Around the Horn in Wholesale Distribution - Episode #177 📱

Good morning.

It's the word.

You know, I was just thinking, um, oh yeah, I know, that's— can you see the, the steam coming out of my head?

Yeah, exactly right. There's expansion in your head.

You know, when we started this, I don't know, whatever it was, a couple, 3 years ago, 3 and a half, today's 180. Okay, well, it felt like we would do the newsletter, you'd look at it the night before, and Monday or Sunday— I'm sorry, Friday morning when we got on the show, it was still kind of relevant. And up to date. And it seems like the last few months, it's like I go over the newsletter on Thursday night and I wake up on Friday morning and there's like a million other news events that need to be incorporated into the whole thing.

[Speaker] Yeah, or you would look at it on Monday and things were similar to the prior week.

[Speaker] Right, right.

[Speaker] And last Friday we finished our show at, what was it, 10:30 Pacific time. 7:00 AM Saturday morning, I'm awake and the country's in a global conflict. So it is a unique time in the world.

Hey, Bob's back. Good to see Bob again. I think we've missed him the last week or two.

I think Bob's back for the AI discussion later today.

Yeah, we've been holding off on AI 'cause Bob hadn't been here in a week or so.

That's right.

Thanks, Bob. We have been kind of pent-up demand on AI.

We appreciate and welcome the people that come with us live. So maybe we should talk about who we are and why we're here and what we're chatting about. I'm Kevin Brown. This is my good friend and lifelong friend and business partner, Tom Burton. And we get together every week here on the Around the Horn and Wholesale Distribution podcast and live show. We stream on YouTube Live, LinkedIn Live, and Facebook Live from 9:00 AM Pacific time to whenever we're done talking is, I guess, how it plays out. And it's funny, we were having a conversation earlier this week with some folks that are gonna join us for some shows soon, and we were trying to put some structure to some things. And the putting some structure to the show was kind of a funny part of the discussion, right? It's like we've never really done that. So it's something that we'll get to soon. But anyways, we get together every week and we talk about the news of the week as it relates to the economy and supply chain and manufacturing and distribution, sales and marketing, M&A, AI, robotics, and technology in general, cybersecurity. We even have a section of the newsletter that we'll talk about momentarily that we actually look to people in leadership and what's going on in human resources and how we can be better, better workers, better bosses, better leaders, and so forth as well. So we, as I mentioned, publish that newsletter. We talk about that here on the show each week, and that's the structure and the basis of this show. So if you're new to the show, we welcome you. We're appreciative of you being here. If you're a longtime listener, is that first-time caller, longtime listener? That's good. Here's a comment here that says, "You have structure, you just choose not to follow it." There is no written manual for anything that we do here. So, but we'll get there. We're working on that. You know, we're only—

more structure in the beginning. We would actually get through all the articles in the newsletter in the beginning, if you remember.

It's true.

We had fewer of them. Yeah, but there's certainly— I don't know, it just seemed like easier times. Back in the good old days.

Yeah. It's good to see Mike Mortensen, our good friend, joining us. And Paul Kennedy, thanks for chiming in here. Mike, just— I don't know if he's back in Alaska yet, but I saw on LinkedIn he won a big award at the I think it was the IDCO event. So congrats to you on that. But anyways, back to what we do. We review that newsletter every week, and the newsletter is called Around the Horn in Wholesale Distribution and Manufacturing. Goes out, uh, I think we're up now about 11,000 people and growing and adding to that list. So if you don't get that newsletter and you would like to, we would love to send it to you. 3 simple ways to get that. The first and simple one is send us an email to hello@leadsmarttech.com. Second is if you're active on LinkedIn, just look up the podcast there, Around the Horn in Wholesale Distribution and Manufacturing. You'll find it. If you have any issues with finding it there, just go to the LeadSmart Technologies page, company that Tom and I work for, and you'll see on the right— or excuse me, on the left-hand column about halfway down, it says newsletters. You'll see that there as well. Or we have a website for the podcast. It's www.aroundthehornpod.com, and you can see past episodes there. Register us for the newsletter, as well as subscribe to Apple, Spotify, whatever it might be. As I mentioned, Apple and Spotify, Odyssey, iHeart, wherever you listen to your podcasts. If you're listening live, you will not see the newsletter that we'll have up on the screen, and that's what we discuss each week. So it would be great if you had an opportunity to do that. The one thing that we ask, and we're, uh, thankful for those who have done this— most haven't—. But if you like what you hear, jump into LinkedIn when you see the invitation or you see the update to the show and share that with your friends. If you're listening in on Apple or Spotify or any of those, hugely helpful to us to have people subscribe and certainly leave a review. Leaving a review is not simple. It takes a moment to do it, but we're very thankful for that. And what that does is it just prompts the algorithms, whether it's on YouTube and there's new subscribers or Apple or Spotify or whatever it might be. It just gets this out to more people that have interests in wholesale distribution and manufacturing. So we're appreciative of that. Last piece of this rant is that we couldn't do this if we didn't have the sponsorship of the company that Tom and I work for, LeadSmart Technologies. At LeadSmart, we've developed a basically a platform and a hub to bring data for your business and disparate data sources from across your business, whether it's marketing automation, e-commerce, ERP data, CRM data and other data and bring that into a central location where now we're looking at all of the different journeys that your customer takes within your company. And instead of applying AI to our ERP system or AI to a marketing system or a product pricing solution, we bring all that data together in one platform. We use artificial intelligence and other technologies to provide smart alerts and deep data and insights. And rather than having to have people log in every day, all day to try and go slice and dice business intelligence data, we say, push notifications by straight to a smartphone, to a, to their email, and give people prescriptive guidance and basically serve up on a silver platter what is important in the business today as it relates to looking at the entire business versus one aspect of the business. So we do that with many, many companies in wholesale distribution and manufacturing. And so if your company is trying to understand not only your customer but your overall business better, We would love to talk to you and introduce you to that solution. Again, LeadSmart Technologies, it's leadsmarttech.com. We'd love to work with you and support you in those journeys. So Tom, what did I miss? Anything?

No, hey, I just wanted to— we, as we, as you know, right, we have a large, a customer who's a large, I guess they're maybe the largest in the South electrical distributor.

You would know. I don't know if they're largest, but they're pretty large. Close enough. That's fine.

Very—

we have a large electrical distributor in the US market. How's that?

And, and they are, we, I was working with them yesterday and what we're seeing, you talk about the alerts and the data that we're pulling together to look at the growth that we're likely going to be able to recognize from their sales team. And we're actually just even scratching the surface of the size of the team that's there. This isn't gonna be 10% growth or 15% increases. I think we're gonna be seeing 40, 50% increase in sales just through the identification of some of the white space, some of the potential churn that's been happening, things along those lines that otherwise no one would really have a lot of, a lot of things about. I'm super excited to get them, get them going because it's just amazing.

Yeah, it's going to be, going to be a great, great case study. You know, it's interesting, I think that over my 35-plus years, I hate to acknowledge that, of working in wholesale distribution, manufacturing, both. You know, it's unfortunate, but most salespeople walk by more business than they have. And that's just a factor of— it doesn't make them bad or wrong. It's just they, they know specific categories or things that they're comfortable with and they talk most about. They're busy. The customer has something that they want to talk about. And we just hear this day in and day out and over and over again with people that we talk to. Is that what they end up with is that they start bringing up, you know, as you described, white space, or we have a wonderful customer in Western Canada that calls it trapped potential. And in that arena is that when we can identify the items that we're not selling, which are usually more than we are selling to them, we see, to your point, great opportunities for huge growth by introducing those products. And what regularly happens in that setting is the customer says, I didn't even know you sold that. If I knew you sold it, I'd be buying it from you. So with what you're describing with that particular customer is they're illuminating those opportunities or things like, hey, this customer stopped buying this category last month and their AR balance is really high. There's big risk here too.

But there's a lot of context involved too. It's not just random. There's intelligence in terms of the products that most likely fit together. Why they would do those. Anyway, let's move on to the news. Um, I do want to encourage— I have the newsletter up here. We do have a new survey that we have put together. Would love to have people, uh, take it. It only takes about 3 minutes. It's our Growth Confidence Survey, and we'll be creating an aggregated report from that and we'll be sharing that with everybody here in the next few weeks as we pull that together. So You can click right into that right here from the, from the newsletter.

Yeah, it's a big, big, big banner at the top of the newsletter. So if you don't get that newsletter, reach out to us, we'll get it sent to you and you take that survey. Or if you don't have the newsletter and something you don't want to get and you'd like to take that survey and then get the results back to see what your peers are doing.

And I don't know how to drop the link into the LinkedIn feed, but what kind of host are you?

I don't know.

I know how to do some things and not others. So good.

The— but if you'd like that, you can also just send us an email at hello@ leadsmarttech.com. So the, uh, it's good. Hey, thanks, Scott Luton just, uh, shared. Great, great show, folks. Keep up the great work. Scott owned, uh, is the, the man behind another great podcast in our industry as well. So he's more on the supply chain side of things. So, uh, as Mike Hockett was saying, um, a while back, uh, uh, when I was with him on the, uh, Scott's show is the Supply Chain Now podcast. And as Mike Cockett was saying when I was on his MDM Monthly podcast, we were talking a few weeks ago and we agreed that, what is that term? A rising tide raises all boats, right? So the more we can get wholesale distributors and manufacturers talking about supply chain and the economy and so forth, the better off all of us are because we're all in this together. So Tom, You want to dive into the news? Yeah. So there's nothing going on, right?

Well, the first major article, which isn't here, is the job report came out this morning, right? Um, it was almost a footnote compared to all the news about the war and all that kind of stuff. Yeah. Whereas had the Iran thing going on, this would be, I think, gigantic news. But we lost 98— I'm sorry, 92,000 jobs in February. The expectation was we were going to gain between 50,000 and 60,000 jobs. So that's quite a delta between them. The unemployment rate stayed— or inched up, rather, to 4.4% from 4.3%. And there was an adjustment— isn't that a shock— or a revision from December and January, 69,000, a reduction of 69,000 jobs in December and January as well. So, you know, the labor market is certainly weaker than maybe was previously expected.

Well, they expected it to be a positive result coming out of this.

Well, I think they expected it to piggyback on what happened on the news last month, but then that's been reduced. So, right. So, so basically, Everything that everybody was thinking coming out of January or into February, I guess, has now been rebooted and looking at it from this perspective.

So do you ever wonder—

go ahead, I'm sorry. Go ahead.

I was just going to say, do you ever wonder— I don't know, it's just something maybe we should talk about someday. We never talked about it before here. Do you ever wonder if we're not using the right statistics anymore or the right metrics?

Yeah, you know, I wonder, there's this guy in New Zealand that came up with this 2% thing a while ago, and you know, it's just kind of random, random metrics that are, you know, lagging completely intelligent, you know, up-to-date data and all that kind of stuff.

I don't know, I mean, we just, my ears over and over and over, do you hear that ringing from some, some knucklehead that gets on the, gets on a podcast every Friday and talks like he knows knows economics. All I know is I can go to Calshee or Polly Market and see live results of what the markets are thinking. I can look and get in, in just seconds, I can look at what's happening in the stock market. I can trade cryptocurrency at 3:00 AM from wherever I'm at in the world if I choose to now. It just, we have such great data at our fingertips. It's, and I'm not suggesting wholesale change, and, but couldn't we do some updating to some of these things? Because, and the other, when you look at it, is, let's see, it's jobs, it's CPI and PPI, I think both for confidence. All of those are, they're, they're just always adjusted though, right?

Surveys and things that it's not really based upon real-time data, obviously. And they're clearly not very accurate in this dynamic world. So I don't know how much they really mean. And you could argue, are they manipulated at any given point in time? Who knows? I don't know.

But if all of these factors are things that are going into a Fed's decision related to interest rates, right? It's kind of a big deal, right? Because if we look at what we want, what could be accomplished with some interest rates adjustments.

Anyways, let's keep moving.

So anyway, don't get me started when we're on our first article to get on a soapbox.

Yeah, well, I mean, I personally am not surprised. I mean, I just, if you look around, You're not seeing, I mean, you are seeing some layoffs here and there, but you're not, I see more of a deliberate hiring approach, a very slow and deliberate hiring approach. And I think it's not because, you know, I talk to a lot of people, I have a lot of friends that have companies, you do too. I don't sense that, or even in our industry, I don't sense that it's like, oh, we're trying to figure out how to not hire It's more how do we figure out how to hire correctly? And I think that's— or differently too than what we've done before. And I think that slows down the hiring process. It makes the hiring process more deliberate, all of that kind of stuff, because you are looking— I think more and more companies are looking to, hey, are the people we hiring, are they at least willing and able to become AI fluent? How would they leverage AI or other technologies in their business? How do they think about running the business compared to, you know, we used to do it 5 years ago or 4 years ago? So I just, I think it's a slow in the process versus a lot of, you know, last mass layoffs and, and just no jobs available. Yep.

So, well, I, I think we need to, uh, when's the next Um, let me just try and figure out when the next Fed meeting is. It's later this month, right?

It's in March.

Yeah, let's see here. I can see it is March 17th and 18th.

Yeah, if you look at the poly market here, uh, no change is pretty much the given, 98%.

Well, what will be interesting is what the impact— and we can talk about this a little bit, I think it's in a couple of the articles mention it here— is the impact of oil prices and so forth. I tell you, for all of you that are listening in that live outside of California, this is going to make you fall out of your chair. I realized yesterday as I was leaving our office that it was like, oh look, I have like 5 miles to empty on my car, which I don't like driving that way. And so I just, you normally get my gas at Costco, and but there was an Arco right, right by the office. And so I popped in and and started pumping gas, didn't even look at the price, started pumping gas, went to throw a few things away, and I looked at the pump. Take a guess at what the gas price was per gallon.

Yeah, $6.75.

$6.75. Are you out of your mind? That the Orange County average and L.A. County average right now is $4.90. Okay, so it's $5.75. $5.75. Okay.

And I literally reached over higher than anybody else. You're higher than where we are.

So I don't— yeah, L.A. and Orange County, when I saw on the news last night, was $4.90 for mid-range gas. So $5.75, I immediately like went and stopped the pump. You know, I had spent like, you know, $30 by then or something. It was like, I'm out of here. So but I mean, you think about that and we're just— we're going to kind of see this. And, you know, how crazy is that, that The— I don't know, how long has that— the fuel that I pumped into my car yesterday been in the U.S.? Right. It came into the— came into the port, came into the port of Long Beach or L.A., offloaded, got refined in Torrance, you know, 5 minutes away from there, which is 40 minutes away from where I was pumping gas. And it's still the most expensive gas in the country. Right.

Well, and prices have gone up, went up immediately, even though the gas that we're buying right now not based on what people are purchasing now.

And additionally, there is that silly thing that we do here in California with summer and summer blend and winter blend and so forth. So anyways, for those of you in Texas paying $2.80, congratulations.

I think it's higher now. I think it's gone up to about $3. I think they said around $3.30, $3.40 in Texas and $3.50 or $3.50 in taxes.

Mike's saying, yeah. Well, yeah, exactly right. Well, I think the other part of what our friend Mike said there is important. Go California. All right. As I describe the People's Republic of California, I think about leaving occasionally and we stay here. So yeah. Bob says here, oil prices shoot up like a rocket and fall like a feather. You know, so. That's right. That's right. Yep. So yeah, no shortage of thoughts on this. So anyways, we're all going to be facing this.

I was looking earlier. $3.19 at Kroger. It was what, $2.12 when we were out in Texas a couple of weeks ago?

I thought it was more like $2.70, but I'm not positive.

So $2.12 was the lowest I saw, which— oh, wow. Inflation adjusted is like dirt cheap. I mean, you think about, you know, what we paid even in the '80s and '90s. Yeah, it's pretty— anyway, so it's gone up.

Tom, I don't think it's reasonable for us to reference the '80s and the '90s anymore unless we want to talk about music. Why is that? Gas prices, right?

No, but if you think about what you paid in the '80s, I don't know, you probably paid, what, $1 a gallon or $1.20 a gallon, which if you adjust for inflation, now in California it's different, but in other parts of the country, it's actually cheaper probably than it was in the '80s.

Yeah. Adjusted for inflation. That's hard math I don't want to do. Okay.

So yeah, I do agree with Paul. He's saying price is secondary. It's all about inventory availability. I think when everyone gets scared about inventory, then everything— but yes, it is very opportunistic.

And so I think that's the point, right? Scared about it versus— and I agree with Paul here, but it's the It's the real, you know, look, I'm going to raise my prices because I think I can and I have an excuse, right? Versus, you know, and it's— we've talked about this over and over again with tariffs and we won't get into tariffs yet here. But, you know, there are people that have raised prices that, you know, and tie them to tariffs that haven't even had to pay the tariffs yet or maybe weren't going to have that. So just, just an opportunity to take advantage of things. I was doing a little research as a side note that talk about briefly is, you know, with the conflict going on in the Middle East, right, the big factor there is the Strait of Hormuz, right, which is where all of that fuel comes out of. And so it sounds like there's not much left of the Iranian naval navy. And, uh, I thought it was interesting when we had the, uh, the Secretary of the Treasury on the news yesterday talking about the U.S. Army being willing to protect any flow of oil and other commodities that are moving through that, that I just thought it was interesting that you saw the Secretary of the Treasury, Bessant, was the one who was talking on the news about that.

I think part of it is because we have agreed to insure the ships, right? Lloyd's of London canceled—

Yeah, that's true too. You're probably right, Tom. I hadn't thought of it that way.

So, and we, we stepped in and said, we will insure ships that are going through the strait there because Lloyd's of London will not. So, which would stop it, right? Because I don't, I don't even think ships are allowed to sail without the insurance that's there.

So it's interesting. There's, I know for those of you that aren't boaters, uh, probably wouldn't pay attention or know about this, but there's an international system called AIS. That you can just search it easily in Google, and there's apps for it on your phone. And I don't know exactly what, if all nations require, but basically every large ship transiting has a tracker on it. It's registered to the ship, and you can see the global traffic. I don't think most people would realize, it probably ties well to when we'll once in a while see if there's an air traffic issue, we'll see on the news, they'll show an image of what the radar looks like of all the planes flying across the world. Think about that like times 3, maybe, if you were to look at the AIS map. I looked at it the other night, just having been a lifelong boater, it's something I'm very familiar with. It's something that when we're racing sailboats like I love to do offshore, is people like to turn their trackers off because they don't want the other people racing to see where they're at and where their position is and what their speeds are and so forth. But you can look, and if you looked at the map and looked at the Strait of Hormuz in this setting, is the amount of ships that were there and transiting. When I looked at this Sunday, I looked at it again Monday, was astounding to me. There were also a lot of ships that were either kind of drifting or at anchor in that setting as well. So then Bob just put the link in there about MarineTraffic.com. That will show you that. That's kind of neat. So that's the website. Bob obviously is very familiar with this as well, the AIS system. So this is kind of astounding, but there is no shortage of traffic that was moving into your point now that there's a support layer behind that from, from the U.S. government with this. So it's interesting because we think about that related to oil, and I was doing a little reading about that earlier in the day, and it said that roughly 20 to 30% of all global seaborne trade in terms of volume and value passes through that 21-mile-wide choke point. And it's liquefied natural gas, fertilizers and chemicals, dry and bulk materials, which is a lot of iron ore and steel, and oilseeds, it mentions as well. So it's astounding that it— how much goes through that. And it's a lot more than just the crude oil that we think about, but it's so many other materials. And they're heading for the most part to Asia. And much of it, in fact, it's, you know, with the oil, Iranian oil cutoff, it's a major impact on China. Sure.

So what do you think the price of oil in the US or the US will cap at?

Man, that's a hard question, Tom. I think there's so many variables with that right now. Just going to look at what oil is like this morning. $70, $80 somewhere. No, it was $90 yesterday.

Well, there's Brent and then there's— Yeah.

Crude oil futures, which is the NYMEX, is $90.33 today. Okay, and it was on, um, let's just look at the 5-day. So on the 1st, it was 71, and, um, and so there's the, there's the growth, and it hit a little, a bump on the 3rd, flattened later in the day. In the 4th, it went down. It was actually in the 73 on the 4th, but boom, on the 5th went up to the 80s, and then yesterday was the big run-up for it as well. So it's fallen by 7 cents in the last, since we've been talking about it. I could see it. I mean, I guess the factor is on this would be, one, does the US government saying we're gonna keep it clear and safe through the Strait of Hormuz with the power of the US Navy? Does that keep everything moving? And if that keeps everything moving, it's, it's one thing that's good. The other side of it is how many facilities get shut down because either they've been bombed or damaged, or they're just shutting them down because of the risk of it. So that there's a production factor that goes with that as well.

So yeah, I think that it will— I think we'll tap— we'll peak at around 120 before this is all Okay. So another $30. Yeah. But you know, we had $120 oil back in 2022. People tend to forget that, but it didn't last all that long, but we had it. Right. And so, uh, that was the start of the Ukraine war, of the Russian-Ukraine war. Oil peaked at around $120 a barrel. I think we'll see similar, which will be about double where all of this started. I do think it'll come down. Quickly. But I think that's where— anyway, this is not financial advice. So yes.

Are you, are you, are you buying or what are you doing?

Yeah, I would buy. I would buy. But I— but it's one of those things. It's so hard to time. And you could have, you know, you could have some pretty massive swings, I think, between here and there as well.

So I'm just looking at the same chart here and it's its highest it's been since in the last 5 years. I'm just looking at a 5-year chart. The highest it's been was in May, on May 27th, 2022, and it was 115. Okay.

All right.

So there you go. Yeah, you're right. You're right in track there. Okay. You're right.

All right. We move on to another fun topic, which is tariffs.

You know, this is a different show. We shouldn't talk about tariffs. It's not what we're about. We never talk about tariffs.

So we better get moving on tariffs or we're never going to get to AI.

All right, let's get, let's get some tariff discussion going then.

Yeah, it's a good point. Bob says don't forget Venezuela oil is coming online.

Um, yeah, that, you know, apparently they— there's oil here in the U.S. we could tap into.

There is, and we're— and we have been, and not enough. And what you see out when oil prices go up is all of a sudden our, our amount of oil, you know, refinery and drilling kicks up a lot here in the US because it becomes profitable again to do it.

Yep, yep, yep, yep. Okay, good. So tariffs, what happened this week?

Well, it says here global tariffs of 15% start this week, will likely be implemented this week. This will be an increase from the current level of 10% that's there. So I guess, in fact, I do, I know that the, well, you're going to talk about this, about the ruling is I believe the ruling of the US Court of International Trade was you have to stop collecting all tariffs related to the previous ones. Again, I don't fully, and I think this is probably part of the confusion is knowing what tariff somebody was supposed to collect and when and for what. But, um, yeah, Mike says, I know where there's some oil.

I'm assuming Mike's home in Alaska now. Yeah.

Um, is, uh, um, anyway, there is, uh, the 15% is coming, the more global one. I guess that kicks off the 150 days at this point. Yeah. And, um, so yeah, we'll see what happens. And I guess it's Figuring out how to track all of that is going to be the difficult thing.

Well, so there's, there's a couple of components of that, right? The first part of it is what did we— we saw some statistics a couple of weeks ago, or was it 2 weeks ago today is when they were struck down, right? There was a Supreme Court, right? You were texting me before I was awake that it happened, got up and started looking at TV. And so forth, getting some of the feedback on that. So we quickly went into the idea of we're going to go back to, okay, we can't use the Emergency Powers Act. And so now we're going straight to Section 122, I believe, is what they're referring to this as now. I thought those 150 days, because the president said right off the bat was that we were heading that, that should already be running. In that setting. But what I thought it was interesting, right, because the cap on that is 15%. The president first announced that it was going to be 10% and then said, okay, well, we'll go to the 15. So maybe it was just a little bit of a theatrics of moving to the number.

But yeah, we said it should be 15%. He listened to the show, listened to the rationale, and decided that was the right thing to do.

Good. So now if the Fed would just listen to me and start using some better statistics and put the— put the— put neutral. And by the way, Tom, I mentioned this to you before the show, is in listening to CNBC earlier this morning, they had somebody from one of the— one of the— I think it was the Cleveland Fed, and he was an economist talking, and he said he thinks neutral is more closer to 2.5 to 2.75, and we should try and get there. You know, that's just one, one person. But, um, yeah, so nobody, nobody listens, but apparently the president listens to the show.

Yeah, he usually calls us names sometimes, but that's all right. That's—

I'll take it. So, you know, back, back to this whole thing, right? So, okay, and let's boil this down, and we've kind of talked about this a little bit before, and we don't need to spend too much time today on tariffs because there's not a lot changing. What we saw last week was that the EU was saying, hey, we want to hit pause on our negotiated program. We've not heard any of that this week from any other countries. I think the reality of it is, is, I don't know, did we put some tacos bet or something on this last week? I think the majority of the trade agreements that have been put in place are going to stick because there's way too many other hammers that can be used with tariffs. And I think tariffs are going to stick. What's interesting is what we may find out, and I think we even talked about this very early, like probably May or June of last year after Liberation Day in April, was that we'll get to a place where there is some balanced number that everybody can feel comfortable with from, you know, foreign trading partners is this is what the tariff is. And, you know, I think we talked about a 10 or 15% number. So maybe this 15% number is okay, it's fine, we're using it now through the, um, uh, Section 122 for 150 days. Congress can extend that, But even within 150 days, the Commerce Department and the other internal departments within the US that need to look at some research and some studies which are about balanced trade and fair trade and how they do business in other countries and how they treat their people. And there's all kinds of different factors with those other statutes that go way beyond just fair trade. Some of it is penalties for, you know, uh, wages and things like that that are paid and in those countries. It might be that we just find our way into this place that between a series of different statutes that can be used is that we find that there is a global tariff of somewhere between 10% and 15% to get to the balanced trade that the president's looking to get to. And that really what we just did is we just went through a bunch of gymnastics for the past year to get to this place, right?

Well, I think I will definitely concede that wasn't our bet, by the way. I will concede that tariffs are going to continue in some way, shape, or form, at least while this administration is in charge. I think it would be fair to say that if you strip away all the noise, yeah, they'll probably end up at that 15% range that's there. There are already some countries that have, I think Europe backed out or—

They didn't back out. Stop that. No, no, no, no. They hit pause on their internal approvals of it all. Okay. Okay. That's not, that's not backing out. Okay. And no one else that I'm aware of has said anything about not wanting to go through with it and so forth. I mean, I, I got to tell you, I think they're in— this is not a statement in support of the, the administration or the president or any of this. I just think there are many, many countries out there that look at this and are smart enough to say Hey, they're going to find a way to make this go through. And if I think if you look at specifically like many of the Gulf states and then if you look at the countries in Southeast Asia and specific and then, you know, further north in Japan in particular, is there's some good business deals that have been done out of this about putting dollars into the US. And, and as you know, right, the Gulf states are trying to move away from just being solely reliant when you look at what they're doing in venture capital and private equity now, right, specifically in the UAE, is, you know, they're trying to divest and do more things. So putting dollars into the US and Japanese, the programs that they put in together, what, $500 billion or something like this of investment, I don't think that's bad business for them. That's just, let's get the balancing act of tariffs in place and put some dollars in and make some good business decisions out of this as well. I want— I think we should be very— this is— and I'm not saying you're wrong, but I think we should be very cautious of saying that people are trying to back out, because I don't think that's true. I think what Europe is testing the waters with— the EU is testing the waters to say, okay, we're hitting pause on our final approval to see what happens.

Okay, well, I think every country will look at it differently based on what makes sense for them. Right? I don't think it's fair to say that everybody will follow through. And it's certainly not fair to say—

no, time will tell for sure, Tom. Yeah, but time will tell.

Anyway, bottom line is I agree with you on the fact that tariffs—

we just stop right there. Just say you agree with me.

But our bet, our bet, our latest bet, which is tacos and margaritas, if I remember correctly.

Nick's in on that, right?

From last week. What's that?

Isn't Nick in on that from last week?

I think so. I don't know what— yeah, he's in. Yeah, that's right. So what the bet was, was, and this goes into the refund frenzy set of articles that we're going to hit here. I said that there will be some refunds issued before September of this year, September or before, before the end of Q3. So September 30th. Nick said by, by the election of the year.

No, by the election. That's right.

Right.

By the election. You're right.

You said March of next year is what you said. So You think it's going to take longer to sort out the mess. I think there'll be money coming back sooner. He thought it would be before the midterms, which could have some political piece there. But this next article, which I find really intriguing, I never would have figured this one out. Wall Street is betting on tariff refunds after Supreme Court ruling. So private equity has, or some private equity have created funds to go in And yeah, Bob, you and me both. I always leave this show hungry as well and thirsty as well. Is basically create a private equity fund to go buy the potential refund credits from companies and pay them what, 40, 60 to 70 cents on the dollar for them. And then go and then basically Arbitrage, all the legal things, we'll handle all that for you. We'll pay, pay those back at, you know, 60, 60, 70 cents on the dollar. So what's your thought on that? This is just the start of the frenzy. I mean, and others, so there is definitely some political pushback. You know, some of those, I think Congress—

I'm just pausing because all I can think of in that component of what you're describing, you know, is ambulance chaser lawyers, right?

Is in that setting. Yeah. But it says what in the article you're hearing? Wall Street sees a minimum of $40 billion of opportunities. Yep.

I lost you for a second. Can you tell me that again? Yeah.

No, in the article it says Wall Street sees a minimum of $40 billion trading opportunities in these refund claims. Right. So, I mean, this is serious money. It is. And certainly that's a big bet to go and pay 40 to 60 cents on the dollar and not ever be able to recover those refunds. Yeah.

The, the interesting, I think, component of that plays out is, um, so two things have to happen, right, to go along with this, is we've got— you've got to, one, be able to sort out which of those tariff dollars were collected, were collected under different statutes for different— versus the, the Emergency Powers Act. And I think it was, was it 6— I can't remember which side of it. I think it was 60% was either under emergency powers, but I think it was actually 60% the other way. Do you remember that?

Yeah, I believe under the emergency power, about $170 to $180 billion were collected. That's what, what the article is saying. Okay.

So you've got that. And then now let's just go back to the— this dilemma. Right. And I think this is why. Right. And I don't— I don't know. And I don't think I looked deep enough on— as we look at the, um, the— trying to remember the name of the, the court. It's a, um, you, you said it earlier, just trying to find it. National Trade Court, International Trade, right? I looked them up, I wasn't familiar with that, and they've got some pretty big teeth. Yeah, my assumption is that it's just because it's just the nature of this administration right, um, will probably push this to a higher court and/or the Supreme Court and kind of work to drag this out, which is going back to, you know, where we're at with our tacos and margaritas on this and me saying, you know, I mean, by the way, I don't know about you, but it just astounds me that it's March 6th, right, already. It just— I don't, I don't know where, where time is going. And it's been 2 weeks since the Supreme Court made their ruling, and there's nothing clear on this other than a court came and said, okay, you've got to— you have to do this, right? Because the Supreme Court didn't say you needed to do it, now we're going to say you need to do it. I think the most important thing comes out of this. Mike made a comment a few minutes ago here, says, where does all this stop if a manufacturer can sue for refunds? They provide these refunds to the distributor since most of the tariffs were passed on increases, the distributors undo, we tap into our customers, tap that onto our customers. You know, the— there's so many layers, right? And this is, I think, what the administration is going to bring up is— and it's the same thing that, you know, Secretary Bessant said last week to FedEx was the— to FedEx was about their lawsuit is great. You know, tell everybody how you're going to go distribute these things now. You know, what you and I— we were talking about this, I think we were talking about this over lunch when we were together earlier in the week— was that, you know, when we see FedEx with this big lawsuit, right, it's a smaller number. I think it's $200 million that they're suing for, something like that. Is it's not tied to you and I getting an Amazon— not an Amazon, but some delivery from FedEx. It is tied to the companies that are importers or manufacturers in the US who are using FedEx as their merchant of record to bring things into the country. So they can probably do that. But just let's just say you and I had— well, we were, you know, I was over at your house the other day and we were talking to your neighbor that's got a small manufacturing business and he's been hit by some of this from DHL. So, okay, so he gets some of this money back, right? Your neighbor Matt gets some of this money back. What does Matt do? Does he share that back with the customers that he raised his prices with?

Well, I think that's— we talked about last week. I think the— look, it's not simple. There's no doubt about that. But the issue— I think there's two issues, right? Recovering of the refunds or recovering the refunds. And then the second is how the company handles the recovery. Right. And what FedEx said, for example, and I could— I believe that even Costco came out and stated— don't— I'm not 100% sure. I have to go fact-check this, but I believe Costco even came out and stated that there would be a rebate or an additional rebate passed through to, you know, you get these rebate checks every year from things that are there, that there will be rebates passed through to members of Costco. Now, how much or how— what percentage or whatever? To be determined. Right? So I think there's a legal aspect of how a company could recover the refunds. And then there's more of a PR or customer relationship aspect of it as to how they handle that and how they share the wealth. And I do think there will be scrutiny, especially on larger companies, on how they share the wealth. I don't know that that scrutiny will exist to the same degree at smaller companies, but it could. Right. If you have a handful of customers that paid substantially more money because of tariffs, you might want to come back to your supplier or whatever and say, hey, you know, is there a rebate or is there something we can work out as we go forward, as we negotiate prices? But I think two of them have to be separated out— the legal legality of recovering the refund and then what happens afterwards.

So let's just go back and it's something Mike said. And, you know, Mike, Mike leads a a large distributor in the Pacific Northwest and Alaska. We've got other folks that have been with us this morning and commented who are senior executives at large distribution companies. Here's my question with this. If— and there's multiple components of this, so let's just say to start with now, and then I hope Mike doesn't mind me using his business, but it's a good example. Great, great people at at ARG, Mike's company. It's an employee-owned company based in Alaska. But let's just use that as an example. So you think about the complexity of this. So now I have to go figure out, okay, I have 300 suppliers, whatever the number is. Go back, sort through. Let's just look at the logistics of this. And anybody that can, can, can, give me things I'm missing on this, please share. But I have to now go through, I have to look at all of the invoices and my vendors, and then I have to go back and see how did they invoice me for this increase. Is it a line item that says it's for a tariff, or did they just raise their prices? And over the phone, my regional manager that I work with for ABC Manufacturers says, hey, you know, it's tariff-related. We're just— we're having to raise our prices, right? Because if they just raise their prices, then that's a whole different component than saying it's a line item. So let's just assume now I've got to go calculate where are the line items that say tariffs to figure out what I paid. I now have to do that by each vendor. So now I have to figure out, okay, so now I've paid— let's just say I've paid a quarter million dollars in price increases in the last 6 months related to tariffs. Now I have to go back to that manufacturer and say, here is my expectation of you to give me these dollars back. Right. And I see Bob's comment here that you're laughing at. Says just let AI do it, right? Yes, because it doesn't hallucinate on things like this.

And, and the very few distributors, I think, would do a pretty good job, actually.

Well, but the challenge with this is very few distributors have AI associated with their ERP systems, right? And maybe some of our friends from Infor, if they're with us this morning, I think a few folks from Infor accepted the invite and were joining us today, could chime in on the realities of all this. But I'm just looking at the complexity of this. Then if I'm this, you know, if I'm ARG or whoever it might be and I'm sorting through this and I decided I'm going to put all the work in and I'm going to go back and request this, Now then, the manufacturer is looking at this and saying, okay, I have this one distributor of my hundreds or thousands of distributors that's coming back with a request. They have a number. Well, I'm not giving them a penny back unless I've recovered it. And now I have to calculate all of that. I don't have the internal teams. We work at LeadSmart with many, many manufacturers who do not have the internal resources and with some very large global manufacturers that we partner with. That still don't have what their needs are to do that. And now the same guy that said— I'll just use Mike, I hope he doesn't mind— as an example, Mike has to be prepared. Are his contractors and, and manufacturing facilities or whatever that he sold those same goods to, are they back now trying to figure all of this out to say, what am I owed to Mike? And then at the next layer of that down comes to the homeowner that says, Well, wait a minute. Look, Mr. Contractor, you just— whether I'm a homeowner, I'm a commercial facility, right? We've discussed this before. But when you really start breaking down what it's going to take to do this, and no one wants to give dollars back that they haven't received yet. And if you can't receive the right— this is an absolute train wreck, right?

I don't think anyone's arguing, or I won't argue certainly, that this is complex. I think it doesn't. I think it can be made less complex, but I think you have to separate out the refund recovery. Right. Which is a legal entitlement per what the Court of International Trade said. Right. That you are entitled to a refund if you paid it. Forget— just stop right there. Don't worry about all the ramifications or I wouldn't say don't worry, but let's not take into account all these other downstream ramifications that you're bringing up. Right. So the question is, are these companies going to work anything that they can do to get their refunds, including potentially selling their interest of those refunds to the private equity hedge funds or whatever that have been created that are there? So that's step one. And I agree, no one's going to pay anything until they get any money in one way or the other. Of course, step two is how they handle the PR aspect of it and how they handle the customer relation aspect of it. I think it can be to try and get everybody to go to connect all the dots and everything like that. I think that's probably not realistic, but to do something like even Costco said or FedEx said or whatever, hey, you'll see a rebate or you'll see a credit or we'll apply some discounts or we'll provide some goodwill to help offset these things. I think that can be done. In a way that would appease those downstream people in some cases and not make it overly complicated where you're trying to reconcile everything to the penny all the way through the process because that's not going to happen.

[Speaker:TOM_BURLESON] Well, let's take— I think the issue— let's stop talking about the retail scenario, right? Because it's the one that doesn't impact our listeners per se in the same way. But if you think about it from a I'm a manufacturer, I'm a distributor, and I buy belts or hoses or wrenches from a manufacturer, right? And the manufacturer got hit with those. I have all of these downstream impacts that, that come with this. My question is, and maybe I'll just ask you, the likelihood of the— your likelihood of this happening is, does the administration say— and I think you might have even commented on this before, Tom. Does the administration say, yes, before you're able to get that, you need to provide us with a plan, and here's a template with what your plan is, and then your ability to document that you've done it, right, to get these dollars to move downstream?

I believe that will be true, especially for large companies where there's large numbers. I don't think that'll be the case if it's, you know, hey, I'm trying to get back $100,000 or a couple hundred thousand dollars or something like that. But I think some of the, you know, the FedExes, the Costcos, the multi-million, hundreds of million dollar type thing, I do think that could be part of the settlement, if you will, that will end up coming out of that. Yep. But again, this is all where we talked about last week is when all the dust settles and all these logistics are worked through, when is that first payment going to be made? Right. And that's really where we had that discussion of when. And that's why I said September, Nick said November, and you said March. Okay. You still—

yeah, no, I don't. I just— I— and here's the— I guess the thing that would really suggest whether— maybe, maybe you could do a quick— or one of us do a quick search on this, but I can't imagine that that judge's ruling can't be appealed. And if an appeal goes to the— so I'm going to throw this back at you. Assuming this ruling is appealed and the appeal needs to go to the Supreme Court, but it probably doesn't. There's probably an appellate court first. Yeah. And then it gets pushed to the Supreme Court. Are you still holding by Q4? I am.

Yeah.

You think this could move through the Supreme Court that quick?

Oh, I don't think it'll move through the Supreme Court that quick, though. But I still think there could be some refunds or other things that are taking place.

But why would, why would the government provide any dollars if they're going to try and push this through to the Supreme Court to get, you know, I guess I take that back.

If it goes all the way through to the Supreme Court and it goes through, yes, you're buying me tacos, right? I'll buy you tacos and margaritas. Yes, you're going to win. Neither Nick or I will win. Right, in that situation.

So, and I just— if you look at— so if you look at the track record of the horse we're looking at, right, what do they do, right? And, and, and the thing that we didn't talk about today, and it's worth talking about briefly again, uh, because we have, I'm sure, new listeners today, is the impact of flooding $170 billion back into the economy when we have all kinds of struggles right now with the economy, with recession concerns, with interest rates and all of those things and the deficit. We just reduced the deficit by that much money. Right. So now you're looking at—

we haven't done anything with that money yet.

It hasn't been used. It's sitting there that can be used in that setting. And so there are major implications of what happens in that case. And so my suggestion would be, if we're looking at an administration that is trying to get balanced trade, lower interest rates, onshoring, and stop the bleeding of the deficit in this country, it is likely they are going to do whatever they can to not push those dollars back, most specifically because they're just implementing other tariffs. Sure. Right. So I think— I mean, this is, this is a lot of discussion left to have over a long period of time. If we were in a position by the end of this year to look back and be able to be clear on what has happened with all of it, I would be quite surprised. So, but before we jump ahead, and I want to jump ahead to all of this, one of the other articles we covered today was from our friends at the Distribution Strategy Group. Don Davis, I had a chance to meet Don last spring, or last summer I guess it was, at an event, uh, wrote an article about, for DSG, about what distributors should do now regarding tariffs. And funny enough, quoted in that article with a big fancy picture of his big smile was Mike Mortensen from, uh, the president CEO of ARG, who's with us today, that's made a couple of comments about this. There was a couple of things that came out of this, uh, that I just— a couple of statistics I'll share before we jump ahead. Tom, are you okay with that? Yeah, please. Uh, so it says nearly 90% of tariff fees paid by importers were passed on to companies including distributors and consumers, according to the Federal Reserve Bank of New York. That's higher than I would have thought. I would have thought that they would have eating a little bit more than that. And then our friend who's been on the show before here, Alex Chasovsky, who's the president and CEO of 3DM Consulting, says that his distributor clients raised prices 3 to 6 times in 2025 due to tariffs. So I think that's pretty powerful about the number of times that prices were raised in that setting.

So what was their— what is their statement? Bottom line?

I don't know that there's a bottom line about it. I think that the big piece of it is talking about applying for the refunds, but being transparent with your customers and so forth. So anyways, that's the— it's good article there. We've got a few of those that were here today. So let's kind of jump ahead. Where do you want to— where do you want to jump to?

Let's go to manufacturing. And I don't know if there's anything here you want to hit on right away.

Well, we've got there You know, there was, there's actually one previous one, Tom, if you'd kind of jump, scroll back up there for just a second. I think the, well, we talked a little bit about that already. I was going to say we talked already about the Iran conflict and shipping and so forth. So yeah, nothing specifically in that side of things on our manufacturing and distribution segment. There's an article there about manufacturing growth for a second straight month despite the headwinds, which is a positive thought. And then there's a good article in there about from Industrial Distribution about margin erosion and the technology imperative for distributors. So I don't know if you looked at that article, but that one is a pretty solid one as well. Yeah, let's jump. They talk about 3 pillars of erosion of margin, external pressures, global instability and inflation, the transparency trap, digital platforms. Have made prices so transparent that distributors are being lured into a race to the bottom. I think that particular one really ties in now as we look at agentic commerce, right, is the reverse auctions and things like that that are going to be happening are going to be probably become more and more because the agentic tools that go with that. Uh, and then they talk about it, and the third one was of the three pillars that they talked about is the internal silent killers. Inconsistent pricing discipline, pricing expectations, sales teams— basically, that's sales teams discounting too aggressively and shifts in sales mix or low-margin items dilute the winners. So they talked about there being a defense to all of that, or a strategic response, that AI and machine learning for demand forecasting can really help with carrying costs that will help with margins as well, and using robotics that reduce the human error when we get into, and really AI would tie into this as well from a billing standpoint and an invoicing standpoint, and robotics takes the error out of what gets packed and misshipments and so forth to a large level.

You know, it's interesting what I was saying earlier, right, about our electrical distributor customer and some of the things I was working on this week is one of the things we're looking at is, you know, they're selling like a salesperson may be selling large amounts of a certain category, but it's kind of a low margin category. And there's some ancillary categories that they're not selling that are much higher margin. So identifying those ancillary categories or even products within a category, right, that could be higher margin than another from one way or the other can make them. And I think they were talking about this, like adding more technology and digital. Plus, I think is the word they used in the article, but I think it's really how do you intelligently sell, right? Again, more broadly, but understanding margins and things like that. I don't know. It seems from what I'm observing, I'm not sure that there's a lot of emphasis from the sales side on margin. I know there's talk about it and it's brought up, but I think the top line number sometimes ends up trumping the margin aspect of things. And yet there's a lot of opportunity to improve the margin side of things.

Well, order takers, right, rush to whatever it takes to get the order. Salespeople work on value to bring solutions to customers where pricing is not the only consideration. And so unfortunately, we see There are a lot of organizations that still have, you know, order takers, order chasers who are looking for the volume and so forth, and that they will chase whatever business it has, whatever price they need to get to versus the value component. Now, there are some times that when you're selling, you know, high quantities of commodity items where it just is what it is, there's kind of an industry and a market price from a sale price versus, you know, kind of mimics what the pricing is from the manufacturers. And so you kind of see that it's no different than, you know, when we look at commodities like oil and things like that, there's spot markets for all of those things as well. But I think the challenge with that comes is when we have people that are just randomly lowering the price because it's the easiest thing to do. And if the technology can look at this and say, hey, you know what, if you looked at this and said, I'm— you're only selling, excuse me, 3 of our 14 categories that we would like you to be talking to this customer about. And if you— excuse me— if you introduce these other product categories at a higher margin, these invoices would blend to a much better, better item. And it sounds like that's the conversation you're having.

A lot of times what they're selling a lot of is those commodity type Sure. Of course. And yet there's a lot of ancillary relevant categories that are similar, but they're not commodity or as commoditized and therefore have higher margins. Correct. And sometimes they're a little, even what I'm seeing and going through this exercise is sometimes those are not obvious things. It's not that the salesperson's being stupid or anything. It's just not obvious. Right. And so to, to uncover some of those things that make it a little bit more obvious. And it's like, then there's this aha moment. It's like, oh wow, and then I can do that, you know, and so forth. So I think there's, I just see tremendous opportunity for this whole area to help address this issue that they're talking about in the article.

I am very appreciative of the technology that you and your team are continuing to build that can uncover these things for distribution customers. Well, did you catch that compliment?

Oh, thank you. I appreciate that. Um, yeah, I didn't even hear it. It was, I was like, what, what's happening here? Yeah. Um, is, uh, is when you take that to the next level, right? And this is, I'm not to go off track, but I'm, what I'm, but you will. I will. Yeah. Just for a minute. And like you never do. No, I wasn't talking about, you know, a guy who stays on track.

I wasn't saying that. I just, I laugh at when, you know, people say, right, it's when you, when you, what is that old saying? When you finish up a sentence with a but, it, you know, takes everything away from what you previously said. So just say instead, say however. Yeah.

Anyways. Anyway, what we're finding is, is if you discover, right, there's a discovery aspect to find out where these potential opportunities are. These are. Then you alert, right? Which makes it come to the surface so somebody knows. Then the next step, which is really interesting, is we're seeing, okay, well, how do you then guide the, the salesperson or whatever to know what to do with that data, right? How to communicate that data? What do you say? What do you do? How do you incorporate that into the next meeting or next conversation? All of that. And then there's a fourth layer, which we're not there yet, but to be able to even automate some of that so that when that alert or when that situation is observed, how do we automate some of that then on top of whatever in, in, in, in as a supplement, supplementary action to what the salespeople can do on those things. But if you look at those discover, alert, guide, and automate, I hate to say it, it's called DAGA instead of MAGA. Um, but should we get some hats?

Yeah, I should get some red hats with Wright Lottery. Yeah, I'll order those today. DAGA.

No, get the LeadSmart color. We don't need a red hat. But, um, but if you look at those, those things there and you kind of go step by step, the amount of intelligence that comes to the surface and the amount of outcome that comes to the surface is pretty remarkable.

What does DAGA stand for again?

One more time. Okay. So discover the situation, alert, right? So it's great to discover it. The AI and other things can discover it, but then we have to alert and let everybody know that it's there. Then it's there. It's like, okay, what do I do with this? Which is guide. And then ultimately automate, right? So automate at least some of that actions, the follow-up actions.

And so let's, let's, this is really cool. So it makes me think, right? Talking to a bunch of customers and prospects in the last more than a year, but you know, there's a lot of companies who have purchased different types of— I don't know how you describe it. I don't want to mention names of products, but I'll say lightweight business intelligence tools where from a mobile app you can, you know, look at some sales comparisons and some things like that. And what we've learned is that the vast majority of people that have spent a lot of money, and these are $50 to $70 a month per user pieces of technology. The idea had been that salespeople would go in and they would log into that tool and they would slice and dice what's going on with their customers and they would find, you know, some areas where, oh, this customer stopped buying as much or whatever it might be. But really what those tools have mostly turned into for the majority of the people, and I've talked to dozens and dozens of companies, about this. For the most part, what that has become from people is a solution where somebody looks and says, what did I sell yesterday? What did I sell last week? What have I sold month to date? And maybe comparing it against another period. And it's usually tied to my commissions, or they might look at it when they're going to see a customer. But the reality of it is, is, you know, I was talking to a customer a couple of weeks ago that has a couple of hundred licenses, and he said, like, you know, 20 people or so use that product here and there. Right. And the issue with this is, to your point, your comment there is the alert and then the guidance.

But it's also the discovery, right?

It's like, well, it's discovering it without you having to— it's automating the discovery versus manually going and figuring it out and widening the discovery capability.

Right. If you go into a BI tool, you're looking at what has already been done and you're oftentimes trying to look for, you know, defensive situations versus offensive situations on what you can do because you don't know what you— you've never done it, right? You've never sold this category with that category, so it's not going to show up in your BI tool per se. So the goal is to widen the breadth of discovery so that we're finding not only things that we need to play defense on, like reduced spend and stuff like that, but where is our opportunity to have offense in those areas, then yes, then go alert and bring that to the table on what it actually is. So the discovery and the alert, all of those things are with AI and with, you know, kind of where we're going. The capabilities are way broader than it's been with historical reporting and BI and things along those lines.

The— it's the silver platter solution. Right. Sure. You don't have to go log in. It's going to come to your phone and your email about what's happening, what, what you should do, and what the results should come out of that. Sure.

No, the goal is to be proactive, right? But the discovery, to your point, right, with BI, you, if you're the salesperson, you have to do the discovery. You need to log in, you need to run the reports, you need to do all of those things. With AI, we're able to do the discovery in a way that's much broader and much more comprehensive than we're going to end up— any individual is going to do. We can weigh that discovery in terms of understanding what's really important and what isn't, right? Because not all discovery is of equal weight. And then prioritize that and then alert people, not so they're bombarded with 50,000 alerts, but alert them to Hey, here is some real things that can move the needle, provide the guidance. And again, I believe eventually be able to automate some of that stuff as well as those, you know, discoveries and alerts are coming together. Good.

So anyway, so there's our Buy Leadsmart Channel Club ad for the day, huh?

Well, I wasn't that— it's not even just Leadsmart. It's just those are the things that you can be doing to handle this margin erosion that we're talking about here. Right, is it's, it's, there's more to it than pricing and, and things like that. There's a lot more to the equation, and all of that is much more realistic than it's ever been.

And the beauty of that discussion, right, is we talk about oftentimes in the, the, the big flag being waved with AI, right, is, oh, jobs are going to go, jobs are going to go away. But the reality of it is most of the customers that we talk to in wholesale distribution manufacturing, they're They're not interested in getting rid of people for the most part. They're wanting to make those people better and more efficient. That's right. And so now you look at how much could we grow? What could we do to top line revenue by using technology to maximize the time and energy of the people that we have? Mm-hmm.

Right. So like I said, you probably could see, I think we'll see in this project alone, 50% top line revenue growth over the course of the next few months from their sales team. And I think the margin though, the margin numbers will be— percentages will be significantly higher along with that 50% growth. So it's not just 50% top line growth, it's significantly higher margin growth out of that 50% that's there. Yep. So, all right. Boy, we're out of time. Oh no, we are not quite, but I guess we got a little more time.

We got all day. Yeah, that's fine. No, I've got, uh, I got a full day ahead of me, as I know you do.

So what do you want to hit next?

Well, I thought, you know, as we look at, uh, kind of thinking about our, um, our marketing and e-commerce section, I thought that, you know, there's, there's an interesting article there about, from SmartBrief, about, uh, rethinking solo coordinator model in marketing and How to Be More Efficient with a Small Marketing Group. But there's another, as we talk about e-commerce and marketing, there's a segment in there too about content marketing and what does that really mean as we get into this agentic age and content development. Those are, those are good articles. But, you know, as we talk about e-commerce a little bit in this setting, Tom, I thought that there's kind of a line drawn in the sand there in that article because about Amazon and Walmart. And so the article there is from Digital Commerce 360. Our friends over there. This is from Brian Wormuth that wrote this yesterday, but it talks about the trends, how Amazon and Walmart approach agentic commerce differently. And I think this is worth a short discussion. You open to that?

Yeah, no, I thought it was a good article. Interesting, interesting. Well, certainly different business models and different ramifications.

So it really ties into so much more of how we're looking at AI in general right now with this kind You know, and the key thing to this is what, what really is happening between Amazon's approach to agentic commerce, right? So where we're using our OpenAI or our other, other AI tools to do purchasing for us, not only search but then to purchasing, is Amazon's taking the approach of its what they describe as a closed system that's basically saying, you know, use their Buy for Me tool or Alexa as a tool. Sorry, I just alerted something here in my office. And that they're blocking the third-party AI agents like a Perplexity or something like that from scraping their site because they want to keep their ecosystem tight within themselves. And then Walmart's doing the complete opposite with an open approach that's saying they're partnering with OpenAI, their partner for ChatGPT, they're partnering with Google and Gemini. And they're bringing this whole open scheme of things where now they're facilitating checkout and doing the whole piece of it there.

And the reason is Amazon wants to retain their Prime membership, right? They want to maintain the leverage of their Prime membership by keeping everything inside their Amazon. Yep. That's, you know, some of the AWS stuff and things as well. Walmart doesn't have that. Same business model, right? So Walmart is not— if you look at Amazon and sort of the Prime being probably their biggest profit maker out of the whole thing, is that is, you know, sacred, right? Whereas Walmart doesn't have that same situation that they're, that they're working with. I think Amazon is actually going to find themselves in trouble from this. Yes. I, I don't think in this world closing, it's like open source versus closed source, you know, that kind of, that, that argument. I think being more open and providing more channels, if much like if you remember, right, Windows and PCs versus Macs back in the early days, right? Mac wanted everything to be closed. We don't share anything. We don't, you know, do all that. The PC world was, you know, where Microsoft came in, right? We'll work with any PC that's there. It's there. And obviously that was a winning formula at the time. I think that the Walmart approach will be more of a winning formula going forward. I just, I think that's a hard, hard thing for Amazon to try and do.

Well, I think, yes. I agree with everything you're saying there. And I think right now it's the reasoning behind that. And your points are really good about why the reason behind that. I think this would be the first time that I can think of that I really can see some risk for what Amazon's doing, but I kind of put Amazon and Elon Musk in the same bucket. I kind of love to hate them and I love them and then I hate them and I love them and I hate them. But the reality of it is, By the way, for the— talk about squirrel here, uh, shiny object is I had to return some stuff. I returned almost 3 weeks ago, I returned 2 computer monitors that we no longer needed at the office. We'll need them in a couple of weeks, in a couple months, but not right now. And I had ordered them too early and I sent them back. It was like $560 or something like that. I'm fighting with them to get the, the return paid. And so far I've only got— after the first bot conversation of 15 minutes, which is a horrible use of time, um, they said, oh yeah, we, we can see that we have those boxes, we'll get it done. And like 5 days later, one of them was refunded. And now I'm gonna wait a few more days, but it's just crazy. But I am going to shift gears on you here. So the— I would never bet against Amazon and I'd never bet against Elon Musk. That said, I believe that Walmart is very, very well positioned right now. And Bob makes a similar comment to this, right? He commented here that Walmart is a physical cross-docking monster, not a digital monster. But I think now we may see this place, if they can do the right thing with, with Agenta Commerce, right, with this open network as we're describing it, and you put that together, I think this could raise them up to the place of saying, oh, you know what, by the way, Amazon has not done well with their physical stores, right? They just— was it Amazon Fresh? I think is they're closing all of them or nearly all of them. Whole Foods seems to be doing okay in some places, but that's more of a niche play. But now you look at, I can buy through a chatbot, OpenAI, Perplexity, whatever it might be, from Walmart. I can get it delivered quickly, or I can pop in when I'm going grocery shopping and grab it too, right? This could be an interesting moment for them. You know, and I've thought in my mind, as long as there's been Amazon and online buying at Walmart, is Walmart was really the only company globally that has been truly positioned to ever challenge Amazon.

Well, we'll see how it plays out. I don't know if you were going to say this when you were talking about Elon and all that stuff, but, you know, I don't know if you should bet against Amazon. I mean, there's certainly smart group of people and successful people. But I do think the closed approach is going to be somewhat limiting.

Yeah, no, absolutely.

But I guess— very compelling reason to, to do it that way. Yeah.

As I look at that is it's the— I'd say don't bet against them because there's a recovery component, right? It could be the wrong move, but they could recover from that and pivot very quickly. And for an organization of that size to make a pivot, it becomes exponential when they do that. So good. Let's jump into— we only have a few more minutes here today, but let's say we've got our technology, cybersecurity, and robotics segment. There was an interesting article there about— and this is from TechCrunch— about China's humanoid robot industry is winning the early market. Now, earlier, it's interesting enough, right, that, um, there's a discussion about some of the German robots that— from an article about, uh, warehouse robotics, and then BMW in a manufacturing facility in Germany using humanoid robots in their plant now. So again, I am the penultimate optimist of where we're going to be at in the very near future with humanoid robots. Very much more bullish on this than you are, but there's an interesting article about there about China's positioning in this as well. And I think they've got a lot at risk here and a lot to gain if they can get ahead of it. Agreed. You know, so they've got kind of 3 of the top companies out there in this, in this place. So, you know, it's what's going to be interesting is, and I think, I don't know why, I just, I remember, I remember, it's just funny, we were in Houston a few weeks ago and I had been there in, I think it was late August as well. It's such a beautiful place in August, Houston, with, it's not sticky or anything there. But I remember driving down the loop there and listening to a podcast, and I just remember they were talking with Elon Musk about robots, and he just commented that he said, I think his words were, from the elbow to the fingertips is the absolute hardest. And I feel like right now, looking at all of this is what's going on, and every time I see the, you know, the dancing robots or the backflipping robot or the soccer ball kicking robots, Just show me what they can do with their fingers, right? Because when they have really good manual dexterity, it's— man, the stuff that they'll be able to do is astounding.

Knitting or crocheting or something like that, then you know they've got it.

Right, exactly. Good. Let's make sure we hit at least one of the AI articles before we go. We've got our segment, the latest in AI news.

Okay, so this article here, maybe we can bring it back next week from MDM. The Your Data Is Worthless Until You Give It Purpose. That was a good article. I don't— we don't need to cover it now, but maybe we bring it back next week or, um, whatever.

Why don't you send a note to Lily about that to make sure we can do that? That article had the 4 pillars that it talked about. Did you catch those?

The, the data article?

Yeah, the MDM article. MDM has a great new Great new logo adjustment that they've done. So it talks about more value doesn't, more data doesn't mean more value. Right. And so that ties into some of the pillars that they talked about here were clarity over quantity. A 1,000-line report is a haystack. One dashboard with clear indicators is a tool was one of the recaps that my AI tool gave me of that. And then, you know, interesting charts can become decorations if the data doesn't the data point doesn't tell a manager exactly what to do next, it's very useless. I'm going back to your DAGA discussion today here, Tom, so we can, we can certainly include this article again next week and talk about it. But it talks about trust with humans, data adoption fails not because of tech, because of a lack of literacy. If the C-suite doesn't understand the why behind a number, they'll revert to gut instinct, as will a salesperson or anybody else in an organization. And for me, what that key component ties to is back to our conversation about maybe we don't need to worry quite as much about AI replacing jobs. And I know there's people whose articles we've used today who are painting a picture of that wholesale distribution and manufacturing, but wholesale distribution in particular, really needs to get their arm around or their arms around the fact that AI is going to replace a lot of their people. There's two sides to that argument. I could, I probably could argue both sides, but knowing what I know in 35 years in wholesale distribution is these are a lot of good people and a lot of good companies that aren't necessarily interested in replacing jobs. Now maybe, maybe a QXO is, or maybe there are some that are of the very, very large and bulky companies, but I don't think it's necessarily when we see that will be about— Bob just made a comment that's got me thrown off a little bit. He says, "Never discount gut instinct. Never." Bob, send me a note if you think about it. We're connected on LinkedIn. I'll connect you to a wonderful speaker from Harvard that I heard at a conference in January that gave really the analogy of when to use gut, when to use data. It's a was wonderful. So from that standpoint, but in going back to this as a whole, right, is I don't think if we see large layoffs in wholesale distribution with somebody mentioning it being related to AI, I think it's going to be the same AI view that we're seeing, or whitewashing of it that we're seeing in, you know, we saw it last week with eBay. And I talked to a buddy of mine that's an executive at eBay last week. I was texting interviewing with him. And, you know, he shared with me a little bit of the details of that. And, you know, it's very, very little of it, if any, is tied to AI replacement. And you look, if you were— I bet if you peeled the onion behind Jack Dorsey's Block company that laid off, was it 4,000 people last week? You know, Jack Dorsey's the founder of Twitter and and a handful of other companies is that's just right-sizing an organization versus really, are they replacing workers with AI? Yeah. So I think we're going to see more of that. So yeah, we can, you can use this article and get back to it. So where else do you want to hit anything else before we go, Tom?

I think we just wrap up. It's getting late. That's great.

So we've got some good, good additional articles. Just we'll hit it really in our sales and M&A segment. We always, I say always, but regularly try and feature some articles in our Sales and M&A section. Mike Kunkel's got an article about sales manager overload, what to remove, redesign, and/or protect. And so you can easily find Mike Kunkel with his Straight Talk on Sales in LinkedIn. He posts some really good stuff. So a few other articles, good articles in our M&A section, People and Leadership section as well. Of the newsletter talking about how AI should handle workplace discussions in the— about politics in the workplace, and some information about the Department of Labor's loosening up the independent contract regulation— contract relationships that got tightened under the Biden administration. So, great article in there. I don't know if you read it about workaholics, why do workaholics work so much.

I didn't read that one, actually.

It's actually that the depth of it is it's tied to the company culture, right? So if you're, if you're trying to manage all of that, it's good. It's a, it's a good, good read. That just ties back in as we wind this down today is that we've been reviewing through our newsletter. I just recapped a couple of articles that would be beneficial for you to get a read of. If you do not get that newsletter and you would like to, we would love to share that with you.. And, uh, you can get that from us through just sending us a simple email at, uh, hello@leadsmarttech.com. And, uh, Tom, maybe you could jump to full screen. We don't need the newsletter there anymore, uh, or scrolling. But, um, you can get that by reaching out to us directly at, uh, hello@leadsmarttech.com. If you're active on LinkedIn, you can, uh, find— search— just search around the Hornet Wholesale Distribution.. You'll be able to find it there as well as if you want to just on LinkedIn, go to the LeadSmart Technology page and you'll see on the far left column newsletters and you'll find it there. And then we have a website for our podcast and live show called aroundthehornpod.com and you can sign up for things there. So, we're appreciative of, man, great comments today. It's so funny, sometimes we'll have, we'll look at the statistics and we'll have a week where it's just record listeners and downloads for the podcast and hardly any comments. And then we'll have weeks where we have lots of comments and it's just kind of an average week for downloads. So we appreciate all the people that put some time and energy with us and spent 90 minutes of their day with us. Yes, appreciate that. It's got some exciting announcements, you think, coming up soon about the show and some offshoots of the show that we already do and I've got some good guests coming up. I've got a list that I'm working on right now and got some good commitments in the last couple weeks for some upcoming guests. So we'll keep this momentum going. We're at 180 episodes today, so that would suggest that we're 20 months or 20 weeks or 5 months away from the 200th episode. And, uh, I think we should just like go to Hawaii and broadcast the show from the beach or something.

Okay, well, it's 5 months away.

It'd be July-ish, I guess, somewhere in that neighborhood. There's never a bad day in Hawaii. Yeah, it's true. Um, you know, maybe, uh, maybe we sell sponsorship for the first time for, for the newsletter and fund a Hawaii trip for that show. Yeah, we'll get on that. All right, my friend, any exciting weekend plans? Uh, nothing. Software?

Sorry, gonna build some software? I've got some work to do before I go to New York the week after next. That's right. Very good.

All right, let's get out of here. Thanks everybody, we appreciate you being with us. We wish you a wonderful weekend. Be kind, be safe, do good things, and come back next week. And don't forget to hit the subscribe button and leave a review if you can.

We would greatly appreciate it. Agreed.

Thanks everyone.