year has gone on. Which isn't a surprise because we saw the front loading of inventories and orders ahead of the tariff impacts. Early this year everyone was trying to stock up on inventories and orders before tariffs took place.

Right.

And that really kind of carried some of these wholesale revenues for the at least the first half of the year. And now I think we're finally starting to see that deceleration as that front loading effect has worn off. Revenues aren't dying. You know, the sky isn't falling by any means, but we're definitely seeing this normalization, I think of distribution orders, manufacturing orders, and we're starting to see that in the numbers even though they are delayed because of the shutdown.

So I know we have an article about this and we can hit on this. But Mike, do you think there is a kind of a wait and see sort of thing happening here to see what happens with the Supreme Court ruling on the tariffs. Because if that comes down, at least temporarily, there would be no tariffs, I would assume. Right. Even if they implement other, other avenues.

Yeah, distributor executives, manufacturing execs, they're watching the news cycle just like we are. They're seeing the, that everyone's kind of waiting for the Supreme Court tariff decision. But I think the, what we're hearing at, you know, every industry conference when they're talking about tariffs and what could happen here, what NAW's team is covering on the regulatory side is I think the consensus right now is that the expectation is that the Supreme Court is likely to strike down tariffs as they are right now. But it seems like even if that happens, the Trump administration will immediately pivot to, there's kind of a slew of different options that they can almost rebrand these tariffs as something else and keep them in place. But I do think there's going to be a very short window where technically tariffs will be gone, at least in some form. But I, I think most manufacturers and distributors just expect that they aren't going away, they're just going to be rebranded, repackaged as something else, but essentially remain here. The, the administration has a lot of tools at its disposal to pivot to.

Right.

But yes, even with all that said, I think you're right that there is this kind of wait and see process happening right now where that could explain some of, some of the conservative numbers we're seeing out there in terms of decelerating orders and expectations. Because, yeah, people just, they don't want to, they want to see what's going to happen here before they invest much more in front loading on more orders. It's not like they're trying to front load on orders, expecting tariffs to just disappear for a month or two. But even so, it makes sense that they want to know what the official situation is before it's business as usual.

And what's a little unclear. Right. Is when that ruling was going to come. Right. I've heard everything from next week to next summer or late summer. So there is, that's a pretty broad range of when you know when that is going to come down. It'll be interesting to see how long the wait and see process.

Well, I think, I think there's a couple components that go with that too. Right. Mike, you might have heard in the past on the show some of the spirited conversation that Tom and I have and in disagreement on what that really means. But, and we talked on last week's show about Costco filing a legal action, wanting the money that's been paid in tariffs back and getting themselves at the front of the line. And, you know, Thomas had a belief, I don't want to put words in his mouth, but I will. But that those tariffs are going to need to be at some level refunded because they were gained illegally. And I've just said, good luck with figuring out how to go do that. Right. Maybe there's some credits or something to some taxes or fees or something down the road. But I, I would suggest to this point, Tom, that, you know, and I'm glad you brought it up about timing on the Supreme Court is that every day that goes by that there's more and more tariffs that have been taken in. The harder it's going to be to try and ever refund those. And then the other side of it is, and I think I mentioned this before, right. Is if, let's just say Costco gets 200. I think the lawsuit was $200 million.

Right.

So Costco raised their prices because of tariffs, and I paid those raised prices at the Costco down the hill from my house. So how does Costco get that back? And how do they get that to me? Because I ultimately paid the difference, even though Costco wants to do the lawsuit. So that's where I just struggle is how possibly could you ever litigate through this? Because if you're the government side is to say, great, if you, if you have, if you want to sue me for it, show me how you're going to get this back to the people that ultimately paid for it. Because I can show here that you raised your prices.

Yeah, but I don't know that matters. You know, it's what's, why would it not matter? Well, let me couple things, right. Let me jump to the last article in the thing. We're going to go all the way to the end of the newsletter you had the article about the second look is, and I haven't unpacked this more, but there was a statement in there. The article talks about a lot of companies going, well, wait a minute, should we be doing lawsuits, too, you know, to follow on the Costco thing? And the article was, you know, quoting a legal firm saying there's lots of potential avenues you can take to potentially get a refund or get some of those back other than a lawsuit.

Right.

My point all the way along is manufacturers or whatever just not going to sit on their hand and go, oh, well, yes, so what? Thanks. All right. You know, they're going to find, try and find ways to get some of that back. Now, legally, I don't see more lawsuits. Sorry.

Why do you think we haven't seen a slew of lawsuits?

Well, I think that's what that article is about is, you know, the Costco was kind of the first olive out of the bottle.

Right?

Or the first.

You're talking about last week's article. Sorry, last week's article about that or we are in. Yes, this one. Okay.

Yeah.

Yep.

Yeah, yeah. So that was what they were talking about is the, the Costco was kind of the first olive out of the bottle. And a lot of companies are like, well, wait a minute, should I be doing this too? You know, and that's the question that's coming. Right. So my guess is there will be more. But the point of that article was is there are other potential avenues other than a lawsuit that is there. I do want to, I want to put Bob's comment here, though, front and center. He is betting, which is against polymarket, that the Supreme Court upholds the tariffs. Kind of in alignment with your, what your point, Kevin, has been is, hey, there's just been too much money coming in and too much of a tool to not hold them up. But that's very much in contradiction to Poly Market and the quote, unquote, experts out there.

I, I, listen, I, I've never said, I don't think they were not going to strike down the method. I think I just, it's just we're, you know, We've been here 170 times and we just continue to say we're not economists or experts. We're just guys that have thoughts in the industry.

After 770 times, we can call ourselves whatever we want.

Perfect. I just have a strong belief and I have not talked to and, and I'm on the phone every day with wholesale distributors. I can't count the number of industry events I've been to this year. And I was just thinking that behind me there's a light in my office and I've got to go take a picture of it because I've hung every one of my lanyards on that light. And so I need to take a picture of it and do a LinkedIn post about the year and the events. But I've just not talked to anybody that thinks the tariffs are going away. Right.

I don't think they're going away. I think they're going to.

The answer is what is the methodology to do it? 301B. Whatever. There's like I think Mike, you mentioned earlier and we've talked about it over and over again on the show, there's three to five different methods that they can go do that are in varying degrees of complexity. One has Congress involved, the others don't. And we saw right away when this went to the Supreme Court, can't remember which one of the the the methods was. But you saw immediately that that required the Federal Trade Commission, I think, to be involved and having done some research. And we immediately saw a couple of those things get started related to I think it was the eu. So the sentiment out there, I was just looking Bharani Nagaratham from Texas A and M University. I just call him Dr. Bahrani. It's easier that way. But we had a nice chat the other day. He did a wonderful if you don't follow Dr. Bahrani on LinkedIn, it'd be great to do. But he did a beautiful recap of the Hardy event on his LinkedIn this morning. And Mike, you probably saw I know Dr. B was at most of those sessions, you were at far more of them than I were. But he commented in here he's got a whole segment in his post is long great post, distribution economy and sales and growth segment. But in here he said estimated effective U.S. tariff rate for 26 is 9% across the board. Right. So I don't know if you heard that in a session, Mike, but I don't think anybody thinks this is going away. The question is when will we get the response? Will there be too much of a water under the bridge to try and get money back? I'm sure there will be plenty of lawsuits. I'm continuing to say to get all that money back I think is just silly to think of from the bureaucratic standpoint. But the next next question is then what is the gap? Let's just say, Tom, to Your point, it's January 15th, the Supreme Court comes out and says it's and I would almost go back to Bob Britton's comment about him thinking about it. I'm holding, you know, we've talked about a number of times that their role is to say was this legal or illegal? The question will be do they just go down that very narrow path and give an answer to that or do they put some parameters to it? Unlikely that they would say you have to pay the money back because that's not the question they've been asked. It'll be interesting to see if they do something. But then how long does it take? Is it 45 days? Is it 15 days or is it 6 months before some of these other tariff statutes can be used? But I think no matter how you slice it, we're going to go into next year, we're going to be having tariffs across the board.

Yeah, I've seen the timeline. You know, it could be as late as you said to the summer. It could be June or July when the Supreme Court decision has happens. And I am surprised that there's not more clarity on the timing of that. I think that would make people feel a little more confident on what they're doing and what they're expecting. But, yeah, I've seen that effective US the tariff rate, the estimate estimation, anywhere between that 9%, as brownie points out, up to as high as, you know, 16 to 17%. So it's. There's a range with that. I'm sure it's different for every market in terms of their effective tariff rate. But I would say at somewhere between that 9, 10 to 15%. But yeah, I think it's just really hard to narrow down the exact figure there.

Yep. And we can move on from here, but. And Mike, interested in your take? I. I don't.

Hey, Mike, by the way, tell me, I interrupt you. This is how Tom says, I'm going to get the last word. We can move on from here. And then he starts talking. Okay, go ahead, finish your thought. Tom, I'm sorry, I had to.

I wanted to just get the last word here. Mike.

My wife has a different method.

Sure. But no, I would now I forgot. No. So I don't believe we're going to have, like you said, January 15th or whenever it is, the Supreme Court ruling. Let's assume they do rule them down. I don't think it's a hot swap, though, over to the next thing.

Right.

No, for sure. So the question will become what is that gap?

Right.

What happens during that gap?

Yep.

And at the end of all of that, even if there is a transition to other means to accomplish the same thing, does that actually help bring that median down, you know, more on the 9% level, or does it potentially elevate on the higher level?

From that perspective, let's say that gap is only two weeks. Yeah. Like that's gonna have to be figured out of what happens to just what are people doing with their. I don't know what happens there. But. But yeah, you would have to assume it's not next day. It's going to be some sort of a gap if. If it does transition. Right.

Well, and it's interesting and So I know Tommy wanted to jump ahead on this. I want to throw one last thing up because when I look at our.

Comments, what he's saying is I want the last word.

No, no, I'm gonna act. It's not true. I'm getting ready. I'm get. It's funny. I, I just scroll. I've missed a handful of comments. I didn't know my wife was listening today because she just made a comment, Darlene did on our post here. It says, and then we can throw them away, the lanyards. Because I'm, I'm at my home office today versus our lead smart officer in.

That backyard fire pit and burn them.

That's right. Okay.

We got my own stack of them about five feet to the right of me here.

Just Mike, once you get your wife. And in December when in January when it's really, really cold and snowy in Madison, come here to Laguna and we'll have a fire in the backyard and we'll burn all our lanyards. Okay, I just did want to just hit this. As you know, Bob made a comment here. What we don't want to have is a completely dysfunction of 435 people that is the US Congress too wrapped up in this. But before we leave from this, and Tom, I will come back to you to defer for the last word because it was not my point, but it is funny, is that we have. Oh, and then Klaus says he's posting here because he'd like the last comment.

That's pretty good because we're going to move on to the next topic here.

My point was we've got John Gunderson. Hopefully John's still with us. Right? You've worked Mike with John off and on for many years. Great writer, great speaker, great researcher. We've got Paul Kennedy. That works real close into our audience. That's commented this morning. Paul's on the distribution side. I'd love their comments on what they're seeing and what they're thinking. If they're still with us and in a position they could type a comment in to, to go with that. But I think our consensus would be that there's going to be tariffs. They're going to be somewhere probably an effective rate of say, 8 to 15%. I think Mike, is roughly what you were saying. That's probably reasonable. My question for both of you and then Tom, you take us away from this after you make your comment is do you believe. And Todd, by the way, Mike, are you familiar with polymarket that, that, that we've been referencing on the show and stuff in the past.

Not deeply, but yeah, I see it cited all the time.

Yep. So. So Tom's gonna. We're joking, but I'm hoping he really does it using some vibe coding. Build the. The Tom's market to get. To get. Get it working. But my question to the group is, because there's not a poly market likely on this is do you believe. And there's no right or wrong answer and anybody that wants to chime in on this, please do. Do you believe that every day that we move along with the current tariffs in place and there's more tariffs collected, that that makes it harder for the process of tariffs to then be returned at some point? Is that yes or no belief in that or not?

I mean, I would say yes.

I would say no. I think it's irrelevant.

Do you really think?

Yes.

Why is it. Why is it irrelevant?

Because in fact, the more that are collected, the more people are going to want them back, number one. Number two is. And it's unclear. Right. The Supreme Court could. It's not likely, but could also rule that you need to return the refund the money. Right. That is a potential outcome of this as well. But I don't think it matters a whole lot that whether it takes now or next summer or whatever, the tariffs accumulate. And again, let's assume that they rule it down. I do believe there's going to be a frenzy of people trying to get their hands on some of that piece that's there. So that's my. I don't think it's dependent upon nuts.

You're nuts. I just. I just. So Wes says with DSG West. I love it when Wes comments. It's great. Thanks for being with us. Who do you agree with? Wes. He just says, I agree. Maybe Wes is just looking to get the last word. True. Yeah. But Wes, Paul's with us, so Paul may get the last word. We'll see. I just. Yeah, I guess so. I'm going to ask you both one more question. Do you think the consumer. And let's just. Let's just go back to our B2B marketplace. We were talking about Hardy earlier. If I'm an H Vac distributor and I decide to go ahead and. Because I've paid tariffs, or I'm an H Vac manufacturer and I'm going to go file a lawsuit, do you think my contractors are ever going to see any of that?

Not likely.

So then how do you do that ethically? They say I charged you for something.

Paulo has A last word. Let's go ahead and move on.

I think the consensus, it's complicated.

Yeah.

So. So Wes says he agrees with me. The CEO of Wes's company says he agrees with Tom. This is good. Okay. Anyways, we, we are, we are in agreement to disagree. Okay.

Well, I think it'll be interesting to see, right. There's a lot of complexities here and there's a lot of different variables and dynamics that could influence these things one way or the other. But one thing I guess for me is where there's money or where people believe there's money, I don't think that people just walk away from it.

Yes.

Or they, they don't give it a shot, if nothing else. And you could easily see, Right. I mean, I agree with your point on the consumer. You could see, let's say that Costco was effective in getting some of that money back. Then you have lawyers that are all representing class action suit with classical members going after Costco to get, you know, that's my point. Right. Yeah. You know, the trickle down effect. The winners will probably be the lawyers on the legal, legal things on all of this.

But, well, but, and that, that's. Tom, that's been kind of my point through the whole thing. Right. Is, and I just, we, you know, have some folks here from, from DSG and in the electrical and H vac markets as well. And that's just my question about all of this is like, look, if, if their largest supplier of switch boxes goes and sues the government for $100 million and they recover that, but they've passed on to DSG or ABC or any other wholesale distributor, they've passed on those, those tariffs. Right. And there's specifically, and this is, this is what's so intriguing about this. And man, I know 10 minutes ago probably we said we were going to get off of this, but this is what's so intriguing to me. Right. Because with. This is we talked about with, and it might even have been Paul as a guest, but. Or one of our guests we talked about, when a manufacturer pays those tariffs, how do they pass them along? Is it a price increase without an explanation? Is it a line item that says economic adjustment or tariffs paid? If it's a line item that says tariffs paid, if I'm a distributor, I'm going back to that manufacturer and saying, hey, I had my legal team run a Nexus search and see that you're suing and I want part of your recovery. Now if I'm a half a billion dollar a year contractor that buys from XYZ distributor. I should be doing the same thing that's saying, are my vendors out trying to recover? Because then I want something back. Right. So Paul's point is good. Paul just says there's no way to unwind that the only noble impact is who initially paid the tariffs. Right, Agreed. But Tom, you made a point about who wins is the lawyers and class action lawsuits. And in using that is, hey, you know what? Somebody comes to me and says, you can get $300 back if you join this class action from, from your purchases at Costco. I'm saying yes. Right. I just. And that. And again, Tom, I'm coming back to you for the last word. That's my, the reason I have my position that says I don't think there's a lot of dollars I. That will really eventually flow through coming back.

Look, I don't know if the bottom line will be right. I don't think anyone. But I don't believe anyone's just going to put their head in the sand and ignore it.

Correct.

Right. And, and as I said, where there's large pools of money, there are people and all legal and everything else that is going to circle that.

Yeah.

It is not simple. I agree there is a lot of logistical issues associated with it, but it doesn't mean that as a result of that, people are going to ignore it. That has been my take all the way along.

Tom, can you give me an edit? I know you're controlling the Streamyard platform. I need to just delete Paul's comment from 9:41am can you, can you just take that one off?

The only thing I'm allowed to do is highlight it and spotlight it.

That's where Paul says, I think I'm with Tom.

All right. This morning, Mike's probably like, why did I do this?

Mike's like, I got, I got other. The, the funny part is, Mike, you, you're so calm and relaxed. Tom and I are jabbing at each other and you're like the, like Switzerland here.

No, I'm sure when you guys do your, you know, your, your review showed. I mean, I'm not going to speak for it, but I'm guessing the consensus is going to be that 2025 was the year of tariffs and what it all means, the legality of everything here. And who knows, maybe by then there will be a little more clarity on, you know, the momentum behind striking this down or keeping it. But, but yeah, it's, it's overall a mess. And I do not envy distributors Waiting to see what's going to happen here. All we can do is report on it.

Yeah. That's nice. See that, Tom? Do you want to highlight that?

Yeah.

Talk about Switzerland.

Yeah.

Sometimes I, I think what I didn't have a, have a comment on that one. The once in a while maybe between.

Tom and my wife being here listening to the show. My wife has with a lot of manufacturers in the distribution world. She has a marketing design and printing firm doing catalogs and design work. So little plug for Ink Works marketing and design and Print Group. So. But I think what Paul meant to was probably typing there was. You're right sometimes too, Kevin, when you're picking up the bar tab.

So.

Very good. All right. The. That's a bun. Bob says Mike's just multitasking while you two guys are talking.

You've already read another article and published it.

Exactly right. Hey, Mike, I want to ask you a question as we move on and talk about interest rates and a few other things and we've got a lot of other topics to dive into. But Mike, if you have time and you've been on on you were on our 100th anniversary show with Paul Kennedy and Mike Marks and Dirk Beveridge and Ian Heller and and Dan Schuberth from Naw. Right. Your parent organization, which was a great, great. Which was a great. Paul just says even a blind squirrel. We just digress even further. But you were with us on that show. You know the gentleman that'll be on that. Your recap with us if you have time that morning. Will you just listen in and chime in with some comments. We'd love to, love to do that and have you, have you share some ideas. I think what's going to be really interesting in this is not just tariffs but overall the economic view is, you know, Mike Marks is that's going to be with us from Indian River Consulting Group. Mike sits on a lot of corporate boards of distributors and I think he'll have some, you know, inside the, inside the boardroom take on. On what some people are thinking as well. So Tom, we are looking at it. You did have the last word on what's going to happen with tariffs dollars. Let's talk for a moment about interest rates and then kind of move a move ahead. We Interest rates dropped again this week, but a little bit of signals and things going on with that. Tommy, your. What are your takes on what Powell's comments are? I just saw a little bit about it.

Well, I mean the, the consensus is one cut next year, one cut in 2027. That's not very much.

Right.

That's another quarter point next year and another. So I don't know that that's going to have a tremendous amount of impact. Would love your take on this, Mike, is are we kind of, you know, we just talking about the year of the tariff? Are we kind of past the whole rate cut conversation and interest rate thing? And is that really a factor?

Yeah. So another quarter rate point cut. So that's like we had one in September. One in. Was it October now? December. So three quarters of a point that's gone down this year with three cuts.

And.

And yeah, I think that the, the narrative coming out of yesterday's decision was the dissent. You know, three of the 12 votes voted against the majority, which I think.

Two of them had done. I think two had done so the prior time. Right.

Yeah.

So they just added another one.

Of the three dissents. Two were in favor of no action and one was in favor of a larger than quantum quarter Right. Point cut. But it was the first time, I think they said in six years that there's been three descents. So I can't really ignore that. And it just, it paints the picture of uncertainty out of that group going into next year. And I think, yeah, I think I see that the narrative is an expectation for one quarter rate point cut like you said, Tom. But yeah, that's not really going to move the needle in terms of home buying and things like that.

That's.

That really are impacted by interest rates and mdm. We actually did our own research at the start of October where we. We do a survey with Baird every quarter. We asked a group of about 400 distributors, does the changing interest rate, does it impact their capital investment decisions? And we kind of figured they were inextricably linked. That, you know.

Yeah.

Depending on how interest rates go, that determines their investment plans. But it was like only 60%. I think it was 60. It was only 40 said that. Yes, there is a direct correlation.

Really.

If rates go down, we're going to invest more in capital investments.

You said 60, Mike.

60 said it doesn't impact.

It doesn't.

Only 40 didn't. Okay.

Yeah. I mean that still means two out of five distributors say they are they. That impacts their decisions. But it was a little surprising to us that it was only 40% say that interest rates impact their capital investment. We thought it'd be closer to 75. 80.

Yeah, that. What do you. What was the sentiment that went with that, Mike? That really surprises me.

And that's the, the big question there that I'd love to talk with more distributor executives about. Yeah. Like why does this or doesn't it impact your capital investment given that it seems it would be one of the biggest factors out there. And, and again, this is only, I mean 400 distributors isn't the entire industry, but it is a, I think a nice representation. But yeah, I would like to look more into and talk.

That's intriguing. Yeah, that's, that's intriguing to me with that.

So I think there's definitely a story behind the story there. Right. Because what I'm hearing you say, Mike, is there's probably more to their decision. Right. Than whether it's just interest rates.

Yeah. I think it suggests that interest rates play a factor, just not maybe to the degree that we.

It's not a black and white issue related to interest rates.

They're making moves based upon. That's a factor that in, in a big move with there. There's maybe some big opportunity and so forth. But it'll be interesting. You know, it's. With the discussion of. And I didn't be, you know, it was a busy few days. Right, Mike. It just seems like it just 7am to you know, 11pm and then trying to get the work of the day that still, you know, there's still people calling and having expectations while we're at these events. And it was something a little bit of a whirlwind but. So I didn't get to watch much of Powell's response. I did see a couple of snippets from it but with the discussion of him alluding to. And I think Bob Britton makes a great point because Powell leaves in what may of next year. So what is, what does that incoming person look like? Right. And I think they just approved earlier this week. I think all of the Fed chairs are now. What do they call it when they're. What's that, Tom?

Ratified.

Ratified. Yes. Sticking on the board, I guess is the key. Right. Whatever the, the ratified might be. Right. The term. But so you have that group, but then you're going to have a new leader of that group too coming in And I, I just kind of go back to thinking about this administration. Paul's just back to the other point.

Right.

Paul just made a great comment. Opportunity cost of return is greater. What is the loss of time without the investment cost you. Right. So. And it's. I'm going to break this. I'm going to take this. I'd love Paul to correct me if I'm not Getting this right, but I'm going to make the correlation to the comment that Paul makes here about opportunity cost to the gas station. Right. Mike, what do you guys, what do you guys pay for a gallon of medium grade fuel in Wisconsin?

I think it's 259 here in Madison right now or for, I mean that's the, that's the cheapest.

But yeah, want to take, take a guess what it is in California.

I'm gonna say it's at least 425.

Yeah, I think I paid 479, something like that last weekend for mid grade.

And there's no shortage of 550s around either, correct?

Well, yeah, do not pull off the, the side of Interstate 5 because it's over $5. But I, I'll, I'll use that, I'll say, I'll correlate it to my, my thinking related to Paul's right is hey look, it's 5 cents a cheap 5 cents cheaper, right. A gallon over there. But I'm going over here and that whatever it is, based upon my gas tank size, that $3 5, $4, $1, $9, whatever it is, it does not correlate net savings to the value of my time or the opportunity of the other things that I can do.

Right.

So I'll pay that extra money because of the opportunity cost in this case, same thing is. And I'm assuming what Paul's saying if he chooses to open a new branch in Iowa, right? Because there's a new market, there's a data center being built, whatever it is, those opportunities will very much offset what that extra half a point costs and interest rates, whatever it might be. So I think we're probably seeing a lot of that. What I do think is interesting with this particular Fed group is the. Don't think I haven't thought about it. Bob, Bob says why haven't you moved to Texas yet? Texas isn't on the radar, but somewhere with low taxes has been a very common conversation recently. The answer is that barely four miles that way, Bob, is this big thing of blue water and it has sand at the front of it that my wife and I love is the.

But there's a lot of lakes in Texas. Texas had a lot of lakes and beaches and stuff like that. So. Yeah.

Yeah.

Yep.

So. Oh, that was gracious. Paul just said I was right. That's Tom. You don't like that, do you have.

Thank you Paul for making him feel better. I appreciate that.

So. But the other side of this is, by the way, we Were talking a while back about interest rates correlating and I was wondering about the percentage on that and I looked it up and they said on average historically it's been between one and a half and three times at the high end. Percentage points higher of mortgage rates on the 30 year versus what the Fed rate is because I think we're down to like three point. What is it high, high threes, low fours I think is the range now with the Fed. But now we're talking about Treasuries being purchased back which you know, has not. They've been kind of stabilized with doing.

Any of that, which quantitative easing.

Right.

They're putting money.

Right, right. So then what happens? Right. So I, I think what will be interesting to watch with this, with the new Fed governor is or chair, as Bob was mentioning there earlier in his comment, what comes out of that? Because this administration. Right. What have they said? Fentanyl, close the borders. Right. Consistent free trade on things. And so which is what we're tariff discussion. So there's our three interest rates to help boost the economy and get spending going. So I've got a feeling we're going to see some pressure from or, or attempted additional pressure from this administration to get rates down a little bit further. Any take on that either you.

Yeah, like it's, I can't remember when the next Fed meeting is. Is it late January?

January.

Yeah. Yeah. But yeah, my guess there, I mean given the comments that came out of this one just yesterday, I'm guessing they're gonna take no action for this next one at least.

Right.

Yeah, I think it's just about the timing now of when, if and when the next rate comes or cut comes of. Is that going to be, is it going to be three months from now? It's going to be six months from now. But they definitely seem to paint the picture of caution going into 2026.

Right, right.

So there, there are three meetings between now and May. Right. When the so they again, Poly Market, 78% no change in January, March meeting, 61% no change. So a little bit more. And April, 64% no change. So pretty much the betting markets are saying no change or no change at least between now and April, the first three meetings of the year. And I would agree with that. I would, I would align to those odds if I were betting on this.

When's the third one?

January. March and April. April 29th.

So Powell's still there for those?

I assume so, yeah. I assume that is correct, yes.

All right. I was getting ready to Throw a gauntlet down and take the other side from you and throw a steak or something at it. Because last year I won a steak from you and what was the bet that you won tacos on that I haven't paid yet.

I don't know. It was no rate change until September and there were no rate changes this year until it was.

Surprised I took that.

All right.

But the, I was, I was actually going to take the other side of this. But I, I'm, I would, I would go on a limb to say we'll have at least two next year. I don't think there's any.

Do you think there'll be one before May?

I. I'd struggle with that. I, I think we're going to see a lot of pressure on Powell to do more. I would absolutely think that's the case. I just don't know.

Right. He doesn't need to do anything. He's just gonna go do his thing. All. I think he's, look at it. He's. He's lowered 3/4 points this year. He can ride, he can ride into the sunset over the next three months with I think a pretty even keel. I think the pressure will come on the new, on the new chairman and starting in May.

Oh, I don't, I don't think this administration is going to let the pressure up on Powell one, one bit if. And, and we have to see what comes, what happens within the economy. And I think this treasury purchase thing is, is an interesting component. I wouldn't suggest for a second. I understand all of that well enough to adequately comment on it. But now we're, I mean, we've just looked at this up, down, up and down. I call it a simmering economy for the last, you know, few years with Powell there, and there's nothing of significance that's really come out of this yet. And I think Powell has been worried about more I don't want to say worried about his reputation, but I think there is a component about what is this particular Fed that's there look like through all of this and just, you know, don't get me started on the data that they're using. So I'll be quiet now. Tom. Sorry.

Right.

Well, we're an hour in and we've covered our first article, so.

No, we covered Mike's. This is two.

Okay. Okay. We're two.

Yeah, yeah, yeah.

I want to make sure we don't miss AI because Bob has come in.

Bob.

It's here.

Right? Yeah, yeah. So a few, few other articles that you know we have here that if you're listening in and have the newsletter and by the way, I haven't mentioned again if we're new to the show or listening live, excuse me, not listening live and listening on a recorded version on of the podcast. We're discussing the newsletter that we publish. In fact we're discussing some great things that our guest Mike Hockett from MDM writes as well. And if you're not following Mike on LinkedIn and you're not following MDM and naw, do so before we get off this show, go follow Mike. And because you Mike, it's not just that you're a guest and you're a friend, you put good stuff out and, and, and your organization does, but you in particular do great stuff and carrying the mantle for our friend Mr. Gail as well. But we publish this newsletter. If you don't get it, we'd love to get it out to you. Just send us a note@helloadsmartech.com and we'll do so there's an article in here we won't We've talked enough about tariffs today about this was from Politico only so long before Trump tariffs hit the consumer businesses. Warren. I think we're already seeing that starting to happen. Mike, you spoke earlier about the article. We have an article though published today in our economy and supply chain segment about North American manufacturers pullback on orders ahead of tariff ruling. And that's your article as well, Mike. So I thought that was good. I think you made a good point early on that I'm appreciative of. Right. I think there's a couple of components to that particular One is a lot of people put a significant amount of inventory in place pre tariffs of what they could get their hands on too. It's been a good year for most distributors that I'm talking to, but not necessarily a banner year. Would you agree with that Mike, when.

You'Re saying you're hearing we actually just I think 20 minutes before we went live here we got the latest MDM forecast data and we're basically forecasting as of you know, here at the end of the year that 2025, the industry as a whole is going to end up up I think 4.6% compared to 2024 and that's all of us distribution. Of course there's going to be some sectors that are way up or way down, but the overall figure is up 4.6 for historical context for the 30 year average for wholesale distribution is about it's between it's basically 3%, you know, low single digits. So as we said, 4, 4 and a half percent would be a good year, not a fantastic year. But I think most sectors are feeling okay about the 2025 they've had. And then 26, we're expecting about the same. I think actually a point higher at 4.7% is what we're projecting right now. But again, that's. Tariffs are going to be a big player determining how close we come with that forecast. But that's the overall narrative. Solid 2025, probably a solid 2026, unless things get crazy.

Great. And then we have the, the below brothers from ITR Economics who the have forecasted that the world is going to collapse in five years. Four years. Right.

He's been saying for years that distributors need to make their money between now and 2030. So they're, they're running out of time.

Yep.

Yep.

Which, that's a whole nother thing, Tom. We need to get Taylor St. Germain from ITR back on the show. I'll get working on that because he's got some, I mean, and everything they've got in that discussion is they've got great data and have been right on a lot of things. So that's a whole nother discussion.

It's an interesting. And I don't know, Mike, if that 4%. Well, you said 3% has been the average, so 4% is up. But I know a lot of the customers I work with, we hear, you know, we, we spend time with our customers trying to understand what is their definition of success. And we hear a lot that, hey, we want to double in five years. Right. Well, that's not going to get done at a 4.6% increase. It's more of like three times that to, to achieve that, that metric. Are you, are you seeing more in some of the conversation, though? Even though this is the median growth, more aggressiveness on, hey, we need to move faster and we need to grow faster and, and, you know, cover that ground maybe quicker than we would expected.

I don't think I'm seeing it to a real pronounced degree of people feeling like they have to, you know, like these next four years of their make or break stretch here. I think there is more, given that there's more data available than ever, there's more benchmarking available than ever. I think it's easier for distributors and manufacturers to see how far behind they are with their peers right now on whether it's manufacturing or distribution. So I think it's easy for them to benchmark themselves and set those goals that they want to reach. But I can't say I'm seeing real heightened pressure or a fire under these companies to feel like, yeah, if we don't grow by X percent by 2028, then we're struggling. It's a case by case basis for every company. For some companies, 4% growth, they might feel like that's just fine for them over the next four or five years. For other ones, they might say that that would be really disappointing if they only grow 4% each year over the next five years. So it's hard to paint with a broad brush here, but I would just say that yet every company now, I think it's much easier for them to make their own projected growth path and set what makes sense for them rather than, you know, saying, well, Ferguson growed at grew 10 last year. What do we need to do to compete with that?

Yeah, great.

But it is interesting, Tom, I was hoping you were going to bring that up about some of the customers that we work with and talk to. I was actually talking with one of our, our, the owner of one of our customers, at leastmart customers this week at Hardy and that's there. They've, they've done it. I think he's with his time there five, five, five times in a row they've every five years doubled in size. And you don't do that on 6, 7% growth. Right. You just, it's impossible. So take some, some aggressive approach and then of course using the right technology to understand your business better. Hint, hint, hint, hint. Okay. All right, let's jump into manufacturing, distribution. You guys, any of those articles there? We have one about necessarily. We just mentioned Ferguson.

Right.

Don't need to necessarily talk about their acquisition, but QXOs, Brad Jacobs expanded a little discussion on AI and their strategy of additional acquisitions. Any thoughts on that?

Figure out how to get Brad on our show. That guy, I love some. I mean he's like Mr. AI everything. AI is going to save the, the world basically from some of the things that are there. But that all said, he's. They're clearly aggressively investing in AI all over the place. We've talked about sales enablement. They were talking in this article they're hiring more salespeople. But how do they enable those salespeople. Right. To be more effective and, and so forth. I mean I really believe he's, he's right on the money in terms of a lot of his least his thought process of, of how he goes about things.

I think maybe that's a good challenge. I've had a very, very brief communication with Brad through LinkedIn and actually chatted with some of his, his marketing and his PR team a little bit. I, I think if your name was Jim Kramer, Tom, we could get him on.

I can act like Jim Cramer if that's what's necessary.

So go ahead.

Yeah, do it, do it. All right. What did I do? Oh yeah. So if that's what we need to do, that's what we'll do.

Right.

Mike, do you watch CNBC at all? And Jim Cramer, you familiar with him?

Not Nothing live. I watch clips here and there on YouTube on companies that, you know, distributors that I'm interested in. Anytime he comments, I, Dale Ferguson on there, their CEO every now and then. So. That's right. I do tune in when there's a distributor.

Anyways, he's, he's famous for having this big board in front of him where he can just hit these buttons and all the different sounds come. So Tom's got a little system now for that, which is why I was laughing so much. He, he just displayed it last week with booze or something from a joke that I, I did. But, but I, what I think we might be able to accomplish is getting, maybe getting Brad to do a five minute spot with us that we could include in the show or something sometime. That wouldn't surprise me. So Tom, think about what you want to ask him. And I've got. I. Our people know his people.

Yeah.

How's that?

Well, it's, it's, I mean clearly right there they're the extreme of what we just talked about in terms of, in growth. But it's not just growth. I think he certainly has a very, I guess modern, if you want to call it that or aggressive attitude on how the efficiencies of the industry can be changed and incorporated. And you know, he really believes there's a lot of opportunity, untapped opportunity in the industry that's there. Mike, do you have any experience with him or qxl?

Yeah, I've written a lot about QXL and Brad and I was actually able to go to their, their stock, their when they rang the opening bell on the New York stock.

Wow, that's cool.

Well, you can give Brad a call then and tell him to come on, can't you?

Yeah, so I, I did be able to have a brief meeting with there in the chat with them which was nice. And I actually just got his, his second book of how to make a few more billion dollars. I haven't paged through it yet, but yeah, he's very bullish on the building market or building materials market. And he, for someone that, you know, was on the, the logistics side with XBO and GXO Logistics now getting into distribution, he just, he always talks about the opportunity there. He loves that it's such a fragmented industry. He's, you know, him and QXO are constantly saying that they're talking with distributors all the time about potential deals. They've only made the one deal so far, acquiring Beacon. I think they assumed that they would have two companies under their belt by now. But just in his latest talk he said that, yeah, like they expect to probably acquire two more distributors next year, maybe two more after that. And if they get three or four more deals done, that's probably going to get them right on track for that. The goal of being a 50 billion dollar revenue distributor by 2030 that they keep saying. So they have 40 billion dollars to, to make that happen. I don't think they need to acquire $40 billion worth of distributors. I think they're looking to acquire 30 or so billion and then organically make up the rest. But we know that they're talking with a lot of companies. We know that they tried and didn't, weren't able to acquire Rexell, the electrical distributor. So it's not just pure building materials distributors they're going after. I think any product that goes into the building or maintenance of a commercial facility, that's the type of company they're looking for. It could be a plumbing distributor, it could be, could be a traditional building materials distributor, it could be something in between. But I think just they have a lot of targets and people that they're talking to. And Brad's not going to overpay for anything that he thinks. Yeah, he draws a hard line there. That's his M.O. so, so it's interesting to watch that.

Yeah, it's interesting. And even in this article he says he's talking about the construction industry. Says I like the characteristics of this industry. I think it's a safe bet that building products is not going into the Metaverse five years from now or ten years from now. So he, he likes that stability of that tried and true marketplace. Right. So it'll be good. But I didn't know that about the Rexell component.

So yeah, I think it, I think the Wall Street Journal first broke that. That was before they acquired Beacon. I think the news came out that they had, you know, were interested in acquiring Rexell and Rexell just Turned them down. But Brad kind of shrugged it off saying, yeah, we're going to strike out on a few of these, but as long as we can get a couple done, that's all that matters.

Yeah, well, we'll, we'll have to watch that. Tom, what's next for us?

Should we go into E commerce and marketing?

Yeah, let's do that. Yep. What do we have any.

I know we're kind of limited on time. Any of these you want to focus on here?

Well, I'm not seeing them on your.

Screen, so that's because I have to share. You don't see my thing going here usually, Mike.

I, I, you, you see me usually in our private, private chat. Me.

Sure.

Firing off a note to Tom to say go full screen. Go full screen. So, Tom, I'll throw this to you. Which one of these did you like?

Well, I'll do the second one here with that one. About AI isn't changing marketing, it's how to. Yep.

Sales and marketing management.

Yeah. And you know, because there's a few articles in here that kind of have some similar, I guess, overlap on related to marketing. It was interesting as I was reading all of those and I kind of just took a step back and I said marketing is harder than ever. Right. Marketing is freaking hard. And Mike, I don't know if you knew this. I had a marketing, a digital marketing agency pre, pre lead Smart. So I have quite a bit of experience in B2B and some B2C marketing that are there. And I was just reading these articles and the things that I think to be effective in marketing that you have to take into consideration and deal with, you know, they're talking about personalization and just, you know, how do you cut through the noise? I mean there's so much noise out there, especially with the AI generated slop, so to speak, that is all over the place and, and so forth. It's just harder than ever to rise above the noise and to really develop an effective marketing strategy. And it was just, that was my initial sort of takeaway from reading some of these things.

And we know that sales and market, I mean especially marketing is often maybe the first place distributors are experimenting with AI and just trying to do things more automated there. But it's a tool, but it's also another responsibility for them to have to get right and like you said, not just put stuff out there that just doesn't hit the mark at all. I think it does make things a little easier if you can really figure it out in terms of coming up with creative copy, different versions of tone and voice that you want to use for marketing emails. And I mean this goes for sales as well. But yeah, I agreed with this article about how the different places that it makes sense to apply it and how it's just at that next level, it's not just about generating copy. It's about learning these, what they say, these emotional signals that you're. That are for your customers.

Well, I love they, they made three statements and this is, these are just great in life. Right. Validation equals. They get me. Relevance. This makes sense for me. Effortless. This is easy for me. Right. That's just, that's like a. Something to put into practice and just life in general.

What were those sort of the pillars of the marketing perspective?

Yeah, that was, I mean that was their component and what they were talking about is that in this particular they call it the personalization paradox. And he said why personalization is so important. And we've historically been able to try and do personalization through our in person relationships and then our digital relationships and now using AI within that, we still need to appeal to people from those areas. Right. And if you can, I mean this really breaks down things in general and in sales and marketing across the board. Right. Is you need to be validated with A whether. And this is B2B or B2C. Right. You need to be validated that you. Somebody feels a, a relationship there that you get me. You understand my needs. Because to Mike's point earlier about even the greater part of personalization and different voices to different people, I think is what kind of Mike's point was there. Right. Is what, what resonates with a millennial versus a Gen Z versus a baby boomer in my marketing messages needs to be wherever possible adapted so people can feel like they get me is the comment here. And then this makes sense for me because it's relevant. So what is relevant to your, your target audience here. Right. And then making it easy for them. So.

Anyway, good article.

Good, good article there as well. We don't need to go into it just because of time. We can kind of move ahead. But about Amazon with their AI controls speeding growth for corporate purchasing. You know, we, we talk a lot. We. And we've. We're going to have two different guests and we're. I was actually talking with them about doing around the horn 2.0 recently, but in the new year. But early in the new year we're going to have Jason Hein and with very much an E commerce expert out there as well as the, our old friend Brian Beck and from INCEBA and talk about this a little bit further and kind of dive into really that who and what is Amazon? Because, you know, and I, I literally, I talked to Brian a couple of weeks and all, I don't know Mike, if you know Brian, but Brian's firm works, works with manufacturers, mostly with distributors as well on their e commerce initiatives. And I asked him, I said, you know, I want to make sure that I'm not out of touch what has changed. And I said, because when I was still on the distribution side of things, working both on the manufacturing distribution side of things, which was, you know, I've been out of the day to day of that for six, seven years now. He said, but the, the viewpoint was from manufacturers was I want, I want to have a presence on Amazon. If they were, I'll just say if they were enlightened enough to even be looking into it. I want to have a, I want to have a position there and a presence there. But I'm afraid to because my distributors will look like I'm selling direct. Then you had a group of them that were more forward thinking that says, no, no, no, this is a B2B marketplace that I am putting my products on and they're another distributor is what they are. And they struggled to get their distributors to really embrace that. That's what it was. And then at the distributor side of things, they're like, well, wait a minute, they're the enemy, right? I must, I must avoid them at all costs because I can't destroy them. And then you have another group of people that are a little more forward thinking that says, well wait a minute, why don't I use that as a marketplace and post products there's, and sell them in places that I, you know, why not extend my footprint out of Madison, Wisconsin into California where I could capture some customers. But the vast majority of people were thinking is Amazon bad, Amazon bad manufacturers. I went to Brian. We literally, we did a. He lives for, we live 45 minutes or so away from each other. And the, I asked him, I said, so how much has that changed? You know, that was a narrative five, six years ago. He's like, it's exactly the same today, right? So I think when you start looking at this is if I'm a wholesale distributor, I'm really trying to understand Amazon. Let me rephrase that. Kevin's opinion says that this smart wholesale distributor is watching very close what Amazon is doing from the customer experience standpoint. The ease of Doing business. And I'm trying to understand that. Not that I have to match it, but I have to understand it because there is no slowing down on the business side of Amazon.

Yeah, yeah. That whole friend or foe mentality.

Yeah.

It is crazy that it hasn't fundamentally changed now that, you know, E commerce has been, you know, proliferated in distribution for what I would call it 15 years or so now.

Yeah.

And it's still that same relationship. Like you said, some distributors are just, no, we're not going to touch Amazon business. They are the enemy. Others kind of have that frenemy mindset to it where they don't love that they have. They don't love that Amazon business exists, but they're. They're going to use it as one of their sales channels and maybe they won't brand themselves as if they're XYZ distributor. They're not going to list that product as this is coming from XYZ distributor.

Yep.

But there's a lot of ways that you can sell on Amazon business without people knowing it's you sort of a thing. So there's a whole ethical discussion to be had there. But yeah, overall I definitely agree with Brian that it has not changed fundamentally. At least even coming out of COVID it's almost. Maybe if anything got more heightened, it's just more distributors are having to do that friend or foe decision there.

Good, good, good. Tom, you want to jump into technology, cybersecurity? Anything there you want to hit today?

Man, there's a lot here. No, I mean there's a lot I would like to talk about at some point about security, but that's probably more than we can touch on.

So let's reference what some of those articles are. Right. So we've got an article there from Digital Commerce360, a genic AI rush exposes a growing security gap across enterprises. We could do a whole show on that. Right. And then OpenAI warns that new models pose high cybersecurity risk. So it's. And as I was reading that one about OpenAI commenting about that, when there's that right in the logo is a ChatGPT logo with that is. It seemed like there needed almost be another side of that from them, like a little bit deeper about here's what we're doing to solve that versus here's the risk. I don't know if you guys got a chance to read that one or what your take was.

Yeah, I had a chance to dive into it. But even beyond OpenAI. Yeah, it seems like they're, they're flagging the concern but not really presenting solutions to the concern. I think is the big thing there that.

Yeah.

That you're mentioning. And yeah, maybe it's because there is no, you know, concrete answer of, you know, here's how you can protect yourself and your company better with this as you're using GPT and these models more and more. Um, yeah, I don't have a solution there. And it just seems like, yeah, they're, they're talking about. Yes, they're, you know, the cybersecurity risk keeps going up the, the more you're exposed here. But I don't see a lot of solutions out there yet.

Which I think the challenge. Right. Is the same technology that we want to use every day in our business to help our businesses grow and things in our personal life and so forth is helping the bad guys use the same tools to come after us. And it's really interesting. We've had a couple of articles recently. We should, Tom, we should think about doing a 2.0 show on, on cyber risk within distribution in general. But you know, the vast majority of entrance now for cyber criminals is not by hacking. Right. It's by getting in by somebody clicking on the wrong email. And the, and it's funny, I don't know if you guys noticed, this is the amount of, and this is mostly on the distributor side versus the manufacturer side. The amount of emails that I interchange now with people where their responses. You can see their corporate line in there that says this is from outside of our organization. Do not click on any links unless you clearly know this person. We're expecting a link or things like that. That proliferation of that is astounding to me. But it's smart, right? Because people, you know, get excited about something they think they know and I mean. Tom, give the. To share. Share with Mike in the audience. What the emails that you get multiple times a week about my, my spending.

Yeah, your, your coaching. I get all these emails saying, hey, you're. You owe $40,000 for Kevin's executive coaching. And I reply back, I don't. I haven't gotten anything out of that yet. So we're not. That's.

I just waiting for that. Right. If I can see some results, I'll pay this invoice.

So.

Yeah.

So last one here real quick. This Trump pledges order addressing that was actually signed last night.

Yeah.

The order to an executive order saying that basically there will be one rule approach to regulating artificial intelligence and each state cannot have their own rules of Regulation for artificial intelligence. The logic being, which I agree with, is that if you have all these states with all these different regulations, it'd be impossible practically to take stuff to market. It would just be. There's just no way to, to do that effectively.

Right.

There's. And I don't fully understand this other than maybe just the political, you know, chest pounding. But, you know, there's this, oh, we at the state should have our control. And the Congress was really, really against a lot of the Congress. The Democratic and Republican to a degree were against some of the. This is that, oh, we have to keep this at the state level. I think that's a bit naive because it's just, it's. It would never work. Right. It's impossible. Impossible for it to work.

So this naive is the important. I really, I think that's the right term to go with that, you know, Tom, that you're describing, because it's like if you, if you think that color. And I think Colorado has led this, the, the charge on this is if you think that having Colorado being able to dictate what OpenAI or Meta does in their state is a good idea. I mean, I'm sure, and I'm sure there's some other arguments, but how do you just decide. Okay, well, Meta just decides that, hey, you know what? You can't use the Llama LLM in Colorado because they're not willing to do what Colorado says you have to do.

Yeah. Or, or. And again, I don't know what, what all the. But as you roll out AI agents or you roll out AI products or whatever. Right. Each state then would then be able to. It's just like you look at it. It's. You talk about impractical.

Yeah.

Right.

It's not practical. So it's an executive order. They tried to. He tried to push it through law, through Congress. That didn't work. It went to an executive order. The problem with executive orders, they could be overturned. But maybe there's enough time to start to get some sanity in this. That becomes law right before the, before the administration is done.

Hey, Tom, we need to start winding down, but there's a couple of things I wanted to hit here. If you go into our. We're going to skip our sales and MA segment today, but there's. By the way, there's a great link to an article in there from Mike Kunkel, if you go ahead. It's a link right into LinkedIn about how reps rate their bosses, teammates and training. Mike said. Mike. Mike Hockey. Do you know, Mike had a few.

Discussion with him, but yeah, he's definitely seen as, you know, absolute guru when it comes to sales management.

Yeah, he's written, just written some great stuff and so we've got that posted there. But you know, we don't typically stop in our people in Leadership segment. We kind of pass by that. But Tom, if you would scroll back up there, if you wouldn't mind, there is an article there from Leading with questions as a single question that will transform your leadership. I really like this article. It was a guest post from her name's Kelly Meerbot. And it just goes through a series of questions that leaders can really use, you know, like what do you need most from me right now to succeed? What's one obstacle slowing you down this week? What are we not talking about that we should be. Whose voice isn't being heard in this group? Just stuff that it almost seems rudimentary. But I just don't know that we all do a great job of listening and I just really appreciated that article. So maybe, maybe it resonated with me because I, I see the what I what I where I need to improve in those areas. So then the last piece is that we go to our channel Leaders segment there. Tom is our good friends at EB Horseman in Western Canada have just announced a new regional vice president there. So we want to congratulate them on that as well. So and then finally in our scuttlebutt section, Tom or Mike as we wind this down on the day ad expanding into construction. Kind of a big deal. Yeah, we probably should have set some time aside for that. But do you want to give us your brief thoughts on that?

Yeah, they just added it's two different distributor members.

Another one announced today.

Yeah, so there was a pair of them. I think they announced them separately. But. But yeah, ads always had their, you know, their industrial business unit but not so much into construction supply. So this does seem to be a newer market for them. And I mean ad touches a lot of different markets. But yeah, construction seemed to be one that they just hadn't really tapped yet. So this definitely, and they say it right there in their press releases that this represents, you know, a newer correct market for us to expand into. And to get two members like that off the bat is a pretty good.

Signal and then in pretty good size members, one of them has a construction and a fastener side of their business, which is interesting and I think it what will be interesting to watch with this is and we have a wonderful partnership with ad. You know Mike, you and I have talked at some of their events before where I think we did five events with AD this year. I think we did every event available to their service provider this year and it's our intention to do the same next year. And but it is interesting to see that not just the expansion of the market but then you know, with the, the Commonwealth Group coming in, Imark Electrical coming in, there's puts a lot of pressure and this is, this is a. An hour long discussion we could have about the pressure that it puts into. I don't want to say consolidation but I think there's going to be what is appearing. It's going to be. There's AD and then there's a lot of smaller folks that fit into that arena. And I look at this within construction side of things. I can think of two other buying groups right off the top of my head that this puts some pressure on as well. So it'll just kind of be interesting to watch but good for them. And you know, obviously there's real value in that. The interesting thing will be is does you know one of the construction related buying groups get absorbed by Ed? I'm sorry, Merge. Let's. Right the, the term is always merge but to me that's code for bot or. But we'll see what comes out of it. So good Mike, awesome to have you with us. Thank you.

Great.

Yeah, we covered a whole lot of ground here.

We did. It's. It's funny though. We've almost turned ourselves into an economic show which is. Has never been the attention but there's just so much happening with Aaron that impacts our audience so much shows. Good. So Tom, anything in closing on the day?

No, I want to thank Mike as well. Great insights. Really appreciate it.

Yeah.

I think we have one more show next week before the end of the year, so.

That's right.

Final show next week.

Have a couple of. Couple of Thursday afternoons that I'm not scrambling to get the articles curated. I Mike, I was yesterday at the did a customer call from the airport in Las Vegas and then was scrambling to get some articles curated and then the whole flight home was curating articles and then literally before I got my uber home another 45 minutes at John Wayne Airport to get them off to Lily and Tom to review. So this one was a hard week. So we get another show next week and then a couple of weeks of no early Friday mornings. But we appreciate great comments today. Great broad group of people. Really great. I think Gunderson showed up to make his single comment and then left because we didn't hear from him again. But that's okay. Glad to have him here with us. So that's it. Mike, any exciting plans for the weekend?

Just taking care of the snow that's here on the ground in Madison. We got more of it. Good.

That. That and the dogs and the chickens, right?

Exactly. Yeah. The garden is long put to bed, but. Yeah, the chickens still need tending, too. But other than that, go pack. Go. All that stuff.

That's great. Mike, you were. We were talking yesterday in Las Vegas.

What did you.

What did you describe you and your wife is. What was it? Urban homesteaders.

Yeah, like an urban homesteader. We have a quarter acre here in town, but we garden the hell out of that thing, so it's. It's a lot of work. That's great.

I love that. That's great. My, My. My wife would love to hear that, and she would love to hear me embracing the idea of doing more in the garden. So that's good. Other than growing some basil and some rosemary. So, Tom, what's up for the weekend? Just getting ready to come down and see me on Monday?

That's right. Yeah. It takes a whole weekend to prep for that, so I'll be doing that.

All right, well, thank you guys. Thank everybody. Thanks to everybody that was with us in the comments today. Again, Kevin Brown, Tom Burton, Mike Hockett, we appreciate you being with us. One question and favor that we ask everybody here is that if you like what you hear with what we do each week on around the Horn and wholesale distribution, if you're listening on LinkedIn, go to the Lead Smart Technologies page. You'll see the link to the podcast there. You can go straight and search the podcast. Hit the like button or the Follow button at Lead Smart. Follow the podcast. If you want the newsletter and you're on LinkedIn, you can subscribe to it right there and it'll come right to your LinkedIn feed. It's an option. If you're on YouTube, hit that subscribe button and you'll get the alerts that helps us get this message out to more people. Certainly if you're listening on Apple, Spotify, any of the other formats, please subscribe and leave a review. There's nothing better that helps us get this out to more people. And typically we have minimum of three to five different countries represented in our audience. That's oftentimes six, eight, ten countries. And the more we can get with people hitting that subscribe button or leaving a review, it helps us so there is my. My groveling for the day, but that'll help us get this message out into other people. So we appreciate you guys again, thank you much. We wish everybody a wonderful weekend. Be kind, be safe, do good things.