Around the Horn In Wholesale Distribution - Episode 76 #wholesaledistributors

Sa Sat.

It's a little bit late. Yeah, I was waiting. I was waiting anxiously and then there. Then I was like, oh, man, rug pull up.

I was, I was trying to. Trying to get some of the technology stuff on my end here going properly, but, you know, I wasn't gonna miss a little bit of it. My wife said no dancing. You say no dancing. You know, probably the two people I irritate the most in the world have said no dancing. Which something inside of me says, keep dancing.

I guess so.

So.

All right. Yep.

Yeah.

Morning, Brandon.

Yeah, good to see folks joining us. How are you, my friend?

Well, it's bright and sunny. There's no waterfalls out my window, so that's good. Good sign.

Oh, wow. Well, for the moment, anyway, yeah, it's been raining a good chunk of the night here, but nothing crazy. You know, there's people, other preparing people listening in. They're just kind of giggling as we talk about, you know, weather because it's. The world is ending because it's been raining for a day and a half and it's 53 degrees outside.

So will is disappointed.

Oh, sorry, bud. Yeah, I was, I was playing with some tech technology there and. But don't worry, Will. I will not let you down. In coming weeks, I think he just.

Comes and then he takes off after you're done with the dance.

Good. You know, maybe, maybe, maybe I need to start my own whole, like, little YouTube channel on chair dancing for. Yeah, there you go.

That's the way to get. Get going on Tick tock. Perfect.

All right, well, we'll run that by the appropriate parties and see if that's a go or not. Yeah, we'll see what we get. All right, so welcome Everybody. Good morning. Mr. Kennedy just joined us and.

Yep.

Well, Lars has a good comment. Sounds like California is the same weather as Minnesota. I would would have thought in Minnesota, Lars, that there would have been white things falling from the sky, not raindrops. But you never know in Minnesota. I have a friend that just moved there from Arizona and my experience with Minnesota weather is if you don't like it, wait 20 minutes. So that. That seems to be a change. But anyways, dive in this morning. I'm Kevin Brown here with my lifelong friend and co founder of Lead Smart Technologies, Tom Burton. We get together every Friday morning and we talk about what's going on in the world of manufacturing, wholesale distribution, mergers and acquisitions, e Commerce. We even talk about artificial intelligence. Occasionally we try and bring all of the news of the world, whether it's the economy or whatever might be going on in supply chain issues and so forth and kind of boil that down a little bit and pull that together in a way that's kind of digestible for the folks that we try and serve in manufacturing wholesale distribution. We do that every week by getting out a newsletter. We title that around the Horn in wholesale distribution. Manufacturing goes out to thousands of folks. If you do not get that newsletter and you would like to two simple ways to do that, right? One is you can go and send us an email at hello atLead smart tech.com and we will get you subscribed to that right away. You could also go to the website for this podcast. It is aroundthehornpod.com www.aroundthehornpod.com. and so we get together what we do on Friday mornings here and we always share this a couple of times because we have a lot more listeners on our podcast that gets recorded by our editor that works on this and gets it out later in the day on Fridays to all the popular podcast formats. Spotify, Apple, Odyssey, Amazon and all of those. And we review that newsletter. So if you're listening, you can't see what everybody else that's live with is seeing. But again, if you'd like to get that newsletter so you know what we're doing, just let us know a couple of final things. In closing, Tom and I, as I mentioned, are the co founders of Lead Smart Technologies. Lead Smart is an AI enabled smart CRM and customer intelligence platform. We bring together some of the strongest technology in the world to help manufacturers and wholesale distributors gain deep insights into both their companies, their people and their customers to accelerate growth and get manageable and actionable information. So Lead Smart sponsors us. We're here each week. The last thing we'll mention before we dive into the news today is if you like what you hear each week, you can do us a big favor. If you're on YouTube or Facebook, click the like button or subscribe. If you, if you're on LinkedIn, follow the Lead Smart Technologies page on LinkedIn. And if you do so, you'll get the reminders about this every single week. And certainly if you're listening to the podcast, we would absolutely love a review because that gets us out to further broaden the audience that we have right now. We're typically six to seven countries a week and quite a few people growing each week. In fact, we got a lot of newsletter signups last week, so it's great. So, Tom, ready to dive in?

Let's do it.

All right, let's see. So we're talking a little bit about the economy as we get started today as well, huh?

That's our normal, normal starting point.

It is, it's become a habit and I think it fits well with the new format of the newsletter as well.

It does, it does. No, I do like the new format. I think it's much easier to, to go through. So once again lots of different and conflicting information but I feel like I'm.

In a washing machine.

Yeah, it's like, kind of like that. It's, it's the confusion, the confusing economy. But yeah, so it says the U S economy grew at a blistering 3.3% pace in Q4 while inflation pulled back and on top of that just this morning we had the job report and. Job report was super strong. It wages are going up but at the same time it's saying that prices have dropped or a little bit anyway, prices are, are leveling out, the inflation is leveling out. So I don't know what's your, what's your thought on this?

Well, you know I just. Washing machine is the idea that just, you know, sticks in my mind. Right. We've been talking about this for what, two years now, you know, kind of the ups and the downs and think Paul Kennedy's with us this morning that made a comment earlier and he was on with us a few months ago and I'm trying to remember what he said but you know we just. I think I've been this way all along. It's like wanting to keep, you know, the, the positive thoughts going on, you know, moving in the right direction. We're going to come out of this great. You know, we're still, I think going back and forth now with this, you know, I don't think I've seen anybody in quite some time that thinks we're going to have a recession of any type and so forth but the soft landing is a soft landing or isn't even a landing because it's not needed. We're seeing some great news here but then a little conflicting things. Earlier in the week we had the Fed back out with kind of almost hitting the pause button on lowering rates. And then you had mentioned this morning when we were talking that we've got the 10 year note is how many basis points Was that up?

14 or something this morning?

Yeah, we just got all these different things kind of happening and then you look at the stock market, you know, had an off day but we're still at record highs and it was yesterday was a Little bit of an off day. And then this morning, you know, Meta, which is one of this magnificent seven they describe them out as now in, in Wall street, you know, highest trading value ever. Well, you know, well over 400 a share. So it's just, there's still some of this, I don't know what you call it, other than, you know, up and down, a little bit of turmoil.

Yeah. And I'm, I'm looking at, I, I, I'm not, I won't say I'm changing my tune, but I'm definitely looking at this a little bit differently. I, what I'm seeing occur.

This is being recorded, just so you know.

I know I change my mind all the time.

All right.

Is what I see happening, if you just kind of look back over the last few months or even the last year, I think that what we're learning is we can survive and grow without the free money. Right. We had free money for whatever it was, 10 years, 12 years, whatever it was. And we all got used to it. And you saw some bubbles, obviously created in 2021.

Right.

From, from free money. But what's happened is, is it looks like despite the fact that we don't have free money, in fact, money's relatively expensive. There's a lot of it out there. There's a lot of it out there. And we're still cranking away from a GDP and growth perspective. I think a lot of that is related to efficiencies. I think we're going to get more efficient as we move ahead. I do, I do have still large concerns about the debt situation and the consumer debt.

Right?

Yeah, consumer debt. That's not to mention our own debt or, you know, the, the United States debt, but the, the consumer debt.

But that's a whole show in itself, right?

Yeah, that's a whole show in itself. But for I do, it looks like clearly that the economy is moving on its own despite the high cost of capital. And we'll just have to see if there's, you know, any other sort of things along the way. Yeah. And, you know, a couple of things I just want to hit on real quick is, and both Bob and Brandon brought up a couple of points like there's a lot of conflicting news and sometimes you don't hear the whole story. Like, you know, Brandon says Meta had a $16 billion loss on Metaverse. They were all excited because they had a billion dollars of revenue, or so didn't realize that they spent whatever it was, 16 billion or whatever to get that billion. So, so There's a lot of, you know, stories behind the stories. But overall, it does appear that we're able to grow despite not having free money. Yeah.

Well, I think, Tom, you know, I haven't said this in I think a few months now in our discussions, but my take, personal takeaway on all of this. Right. Is that we're seeing, when you look at Wall street and you see large corporations and so forth, I'd suggest we are maybe need to take a look at the metrics that we use or that are used in economics to really evaluate where we're at. Because what I think we're looking at is. And again, personal opinion. We've got an episode hopefully coming up in Q2 with a good friend of mine, Sean Dubervac, who's a futurist and a PhD in economics, Wall Street Journal bestseller multiple times. And he's gonna be joining us on a show coming up. And, and I wish he was with us today to ask this, but my view is I question whether we're using the right metrics in this day and age based upon the technology that's involved with automated trading and all of the other things that are going on in the world. Because clearly Wall street could care less, in theory, broad scope of all of these factors because it's just charging ahead now. We see some dips and some ups and downs here and there right within Wall street, but they're b what they think the Fed's going to do and other factors are going to be earlier on. So I just question whether we are looking at the right stuff. And we talked about this a few times, and I won't harp on this, but, you know, is below 3% a good number of inflation? Is it 2%? Still is. What is it? But we can see this. To me, it just feels like this pressure from all of these different factors. And we look regularly, I'm sorry to rant here, but we look regularly at the PMI and you know, the Purchasing Managers Index and, you know, Mid States manufacturing consumption data. And we look at all these different, probably have like six or seven different factors that we've looked at over the last, say, 18 months here on the show. And for me, everything feels like there's something pent up and waiting to push and Wall street saying, forget it, we're plowing ahead. And there's all these other things that are ready for positive things. I don't know, just one guy's take.

Okay, okay, well, we'll see.

Throw rocks at that if you want to.

No, I don't look. And I think Bob made a good comment here. Right. I like what he says. He says we need to trust our gut feelings. Sometimes it's more reliable than what we're reading. I, I tend to agree as I don't try to get caught up in a lot of statistics and numbers. You just have to look a lot. Maybe you have to observe and look a lot more than just listen. Because if you listen, you end up with a lot of conflicting data. And, you know, I think that's why I've been concerned about the consumer debt. There is, if you just observe, there is a lot of consumer debt. Right. And there's a lot of other things that are going on that necessarily aren't talked about. So anyway, I know we need to move on.

Let's move on before, before we go. Right. And we, you know, brought this up earlier and there's another podcast that we both enjoy called the All In Podcast. And you know, those guys spend a lot of time. Right. All In Podcast is kind of funny. They're. There's four technology executives and they talk about the economy and health and business and a little bit of politics and so forth. But, you know, they're ranting constantly about the unsustainability of the country's debt. So, you know, that's even a bigger factor that we've never really even talked about here. But we can't even sustain paying, making the debt payments when interest rates are higher. Right. So that's a big challenge as well. I just feel like there's some demand and I don't even say demand. There's an enthusiasm that's there because we're seeing on the consumer side. You started the discussion, right. Talking about people are spending and buying and doing things. Maybe I just, I'll throw this out there one final time before we move on. I just wonder if we're using the right statistics to measure all these things still.

No, I don't think so. I don't think this, I don't think the statistics tell much of a story at all because they're siloed and, you know, so again, you have to look kind of holistically and you have to look at things from yourself and not rely on any one or two, two things that are there. So.

Yep. All right. Too much time on that. Forbes magazine. Most surveyed companies are vulnerable to other supply chain crisis. So we made the adjustment to our newsletter. If you get that, you'll see that we have an economy and supply chain section and we're still in that section Today I thought this was pretty interesting. You know, we've talked about the Panama Canal a number of times last year. You know, the amount of ships waiting to get through there. And then we've been talking about off and on about the Suez Canal. But this article talks. And to me, one of the biggest takeaways of this is fragility is the word that they use. The world supply chain. They talk about escalating tensions in the Red Sea, huge shipping companies that are bypassing the Suez Canal, which are increasing rates, increasing delivery times. All the fuel that comes out of there, we talked about a couple of weeks ago, there's some of the major shipping lines, Maersk and Hapag Lloyd. They're not even. They're completely avoiding those routes as well. So we put that together. Right. With the pressure of a broadening.

Political.

Conflicts in that region as well. And the risks that come with that. You look at the fact that the Suez or the Panama Canal is now substantially lower than the last results that they put out there. It's that Lake Katun, I think it's referred to at is 6ft below where it was a year ago, which means there's less water, which means there's less room, which means ships wait longer. Some ships can't even get through. And then this article talks about China and the Ukraine threats and the caution that we need to have if we're dealing with the global supply chain.

Yeah. So I think fragility is the right word. It seems like you read this as like supply chain has become a bit of a Russian roulette exercise.

Yeah.

Never knowing exactly what's going to. What's going to happen and you know, it's hard to say. Right. How do you actually mitigate against all that risk and fragility? Maybe it's diversity probably more than anything on all of that, but. And I don't see the fragility necessarily changing anytime really soon. Yeah. And it could get worse in some cases. So to me, the only real answer right is you have to have contingency and diversity on stuff. If you're otherwise, you are really kind of playing Russian roulette with your supply chain.

Well, this uses the article again, this is if you're listening in on the podcast. We're reviewing the around the Horn and wholesale distribution newsletter. We do every Friday here. This article again is from Forbes magazine and it talked about the survey that they did. It was 10,000 businesses. The survey was conducted by Dun and Bradstreet. They said only one in three surveyed firms are considering diversifying their supply chains to multiple sources and multiple regions as a top priority. And only one in four is considering improving supplier communication and consolidation as the key priority to ensure seamless supplies. Point being is, if you're not working closely right now and in our audience that we promote our podcast and our show here to is manufacturers and wholesale distributors, right? Both of them critically relying on supply chains, right? Distributors, whether they're having direct relationships, things being shipped from offshore or worrying about and being cautious about the supply chain of the manufacturers that are key suppliers. If I'm a distributor and I sell building materials or H vac or electrical or whatever it might be, this article is suggesting that the things that are going on and again, it talks more that we didn't even reference here about the fragility and the challenges going on in the Ukraine and China being the largest raw material supplier for chips and hardware hubs and all different types of stuff. There's changing trade policies internally. We're going to talk in a moment about, you know, their manufacturing contraction in China. If you're a distributor and you're not communicating, you know, regularly with your key suppliers on what's going on with their supply chain that the article and I think the tick. There's two words that are takeaways for me from this article that I thought it was a great article was fragility and blinders. And it makes the quote, it says corporate leaders who delay it, ensuring that they can get the materials and supplies their organizations need when there is a disruption to supply chains can be putting their companies at risk. And denying that they will ever face such a risk could be the equivalent of wearing blinders, which is never a good look for business executives. I love that.

There you go.

Never a good look to have the blinders on. So dive deep if you're not doing so already. So good stuff. All right, what's next? Manufacturing distribution segment of the newsletter AP article China manufacturing contracts for fourth straight month in January. What's going on there?

Well, it says that, you know, that of course manufacturing has been dropping in China since really since COVID since we had all the delays there. Not surprising, right? I think the, the, I guess the, the China manufacturing party really took a big hit with that and a lot of companies have you have looked at obviously doing manufacturing in other places and you also have, you know, again, some of the same problems that we've just talked about. So it's not China's a little bit of got a little bit of a mess. I mean, if you look at Their economy was really based around all of this. And then obviously it got hit and it's not going to and I don't see it recovering anytime soon.

Yep, yep. No, you're right. And I mean this goes. Bob made a comment there earlier about complicated supply chains add more points of failure. And you know, this just kind of ties in. There was, you know, a couple of things out of this article and we don't have to spend a large part of our morning on this. But you know, it. The article quoted as global demand for manufactured goods has suffered as central banks around the world have raised interest rates. Okay. Right. We know that we have decades high rates of inflation globally and it says the price pressures have eased in recent months but demand has yet to rebound to pre pandemic levels. Now it may be some markets it could be surpassed but you know, as a whole. But here's one of the big takeaways of this article for me. Right. And I'm sure we've got people that are let's. Well, I don't want to say I'm sure I'm extremely confident we've got a lot of people on here that are smarter than I am related to supply chain issues. But you know, as you look at this, we've got a lot of discussion about on shoring and reshoring, but many of the people that are working on that, they're a year or two out on those things. Right. You can't just say we're going to onshore, you know, manufacturing of X, Y and Z and have that plant ready and people hired and whatever else needs to go with that in place. But there has been a move for a lot of things, when you think about a lot of things that are latex related, even cut and sew operations and so forth have been moving to Southeast Asia as we talk about Laos and Vietnam and Thailand and so forth and some of those surrounding companies countries. But this article made a really interesting point that I hadn't been thinking about. That only makes great sense. Right. And it's just another data point to be considering. Right. Is that those price pressures and that are going on in there, these have ramifications across that entire region because so much of what's being manufactured or assembled that might have moved out of China, but what percentage of those raw materials are being manufactured in China that are being used in your final good. So you might have a manufacturer, if you're a distributor that's distributing something, that's making something, saying hey, you know, we moved this portion to you know, Vietnam as an example. But yet what percentage of what is going into that finished good that's getting shipped to you to sell to the end user is coming out of China still. So anyways, we could probably spend all day talking about supply chain, but that to me is eyes wide open, I guess would be the takeaway from the articles today about supply chain issues.

Right.

We got political instability in multiple major regions of the world. We've got economic factors going on here and in Asia as well. And we've got to pay attention to these things. Maybe closer than ever.

Yep, absolutely.

All right, on to E commerce and marketing segment of the morning, huh?

Yeah, now we're getting into the fun stuff.

I think the other stuff is pretty important though, Tom.

I didn't say it was important, I just said it was. It wasn't as fun.

It wasn't as fun.

Okay, right, there you go.

I gotcha.

So this first one we can, we can go through quickly. The Investor money for B2B marketplace slows in 2023.

Yeah.

In addition to less venture capital being infused in the B2B marketplaces, the number of deals reached a five year low totaling just 23 for 2023, a 40 dip from the previous year. My, my take on this and just looking at the data there is that marketplaces are just saturated. They're saturated. Right. How many marketplaces can you really have?

Right.

And I think there was obviously a lot of like everything else maybe a bubble, if you want to call that in the whole marketplace investment thing. You'll probably see some consolidation, if not already.

And a little bit that's even discussed in here too.

Yeah, yeah, but it's just been, it's been saturated. So like I said, like anything else, it probably just got a little bit ahead of its skis on, on just the whole growth of the marketplace area.

Yeah. So this article is from digital commerce. 360, which we get a lot of content from them regularly. And it talked about this huge dip, 40% dip in B2B marketplace investments. It also though talked what I thought was kind of interesting. This is from Applico research that they published recently and they published this every year. And but they used in that article they, they had an example though, and I think to your point about, you know, you talked about saturated. The vast majority of marketplaces that are out there, when you pull Amazon and a couple of other large ones away. Right. The vast majority of them that are B2B driven are, even if you're strong in a vertical, they're still less known and less used. And I think that's what some of the challenge is is we've not got enough people going to the marketplaces to sustain all the marketplaces that have been developed. And my takeaway on that is tied to this Applico study did and they referenced a company called Acculinx which had been number two on their list of B2B marketplaces. It started out as a provider of SaaS based business management app for roofing contractors. Well, that's where they started. And then they moved to a B2B marketplace after they built a dominant market position and they did all of that. What was interesting though is they, that was a kind of a win because somebody took, they started off as a SaaS software for the end user and then they took that and went back to distribution and manufacturing. Turned into a good marketplace. But then they talk about another company. Or was this Indigo Ag, which I've never heard of but presume it's an agricultural marketplace. They did a big pivot in 2023. They had burned through all their investment money and needed to go back to the capital funds for capital markets for more funding. And did you catch what happened? No 94% discount compared to their prior $3.5 billion valuation.

Okay.

Jumped into the game, right. Got the hype, got the big dollars behind him. And my assumption is I don't know this and I'm just going to reference, I won't say it's this Indigo Ag, but in general, what could be, what could have happened in a lot of these instances and to your point earlier, right about you know, an abundance of, of marketplaces have been built and I'm my belief is that not enough people are coming to them yet is that they built it and they didn't come. Right. So the old adage didn't work in this setting. But I mean talk about a haircut.

That's what you call a down round.

I'm exactly right.

I'm surprised they weren't even able to get capital.

That's, that's an off a cliff down round, right. I mean down rounds are, you know, 30, 40% and stuff like that isn't uncommon to hear but 94%. So anyway, stuff to keep our eye on, you know, marketplaces are going to grow. You know our, our regular guest Brian Beck, that's an expert on marketplaces from in CBA. Great guy to be following on LinkedIn and seeing some of his content. I'd love his take on this, but didn't get the dollars flowing into it last year. We'll have to see what this year looks like. Let's keep an eye on that as we go through the year. So. All right, I know you like the next one article. So seven ways marketers should be using Generative AI now. Good article from Forbes. Why don't you get us started on that?

Yeah, so there we don't need to go through all seven, but there were seven sort of strategies or use cases that they talk about here about how marketing can use generative AI. A couple of them are pretty obvious that you would think of. Right. Generating content or writing blog posts or you know, that kind of stuff. I thought though and the one of them that really jumped out and I think is really something that's currently being underused with the AI capabilities right now. As they said, use it for brainstorming and forming ideas and going back and forth on ideas and you know, we've done that a few times just for our own marketing and for our own effort.

Yeah.

And it's quite remarkable how just by going back and forth a little bit, it can open up the creativity and give you some thoughts and ideas that you wouldn't normally have on your own. And I don't see that a lot currently with people that I see anyway using AI in business, they're using it more to generate content versus using it as a tool to help them again, brainstorm, create strategy, look at strategic options, all of that. So I thought that was an interesting use case that they did spotlight in here that's not typically adopted.

Well and it's interesting and this is a very broad discussion, but I actually posted something myself on LinkedIn the other day about this. I've been watching this movement of and you know, I've been very active on LinkedIn like daily activities for 13, 14 years. Been a member since 2006, I think it was 2007 member, been subscribed, whatever we call it but user. But I'm watching this abundant flow from people that historically haven't posted a lot that is this really structured content with and they put a couple little emojis into and there's nothing wrong with that. But I think what we're. What we're seeing here and I'm appreciative of this article because you know, it talks about the first of the seven items they discussed was writing marketing content. But I think what's happening is unless you've spent some time to learn about prompts and how to discuss things or how to get the AI tool to use your brand Voice and so forth. What we've seen or seeing a lot of is people going to chat GPT or Bard or whatever tool they use and saying, write me an article about these five points, right? I could go in and say, write me an article about the seven points about AI and marketing, about writing, marketing, contact, coming up with fresh ideas, creating beautiful images, generating video, analyzing sentiment, creating multiple versions of ads for different audiences and analyzing sentiment. And it would come back to me with an article. But does it. Have I taken the time to help it understand me? Have I taken the time to help it understand my company and my brand? I did an exercise to build, and you should be talking about this because you're the expert on these things, but I did a rudimentary, although you did give me a small pat on the back. I made a small GPT by spending about an hour, probably an hour and a half of talking to chat GPT about Lead Smart technologies. And I just wanted to get a feel for what would come out of that. And so I asked it, I said, ask me 20 or more questions to help you understand the brand, the company and our marketing needs. And it, it was a lot of work, but I was able to put that into a document and make a GPT now from those answers, and now we can do marketing content against that. So I guess my, my thought on this, and like I said, you're, you know, more in tune with this as the technical guy in the group here, but I think people need to be thinking about deeper rather than just asking ChatGPT or Bard or whatever tool a question.

The, the. We've talked about this forever, but one of the biggest things that we're seeing more and more emphasis on this year for the companies is using their own data, right? And their own training a model or using a model that's based around their data and around their company. What's interesting about that in some, that I've been working on with some different companies is a lot of us don't know what our companies really do. It's like we don't know ourselves that well. And so you start telling. We can't tell our own story. We can't tell, we can't articulate clearly our ideal customer profile. We can't articulate our market, we can't articulate our offerings, we can't articulate our competition. I mean, it's amazing, actually. We kind of maybe know that it's there, but we can't articulate it. And so therefore it becomes difficult to train the model if you will around the business.

Although the model might train you but you correctly.

Right. But if you can, if you can use it to help you then get to those answers. Right. And go through there then you now have a foundation to then go back and then infuse it in there. I'm not. Yeah. So you have to, you have to take the journey along the way and it's, it's quite remarkable. I think that a byproduct of this whole AI thing is whether it's yourself personally or your business or whatever. I think I'll just say businesses are going to get to know themselves a lot better than they ever had before. We're going to talk about some HR and people issues here in a minute. I mean think about how many people especially in large companies really understand the business. They don't in a lot of. They understand their job possibly but they don't understand the business well typically they.

Understand the job of how they did it at the last company.

Yeah. Based on their experience. Yeah. So anyway it's very. I thought some really good points in there on how to use the, the. The generative AI not just to generate content but to actually start figuring out how you create better content and more relevant content that's based around your business and, and your. Your knowledge. Right. It doesn't even have to be business. It could be your own personal knowledge.

So Tom, before we jump ahead, Susan Merlot commented here only one of those seven prompts makes sense to use in her opinion. So Susan, what which one is it? Susan works with wholesale distributors on marketing and messaging and social media. So tell us what it is. Susan, if you're still listening, love to hear that. I really appreciated there was a couple of things right. I'm not overwhelmed right now with making images and things like that but for me it's a great tool because I, I once I take set the time aside and get in a groove. I enjoy writing. It's hard for me to get things started so when I can throw some ideas out and get some, some. Some further ideas to work from. So you know generating or coming up with fresh ideas brainstorming on that. Susan needs me to tell her the seven again. Writing marketing copy, coming up with fresh ideas, creating beautiful images, generating video, analyzing sentiment, create multiple version of ads for different audiences and faster and easier and cheaper is one of the. Those are the seven. So I think there's a great tool that can come along with we start building the. Not sure what. That's the one. Okay. I'm not sure which of the seven. But for me, the analyzing sentiment, helping generate ideas. Right. And then doing multiple messages to different audiences, I think those are great tools. And that becomes that multiple versions of ads and content for the audiences is just fantastic. Gotcha, Susan. Yeah, she agrees with me about helping. Helping prompt ideas and maybe bring in some other facts and so good stuff.

All right, let's move ahead.

All right, Cyber security. We're in our tech, cyber and AI section, right?

Didn't we just talk about AI?

Yeah, but that was in marketing, Tom. We're going to talk about AI again when we get to the HR and people section.

That's true. Okay, so this is. But we're focusing here more. No, it's okay. So we're going to focus here on some cyber security stuff and, and, and some other related, related AI issues. Let's kind of start with this first one. Schneider Electric confirms data accessed in ransomware attack. I guess not a surprise other than maybe the fact that they confirmed that it actually got done. Looks like they hit a lot of different things, you know, impacted some of their major brands and so forth. Again, nothing, I guess revolutionary based on some of the stuff we've talked about before, but more of the same sort of, I guess risk related to the.

Cyber attack, but hit last year successfully on a broader base by a different group using different tools. Hit again now on the. Schneider Electric is probably the biggest name in electrical products and components globally. And they have a whole different division that their sustainability business, which is a big chunk of that is consulting related. Friend of mine's wife works for that sailing yacht racing. Buddy of mine's wife works for that division. And that's what got hit that sustainability consulting group. They work with schools and big business. But the issue right now is that they're having to go talk to us. And these are the only ones that mentioned was major brands including Hilton Hotels, PepsiCo and Walmart. They have to go back and they're talking about that their infrastructure has been compromised through this. This particular group is called Cactus, who are taking responsibility for it. And you know, it's my struggle with this is say struggle just frustration is like with these groups out there that are popping up and they're popping up daily. Almost right is they're almost like the, you know, the, what did they call it, the, the body bombs or the vest bombers or whatever that you would see, you know, in the past in other parts of the world that, you know, would, would go into a, into an organization and you know, one of their people became a martyr because they blew up a cafe somewhere and then this group comes and takes credit for it and it just, to me it's just horrendous to, to think about. You know, we've got these subgroups popping up, going after smaller businesses. That's one of the things we've talked about before, right. Is the idea that, you know, you've got these larger successful groups. The previous one I think they talked about was, can't remember the name of the other group that had hit them previously, but it was, they're bold going after these big companies. But my concern about it is just like you see in capitalism anywhere else is, you know, you got somebody working in the large company that's ice. I can go do this too or I can go do it better. And now we get these smaller organizations that are going after smaller businesses. So important stuff right now.

Yeah, no, that you, you mentioned blinders before. This is not an area to have blinders on. And it only, it only, it only bothers you or affects you when it happens, but when it happens it's not a, not a good scene.

So, so they talk about, you know, they're using the same tools and protocols. I think they call them like ttps that are they mentioned like standard ransomware playbook, well known methods and so forth. So kind of a big deal. And most of these I think it referenced were coming in through VPN gateways and we've saw some information last week or the week before about email attacks and so forth. So something we need to be thinking about within our organizations. And it doesn't matter, you know, whether you're $50 billion a year, you know, two location building material distributor, or you're a half a billion dollar manufacturer or multi billion dollar manufacturer distributor. The thread is there and it's there for all of us. So all right, what's next is we are still in our tech, cyber and AI section, the ftc. Here we go. What do you think?

Oh boy. Yeah. So this, this article, this from Tech Target FTC launches inquiry into generative AI partnerships. Same sort of drill as before, right. Is are we are big companies by partnering with small companies, is that you know, distorting the, the quote is is it distorting innovation and undermining fair competition? You know, I, I think that partnerships right now are actually imperative is, and especially with larger companies maybe working with smaller companies that can't afford to invest in the way that the larger companies can in the AI world right now. I think unfortunately this is another probably a political move or you Know, we've seen this before on some. Yeah.

Khan, the FTC chair that's going after.

Amazon, another power, another power play move, which I think is just absurd actually at this point and where we are, you know, we're all still, we're all still getting our sea legs, right, Whether you're a big company or a, a small company on this. And so I think working together and partnering and all of that, we can see how things then settle out and go forward. But to try and throw sand in the gears right now just to me seems unnecessary.

Well, I think that's. Sand in the gears is probably good, right, because some of this could, I don't think it's going to thwart the speed of things. I don't think these companies, I don't want to say they don't care, but this is an annoyance in this space. Right, but what the point about this is, and you were talking about, you know, smaller companies getting a leg up by, you know, having investment or support from larger companies. So talking about Google and Amazon that have a large partnership with Anthropic and the more well known one that everybody sees out there and has been in the news so much is the Microsoft partnership, slash, you know, massive investment into OpenAI, right, in the ChatGPT model and now that tool coming into a lot of Microsoft products. But I just, in my mind, look, I don't think that we need to get rid of the FTC or the, you know, in that setting, but some of this stuff is just such ridiculous political overreach and this is a whole nother topic. But if you're, if you have any interest in this type of stuff and targeting and overreaching, you know, go look at all of the, take a, I mean this is crazy stuff. If you go on to go look at this, go do a little search online of all of the US Sec, ftc, all of the different commissions within the US Government that are having some type of accusation or investigations or actions against Elon Musk and his different companies. You look at all of that and then, then realize he didn't even, he didn't. The White House hosted an electrical electric vehicle Summit and didn't invite the founder of Tesla.

Right?

So you look at the overreach on some of these things and if you look into Musk, it's just astounding. And I'm not a conspiracy theorist guy, but if you, if you look at all the agencies that are poking around at his different businesses, it's scary. But this is ridiculous, right? Let's let capitalism do what capitalism does. You have a good idea, you can either do one of two things or three things. You can grow it organically, you can go get investors behind you to grow it on your own, or you can work in partnerships and investors from partnerships and head on the right way with it. And this is what we're seeing here are these growth opportunities for these organizations. Open AI had billions of dollars behind them already, but now they're partnered with Microsoft, which is just going to accelerate all of this, right. Exponentially. So.

Well, and it's hard for every. We, you know, you can't do everything yourself, right. Whether you're providing the hardware or you're doing software or whatever. It's just. Look, I, I get the point about, you know, creating sort of monopolistic situations and undermining fair competition. I can understand conceptually that situation. But we're so early in what we're trying to. Like I said, we're all getting our sea legs in and trying to figure out where we fit and.

Right.

And how we do it. I know they're gonna, you know, the position, the counter argument. Well, if we don't get it now, right. It's going to get out of control and all that kind of stuff. But it all comes back to me is that what, what AI is today and how we use AI today and how it will be in six to 12 months is very different. So we got to let a lot of these things play out. And I think again, it's just showing relevance, trying to be relevant and all of that. But it's, it's, to me, it's a bit unfortunate.

Gotta, gotta make a name in case that administration changes. I think in this case.

Right.

I mean, I, I hate to throw rocks at somebody, but this, this particular FTC chair is, I think, overreaching quite a few things. All right, let's jump into our. Excuse me, sales and M and a segment of our newsletter that's out each week, January M and A Roundup. A strong start to 2024. This was a great article by our friend Mike Hockett. Mike's going to be with us. I wish I had our guest list come up. Mike's here in the next few weeks, within the next month with us again. He's been with us before. This was from the recently acquired MDM publication that we quote regularly and now part of the national association of Wholesalers. So it was interesting. Some data that came from that strong. January came out of the M and A. But 37 deals MDM covered M& A deals involving distributors as well as manufacturers. That's the majority of them. 28 of the 37 were involving distributors. But that kind of pales in comparison to the 50 that were covered in January 2023. So it's kind of interesting to watch what's going on with all of this. Maybe ties back to some of the factors from our economic discussion that we started with today. But people are buying and selling, right? There's money out there in pe, there's money out there in large organizations for investment and acquisition.

Yeah, it's interesting. You know, remember Ian mentioned, Ian Heller mentioned on our show a couple weeks back, 2023 M&A work, you know, was definitely down. So maybe there's some pent up demand. Maybe. You know, again, I don't know what valuations are looking at. I know that we talked a bit about that before is that valuations drop. So maybe valuations are getting more reasonable, which has opened up the door for some of these M and A actions to take place.

And I think it's interesting, right, if you look at the list again, for those of you that are listening on the podcast that's recorded, we're looking at a live on our live broadcast on LinkedIn live, YouTube live and Facebook Live that we're looking at the newsletter we publish each week. It's called around the Horn and Wholesale Distribution and Manufacturing. If you'd like that, you can reach out to us at www.aroundthehornpod.com and we'll get that out to you. But if you're reading this article, the majority of the deals done this year are some publicly traded companies and some very, very large organizations picking up smaller ones. But it also mentions us, you know, a couple of handful of maybe smaller deals. We had Andy Mitchell from Mallory Safety, right. His grown from a niche safety supplier in the Pacific Northwest TO I think 48 branches across the country now in the safety and industrial segment, you know, they're working with that, the smaller company that's maybe struggling with interest rates right now or they don't have a strong balance sheet to compete and to grow against. And so they're acquiring some of those smaller companies. So we see multiple deals. But what I saw most of this year to date is bigger organization deals. Okay, good. Well we appreciate that info and that it's great that you know, we've got organizations like MDM and naw, National Association Manufacturers as well, Distribution Strategy Group. Lots of different organizations are following these acquisitions. David Gordon in his newsletter, Scott Costa, who's going to be with us in a few weeks as well from the electrical distributor publication from naed. It's great to see all of this. The groups that are following Hardee's doing the same thing, following an ISA are all following on, managing and watching this M and A activity that helps us bring it out into our newsletter. So what's next? Tom, you mentioned this earlier, right?

Yeah. So this is our, our new people and leadership section. Here's where you are in the AI hype cycle according to HR tech leaders. And I thought this article was good on a couple of fronts. One is talking about how AI will be used just to manage HR operations and you know, getting employee information and helping employees, especially in larger companies, get information they need and so forth. But the other part, and they just barely touched on this, was the how do you start training or how do you start really enabling employees to be able to work in an AI world? And I think this is an area that has been really, really, really underestimated. Just kind of what we were touching on before is it's really easy to go, oh, we're going to lay off a bunch of people because AI is going to make us more efficient. But if your rest of your workforce doesn't really understand how to leverage AI or how that's going or how to use it successfully now, you're going to end up with fewer people that really don't know what you're doing and expectations that are not going to play out. So I think the HR world related to AI is maybe one of the biggest areas in an organization that have to really understand how AI would be incorporated into everybody's job and an area of the. In the business.

Well, in two. Right. You know, to kind of. To your point here is that, you know, the HR side of things, right, is where we end up with policies and so forth as well. And you know, we've got. What's that acronym? Bring your own device byod. Right. Which we've done with cell phones. Right. Well, what happens when we've got a handheld AI device, right? How do we, what's the use cases? How. How are we able to, to use those things? What, what are. What's acceptable? This is, you know, big issue too, right? What's acceptable? That of company documents that we load into. Into an AI tool. Chat GPT is an example, right. To, to analyze. There's so many factors of that. But I like, I really like what you're talking about. You know, the people side of it and having them trained in understanding yeah.

And then Bob asks, where are we on the AI hype cycle according to the article? I, I believe what the article is trying to say is we're kind of coming out of that initial hype. I believe, if I remember right from the Gart, you're right.

Yep. It's, it's, it's, it's here and we need to start. And I think this is a great question. Right. It talks about hype cycle and then it says making meaningful use of hr of AI in hr. This just happens to be from HR Executive magazine, where this article is from. Right. But. So they're taking that bend. But their point out of this article in answer to that question is really tied to the. Yeah, okay. It's here, it's here to stay, and now it's time that we get our head around it and what does it mean to our organization?

Yeah. So if I remember the Gartner hype cycle, right. You have the hype and then you have the trough, which is the area of disillusionment, and then you kind of start to have some real relevant use cases. Yeah, I think we're. It's so weird to say because as I said before, AI is so it's not. You just can't categorize AI as one thing.

Right.

And what AI is today and what it'll be in the future in terms of its application and use cases is, is there. But I think what they're saying here is that, yeah, we're definitely either headed into that area of disillusionment or coming out of it, but I think it's going to happen much faster. The velocity of that hype cycle and those peaks and troughs are going to happen much faster as different applications of AI come out and how those get incorporated in the organization.

Well, and they make the comment in here. Right. It's. It says in 2023, HR leaders shifted from viewing AI as a novelty to considering it a legitimate tool for organizational success and starting to look into the applications within the HR and the people side of a business. So they talk about, you know, looking at it as transformative advancements, but they're going to take time. And they. It says that one of the quotes here is, when it comes to generative AI and hr, I find that people are significantly underestimating how much it is going to change the way HR professionals can do their jobs and how it will positively impact the employee experience in the long run. So I love that.

Right.

And this kind of goes back. One of the reasons we added this Segment to the newsletter is we had our, our all star cast on in Jan. Early January with Mike Marks and, and Ian Heller and, and Dirk Beveridge. And Dirk spent quite a bit of time talking about you know, his travels and his we Supply America tour calling on family owned and independently owned and employee owned distributors and he really kind of got us thinking about in fact he called us out on it and said you guys don't cover the people side of things very much. So we added this people and leadership section as well. So I think this is a nice little fit here as we look at the strategies that can come out of using AI within the HR side of an organization that is going to benefit the employee.

Right.

And I think when we start having you know, AI sharing with us, whether it's looking at time cards or work production or hr, you know, issues or personal issues or whatever from an individual using. And it's just a simple example, right? I mean Tommy, this, this is, this may surprise you. I'll just hit my head right? Just how with, with the wholesale distributors and manufacturers that use Lead Smart Channel Cloud, our CRM and customer intelligence platform, right. We're running AI tools against all their connected data from ERP and from marketing automation and from E Commerce and bringing that. We're running an AI tool against that called Genius Feed that is bringing alerts to quotes that are closing leads that are need to be worked. All the different things that can accelerate business growth could use the same kind of tool within an AR thing that says hey you know what? Tom's been out five days in the last six months because of his, his, you know, I'll use my case. Right. His mother's failing health. Let's check in with Kevin. Right. His mom's in failing health.

Right.

And I think it's, it's just kind of triggered for me from this article. Reading it this again this morning was some good stuff happening.

Well I think going back to what we were saying earlier, employees are going to have to get to know the business. The business are going to have to get to know the employees.

Right.

And that's a little bit of a different objective versus okay, you're a worker, you come in, you know that kind of stuff. It's, it's, it's a very different, you know and again this is what Dirk was, has been emphasizing and not just on our show but he emphasizes in general is you really need to be more, act more of like a family rather than hey, you just come in, do your job and leave at 5:00. Right. And this is going to allow the HR people to understand their employees, I think better. In the same way employees are going to need to understand the business better. So hey, we're almost going to be on time if we can kind of zip through this last part here.

Well, you have a time limit. I don't have a time limit in my mind, so that's fine. But you know, you're right. So we just. Back to the format. Right. We just hit our last segment of the newsletter, People in Leadership section. We also have an industry scuttlebutt section. There's three articles there this week. We talk about. There's some published data of what's going on with Hardy, which is H Vac Refrigeration, the distributor group for that trade association. They've got some macro economic data and some residential market analysis. Their revenue for their. Which is interesting. Right. We have quite a few customers in this space, very large distributors in this space that are Hardy members that are, you know, charging ahead and their businesses are extremely strong. We're talking with a couple of others right now, but Hardee Distributor sales revenue fell in 7.8% it said in December. So interesting to watch what happens with that coming January, February. We talked about it last. Mike will talk about a little bit further. We've got some executives from national association of Wholesalers coming on the show this year. I think we've got three of them scheduled throughout the year to talk a little bit more about NAW's acquisition of MDM. I think it's going to be good for everybody across the board. I think it's going to be valuable to us and the content that we can share in our little platform and space on the, on the planet that we occupy. So that'll be helpful. Another acquisition by Imperial Dade which is good information there. So that's a little bit about it. Again, this we're following through from our newsletter that we cover each week called around the Horn at Wholesale Distribution and Manufacturing. If you don't get it, let us know. We'd be happy to share that. Finally, in closing today, we have a couple of weekly features. One's called the Good Read. That tends to be articles about leadership as well. It might be about executive health or mindset or just good, good for the soul type stuff is what we try and share here. This is article talks about the best way to share information with your leadership team. Good article from Inc. Magazine that might be of interest. Last two segments, Tom, that we cover each week. We have our index tracker of publicly traded distributors. This is something that the good folks, Ian and Jonathan at Distribution Strategy Group post on their website. You can see it here on our newsletter, but it's always available. If you want to see what the index of publicly traded distribution companies are, are doing out there. It's a. It's a great little tool to watch this segment of the stock market and so forth. And lastly, bunch of events coming up, right? We've got next week is the Distribution AI Summit. That is an MDM event, Granger show the following week. And then we start going into ad and NAED and PDTA and so forth events. I'm headed a week from Monday to ads, Affiliated Distributors, Marketing and e commerce event where preferred service provider partner there. So I'm looking forward to that one. So, anything to add, Tom?

Yeah, it's gonna be Commerce and Marketing Summits was a great event last year in San Diego. I'm kind of jealous I'm not going to be attending this year.

It's in San Antonio. You want to go for me, you go instead.

I like San Antonio. San Antonio's got some really good Mexican food.

I'll change the plane tickets. You're going, all right. That means. That means you need to go pick up the, the trade show booth and all of that stuff and get it all shipped. You good with that?

I'll take care of it. I'll give you my customer projects and I'll trade you.

So I'll go to the show.

Okay.

You keep working on helping our customers view their data in ways they've never done it before. All right. All right, good. Well, that's it. From stormy Southern California, Tom Burton and Kevin Brown. We get together every week to discuss what's happening in wholesale distribution and manufacturing. We look at events throughout the world that are happening and see how those impact the audience that we serve each week. Finally, if you'd like that newsletter one last time. Hello, leadsmartech.com or www.aroundthehornpod.com. all of our episodes are recorded in the lead smart technologies, LinkedIn page, Facebook page and YouTube channel. So you can see all of the previous ones there. And lastly, if you're a podcast listener and want to listen from your car or whatever it might be, Apple Podcasts, Spotify Podcast, Wherever you listen, download us there. Last thing. One more request. Click the like button, the follow button, the share button. Leave a review on the podcast formats that helps us get this message out to a wider group of people. Finally, thanks to everybody for your comments. Tom. I'll see you Monday.

Yeah. Thanks, Susan. Thank everybody who jumped in with all the great comments. Yeah, I'm planning to come and see you down in Orange county as long as I don't get trapped here by whatever the next storm is supposed to be. Just.

Just take the canoe if need be, versus the car.

Take the boat.

We'll wish everybody a fantastic weekend. We will see you next week, and we will ask you to be kind, be safe, and do good things.

Have a good weekend.