Around the Horn in Wholesale Distribution, Episode 131

Sa. Sam.

Oh, I'm dizzy now I'm dizzy.

What's happening?

Pretty good. What's going on?

Oh, man. Great morning. Got some rain coming in later in the day, which is desperately needed here in Southern California and ready for a great weekend ahead as well. So you doing good?

Doing good.

Awesome. I don't know, I'm waiting for him to solve his issues and maybe, maybe I should phrase that a different way. We're waiting for him to adjust a technical piece and, and join us and pop in with us. I'm sure he'll be here momentarily. We're looking excited to have Sean with us. But you know what, Tom? Let's do this.

Other stuff so we can jump. Right.

Let's get through all the other stuff. So when Sean gets here, we're in. We're ready to roll. I'm Kevin Brown. I'm here with my lifelong friend and business partner, Tom Burton. And we're excited today because got a great guest coming in. We've got Sean Dubervack, PhD, economist extraordinaire, probably the least geeky economist I've ever met. But we're going to talk about some cool stuff with Sean today. So we're excited to have everybody with us. We're going to talk about quite a bit of stuff related to tariffs and onshoring as well today. We've got some pretty cool information. We're going to talk about, about some.

There's no big nothing going on.

Yeah, nothing to talk really about that. Right. We'll dig into that. But some, some great stuff that we'll be talking about as well, related to AI as well. We're going to talk about robotics, some really interesting and unique stuff happening. We're going to talk a little bit about agents as well as we do on an ongoing basis. So we're happy that you're with us. Hope you can stick with us for the, the bulk of the show today or certainly listen in on the recording later. But we'll kick off our housekeeping really quick, as I mentioned. I'm Kevin Brown, this is Tom Burton. And we get together every Friday and we talk about industry, supply chain, the economy, mergers and acquisitions, technology, AI, of course. But we take all of the news of the week, we combine that into a newsletter that we publish each week. It's called around the Horn in Wholesale Distribution. Just like our show. We, on this show, we review that, that newsletter and we apply that back to wholesale distribution and manufacturing and the impact that that has on those two primary arenas. We, we do that because that's where Tom and I focus our time and the time and effort each week through our business at Lead Smart Technologies, which is focused on supporting wholesale distributors and manufacturers with technology to help them accelerate growth in their business. So we're happy to have you with us today. If you don't get that newsletter and you would like to, there's three simple ways to do that. You can just quickly send us an email@helloadsmartech.com and we'll get that out to you. You can join us if you're on LinkedIn. Just search around the horn in wholesale distribution and the newsletter will pop up there as well. And you can subscribe to that. There's also a page for the show there. And you can subscribe to the show as well to get other updates with that. And then finally we have the www.aroundthehornpod.com website. You can get that information there. So enough of that. We'll talk a little bit more about Lead Smart, who's our sponsor each week, later on in the show. But that's what we wanted to get out there. We still still no word from Sean here, but I'm sure he's working on getting in. You know what? I have had myself that panic, whether it's a zoom meeting that you're presenting at or a, a podcast you're joining, if you have a little technical glitch along the way that the panic that goes with that is never any fun. So we'll take, take Sean as he joins us and we'll maybe pause a little bit, Tom, and talk with him. But before we get going, Tom, any jokes to roll off for the day? You know, any dad jokes?

ANDY no, no dad jokes. But I'll say good morning to Bob. I have no idea if he is a key or Smithian economist. Do you know that? KEVIN Good morning to Ted from Miami. And yeah, if you're out there, please jump in, let us know you're here. And I think once we get our all three of us here, well, we're going to make it a great discussion anyway.

So yeah, it's going to be good regardless. But you know, the I what I thought kind of thought was interesting was I was laughing about it yesterday. I was driving up to LA and I was kind of laughing, laughing about it, thinking about today's show. And I said, you know, we talk about the economy and supply chain stuff and as we kick off the show every week. And in doing that, I have to often comment based upon the opinions that I share. I have to often comment as, you know, say that hey, I'm not an economist. So I thought it would be good for us to actually get one here with someone with a PhD in economics. But anyways, I'm sure Sean will, will join us. It's great, it's great to see Ted with us. We just met Ted recently, new, new friend to join us at the show he's at in Miami and working on some projects down there, it looks like related to Latin America. So that'll be good. So you know, Tom, let's, why don't we just kind of get started and we'll get Sean when, when, when he's able to join us. So I know these are some things that we were looking forward to having him chime in on, but we'll certainly get to those pretty quickly as Sean joins in. But what's the first article we have there, Tom, that looks like a little bit more discussion about inflation and consumer confidence this week kind of tumbled, right?

Well, the inflation or the most recent inflation data came out this morning. Everything was on track or what everyone expected, which is good. It didn't throw yet another, I guess hand grenade into the whole market situation. But the consumer confidence was way down obviously in February. Way down, like way way below in fact below levels that quote unquote, they say can represent a recession or an upcoming recession. My thought on this is the consumer confidence isn't down so much from an economic perspective. It was, it's down, I believe from just the amount of change that's going on. And we know people don't like change, they don't like uncertainty, they don't like not know what's going to happen. And there's a lot of that taking place right now. So in my non economist humble opinion is I think that a lot of this is from just uncertainty. Less so than oh my God. I think the economic thing. Hey, it looks like Sean's coming in now. Great. There he is.

Hi everyone. Good morning, good morning, good afternoon, good evening.

Yeah, well, I guess it is afternoon for you. I missed that part. Yep. Great to have you. Thanks for joining us.

Glad to be here.

Yep, very good. We I was joking with Tom as he had sent me the text about your camera and I said, you know, I don't have the world's best microphone. And Tom's, you know, jumps in and out and pauses itself on its own here and there. So no matter how much we all think we know about technology, we're still kind of impacted some days on with its hiccups along the way that is.

Right?

Yeah.

Very good. Well, hey, you know what, Tom, let's push pause on what we were getting started on the news. Let's maybe do a little bit of an intro to our friend John here that's joining us. And first up, Sean, I know how busy you are and it seems like between having your new daughter, what, close.

To a year now, she just turned two.

Two. Wow. I'm way behind. Okay, maybe I should get on Instagram a little more often and see your travels there. But. Okay, so between toddler some weeks, it seems like you're five countries in three days or something like that with your work. Would you just kind of spend a minute and maybe give us a little background on, on you and your work? And we met originally through the Consumer Electronics Association. It seems like I was thinking about that the other day. It's like 12 years ago probably something like that. And you know, I'm still only 35, so, you know, I was really young when we met, so.

But you, you and me both.

Yeah, well, I joked, I joked the other day I was talking to my wife and I said, because I turned 60 middle of last year and I said, my, my driver's license says 60. My, my mind says 35. My wife says I act like I'm 12 and my knees and my ankle feel like they fought in the Civil War. So I have this dichotomy amongst all of these different factors. So, Sean, tell us a little bit about yourself and your work and the things that you do and in the marketplace and how you help companies in their growth and understanding of markets and so forth. Of course.

Kevin and Tom, thanks for having me here. It's great to be here. And Kevin, as you mentioned, we first crossed paths when I worked for the Consumer Technology Association. I was their chief economist and director of research and I spent a dozen years there and then about eight years ago left and started a boutique research firm called Avrio Institute. As a PM piece of that, I do a lot of professional keynote speaking. So I speak at about 50 events a year all around the globe on what's coming next for technology and, and also what's happening in the, the global economy. So what's, you know, what are the geopolitical forces that are at play? My goal really is to help leaders frame the future, to understand what's coming, how to prepare for it, how to start to implement the, the change that is knocking on our door.

So besides all of that, New York Times best selling author right there. Here. It's right here. It's my copy.

Yeah, look at that, Kevin.

That's one of the, one of the few hard copy books I've purchased in the last five years or so. And, and so Digital Destiny's great, great book. I mean, Tom has, if you can see Sean over Tom's, over his shoulder, there is an icon of the, or a poster of the book that Tom wrote and it's called the Revenue Zone. So I'm the only unpublished person here, which probably is actually a good fit in general. But Tom, you haven't made the New York Times bestseller list, but I know you will.

That's true. And I don't have a hardback, but I'm going to work on that.

Very good, very good. So anyways, we, we were just, we kind of kicked off the, the discussion the show, Sean, a little bit, you know, in the newsletter that we publish each week, we kind of start off on the economy and supply chain. I was joking, Sean, that as we talk about this each week, you know, we, we have opinions. And Tom's computer scientist by education and been successful business person. My whole background is in wholesale distribution and manufacturing. So I have to comment regularly on my thoughts about the news and the economy that I'm not an economist. So I thought maybe bringing one to the show would be a good idea. So we were just kind of starting off on the discussion about some of the topics about this week that we saw about consumer confidence plunging this week and what that's related to and so forth. You want to throw a few ideas into that. I'm sure you're following that pretty close. Sure.

I mean, there is a lot happening. I'm based in Washington, D.C. so there's obviously a lot happening in Washington, D.C. that's having an impact on what's happening in the economy. And then there's a lot of economic factors that play as well. When you think about the state of the consumer, they're in pretty good shape and we saw pretty strong spending in the fourth quarter. They headed into the new year in decently strong shape. I think there are some risks and some concerns and some weaknesses under the surface, but overall the consumer was in pretty good shape. There's been a lot of rumblings from Washington and it looked like both the consumer and the financial markets really weren't internalizing everything or at least they were assigning pretty low probabilities to the, you know, the tariffs on Canada and Mexico, increased tariffs on, on China, what that would would happen, potential tariffs on places like Europe. So now the market is starting to pay a little more attention. I think the, the probability weights are going up. Consumers are also starting to, to recognize that at the same time, you know, there's a large swath of consumers that were hoping that prices would come down or the goods that they buy on a, on a daily and weekly basis, things like eggs, you know, love, love to capture the headlines. And in fact, they haven't been coming down, they've been increasing. We did get inflation numbers today. They were relatively in line with what we were anticipating, but still point to the fact that prices are, are moving up. So I think, I think there's a lot of headwinds in the economy right now. There's a lot of headwinds that are weighing on consumers, and as they start to internalize that, you start to see it show up in their confidence and in their sentiment.

It seems like it really spooked it. Oh, go ahead, Tom.

No, Sean, just before you came on, we were talking about that and we had that big drop in consumer confidence earlier this week, which was, and my take on it was, I believe that drop is more from the uncertainty and all the change that's going on versus a fear that the economy is going to crash, you know, imminently. What's your take on that? Do you think it's more. God, there's just a lot of change and uncertainty and a little bit of chaotic thing and that, you know, obviously causes people to get a little bit.

Yeah, I think I, I think the risk of a recession is still there, but I think it's less than 50% and, you know, for a recession to take place over the next 12 months. So essentially in 2025, that probability has come down for me. So I, you know, if you look at yield curve spreads and some other indicators that we tend to look at for recessions, it does, does look like we are moving towards that proverbial soft landing. At the same time, there are a lot of uncertainties, and I think consumers are trying to figure out what to do with those uncertainties. The financial markets are definitely trying to figure out what to do with those uncertainties. And I don't think a recession is out of the question. I think there's still, you know, probably a 30 to 40% chance we see a recession in the next 12 months. So that's not zero, but it, it has come down from where we were. And if you look at Q1 GDP estimates, we're, we're in pretty good range. You know, where, where we see things right now, probably a little over 2% for for growth, for the economy in the the first quarter. And so, you know, I think we can, we're pretty certain we're not in a recession right now. That's also the great challenge of recessions, is that we tend to call recessions long after they've started. And so it doesn't look like we're in a recession right now, but there are a lot of uncertainties. And I do think all of the forces at play certainly could push us into recession. Significant tariffs on some of our biggest trading partners could certainly impact households, could impact businesses, could, could cause businesses to pause investment or redirect investment. So there are, there are a lot of forces at play for sure.

So it really seems like these uncertainties is what's, what's driving it all. And I, I was, it's interesting you, you'd made a comment about, you know, earlier, Sean, about people expecting prices to come down, you know, in a month after. And I think that new administration, I think maybe promised that that was going to happen right away. But I was literally grabbing a soda at the gas station yesterday while I was filling up. And, and the guy behind the counter there said, you know, Price just went up on that. And I said, well, price is kind of up on everything. He goes, well, they're supposed to be down already. And I'm thinking, scratching my head and going, you know, I understand that's maybe what you kind of heard. But to really see any significant drops in 30 or 45 days, you know, seems a little, a little unreasonable. And then, you know, we talk every day, we talk about eggs, right. But, you know, there's the bird flu and the other factors that go with some of these things. So, yes, you know, prices are up, but to me, it really seems like so much of this is in potentially. And I love your thoughts on this, both of you, Tom and Sean is it. To me, I just feels like the sentiment out there right now is, I want to say uninformed, but maybe perhaps less informed. Consumers are nervous about how aggressive things are going on in Washington right now with doge and tariffs and all of those things. So there's that aggressiveness that people were maybe expecting some of it to happen, but not as fast and at the fury that it's happening. And then on the business side of it, we talk about this pretty regularly. It says with that uncertainty, it makes it hard for executives to make decisions based upon the future of things. And of course, everybody would love to see the Fed take some more additional action or at least have some certainty to Say one of two things, right Is one, interest rates are probably going to hold where they are for the next 12 months or whatever it is. And to how long are these tariffs going to last? Because if you know, and we're going to talk in a few minutes about near shoring and on shoring and we can unpack that even a little bit further. But uncertainty on one the tariffs, their impact and then the length of them makes decision making pretty hard.

Yeah, yes, yes, yes to all of the above. I mean I think there are a lot of dynamics at play. I think you can also take the counter argument that, you know, parts of the consumer base are still doing quite well. We're more reliant on high income households to really drive the economy forward and they're the ones driving spending.

That's Tom. The high income households.

Is there another Tom on the show?

And part of that's driven by strong gains in you know, equity markets and other and real estate markets as well. So people have additional cash to now if we continue to see the real estate, continue to see the equity markets moderate and we lose some steam there, then I do think that even the high income households start to weigh their purchasing decisions more closely. You mentioned we'll talk more about reshoring but you do see a lot of investment in manufacturing in the US A lot of it driven by the electronics industry. Tremendous amount happening. I mean some of that is semiconductors but not all of it is semiconductors. So there is a lot of investment. We're investing at roughly twice the rate that we were pre pandemic. So there is a lot of investment going into the manufacturing base.

That's great Tom. Let's roll ahead to we kind of talked about the inflation component and the economic side of that and consumer price. But let's maybe kind of move ahead and talk a little bit about tariffs and so forth. And it just, you know we, we chatted about this a little bit ago on the show over the last few weeks I guess and it just seems like and Sean, I'd love your take on this. It just seems like maybe for the first time and while a little bit of this happened in the previous admin Trump administration, but now it just, it seems like literally you bring a, a hard hitting business person into the White House that has spent their whole life very aggressively negotiating and you know, books about that and think it shows or whatever it might be that go with that and we bring that and apply that into diplomacy, I guess or, or maybe in some cases lack of diplomacy. It's it seems to me like with the tariffs, what really the, both the consumer and the business people in this country really need to get their head around the idea that tariffs is a means to an end. And it just happens to be how this administration is, is doing diplomatic negotiating as opposed to, you know, hundreds and hundreds of people at the State Department going to lots of meetings. Is that a reasonable recap from one one year experience into a guy that lives near Washington?

Yeah, I think so. I, you know, as I look at the, the tariffs, we already knew that usmca, which is the agreement between Mexico, Canada and the US Was going to be renegotiated or could be. Some of those terms could be renegotiated starting in 2026. And so it, even though this is a long term agreement, there are provisions put in place that allow it to be revisited every six years. That next time is in 2026, which would be the first time that that would be revisited. And so some of what I saw initially was, was what I thought Trump was just starting those negotiations a little early, being a little bit aggressive with his positioning to just be clear that, hey, when 2026 comes around, we're going to have a strong stance on some of these things, maybe even pulling those negotiations forward into 2025. Now we're hearing, you know, that Trump is set on pushing Those tariffs forward, 25% tariffs on Canada and Mexico, which would be highly disruptive to not just the US but also to US Manufacturing. I think what is missed in Washington is that supporting Mexican manufacturing is supporting US Manufacturing. And there's a lot of intermediate goods that move, you know, between the countries as part of the production process. And so I, it's tough to know if this is just another opening salvo of strong negotiations or if, if Trump has a world view where he, he does think that the trade relationships between Canada and Mexico are unfair and in the current view, and that they need to, that they will be closer to fair with 25 tariffs added to, to both sides. And so we'll see. I do think that at some point Trump will have to stop sable rattling and, and threatening and we'll have to implement tariffs. Now. Does that show up as more aggressive tariffs for China? I think China's probably celebrating that all they saw was 10%, not, not the 60% tariff tariffs that had been promised. Does that mean, you know, that the, the threats become real for Mexico and Canada? I'm not sure. Do, does Trump target somewhere else as he starts to look at Europe and he's already Talked a lot about Europe. Does he feel like there's imbalance there? Does he not like the way that he's perceived there? There's any number of factors that could be influencing a decision to implement tariffs on Europe. So maybe he completely switches directions and I think that's, you know, there's some probability that he foregoes implementing tariffs on Mexico and, and Canada. Maybe he inches them up for, for China, but he, you know, adding to that goes somewhere totally different, goes to Europe and implements tariffs there. And, and that, and that would also obviously surprise the market, I think.

Yeah, I wanted to hit Bob's comment here and then I have a question, Sean, a follow up question to that. But I agree with Bob's point here. Right. You can't look at tariffs also in a vacuum. I mean, there's a lot of other things going on here. Decreased government spending, all the stuff we've talked about on shoring. You have to look at the whole, there's a lot of moving parts here, right. That have to come together. And I would love your thoughts. Sean, I know you, you know, you, you can look, you look to the future and you help companies kind of look to the future after all the dust settles here and we're sitting here at the end of the year, let's say in December. Do you really think that we're going to have, and I think with the, if you look at the equity market right there, it's this, oh my God, the world's crashing and sell, sell, sell and oh my God, and these tariffs are going to be horrible. Do you really think that there's going to be a mass, again, looking at all of these different things? Do you think there's going to be a massive change in things and massive impact, I guess. Or is all this going to settle out and we're going to kind of end up maybe being in a better position, but economically not having such a massive impact.

I think 25% tariffs on Mexico would be highly disruptive and even for certain sectors, 25% tariffs on Canada would be, would be highly disruptive. If you look at the auto sector as an example, you've got components going back and forth across that border and by some estimates a vehicle will cross the border seven times before it's finished. So there are pieces that are happening in the U.S. manufacturing workflow that's happening in the U.S. it moves to Canada, certain things are done in Canada to that vehicle, it's coming back to the U.S. maybe final production, final assembly is happening in a U.S. facility. Maybe it's happening in a Canadian facility, but I think for certain sectors, tariffs in that magnitude, 25% on Canada and Mexico would be highly disruptive. If you look at the number of vehicles that are, are available in the US for under $30,000, I think I saw a stat that said only about 6 are available under that price point. Three of them are made in Mexico. So the auto manufacturers have used Mexico as part of their broader strategy to have low priced vehicles available. And so if, if you do see those types of tariffs, then I think the auto industry in particular will have to think through what are the strategic implications for that. Do we just stop producing those lower priced vehicles and does it take those out of the market? And so which households are, are impacted the most? Maybe a household that was going to buy a 60 or $80,000 F150, you know, isn't impacted to the same breath that a household that was. But even, even that, you know, there's a lot of aluminum production that happens in, in Canada that's brought over, that's integrated into appliances and other things. So I do think that it would be very disruptive and I think that's why so many have discounted the, the probability that that will happen. I think that's why the, why the financial markets haven't really priced in what those tariffs would do. Because I think you will see a significant impact to the, to the financial markets if that were to come to pass. And, and so I actually, you know, I just because of the implications of it, I still think that we find a way of bypassing them. We, you know, he, he's threatened once and, and pivoted and I think we could see the same thing again.

I think, I guess the, the question that comes with that. Well, let me make a comment first from this article that we're talking about that this is a, was a AP News article that we were talking about here, but first time I've had or seen any reference to this where there's actually a number that's been associated with these things. So the Tax foundation says estimates that the average American household could face an additional tax burden of over $830 a year due to these increased prices. That's the tax component of it. But I'm kind of wondering, you know, as we start seeing these impacts of these tariffs and even what we were talking about earlier about consumer confidence, that all trickles down into the B2B world of where things are being made and inventoried and warehoused and so forth. So I'm really looking forward to kind of trying to get see this outside of this tax number that we're seeing. What's really going to be when we look at tariffs, what does that probably really mean? And it's probably one too early to know one, if they're truly going to happen. But two is, does that mean the Brown household here, it's going to have a $742 impact on average or is it going to be a $7,420 a year impact on us? I think that's what's going to really help people get their head around what does this all really mean.

Yeah, and there would obviously be some substitution in that where households move away from certain products and move towards other products. I mean, the great irony in all of this is that in some instances the tariff rates on products coming from China could be lower than the tariff for products coming in from Canada and Mexico. So we've had this great decoupling which, which Trump really helped start. Where we have been moving away from our reliance on Chinese manufacturing. We've seen that diversified globally. Obviously Southeast Asia has benefited, India has benefited tremendously. But, but Mexico has also benefited and Mexico has regained being the number one import partner for the US just in the last two years, surpassing China for the first time since the 90s. And so you've, you've seen this shift starting to take place. Obviously Mexico benefited tremendously from the decoupling from China. And now if you implement tariffs on just Canada and Mexico, then you could start to reverse some of those if we don't change our consumption patterns, which we naturally would change our consumption patterns. And yes, you definitely would see prices go up. The research is pretty clear that while some of the price of additional tariffs gets absorbed by intermediate, you know, intermediate parties, most of it is getting passed forward and the consumers or the businesses are going to end up having to, to pay that. And as you both know, the margins on some of these products are quite low. So it's hard to imagine that you can absorb that much. That's the other thing is that lower priced products will tend to see the biggest price increases because they have the least amount of margin built into their supply chains and built into their final goods. So the lower priced products will go up the most.

I was talking to a large industrial related distributor a couple of weeks ago and they'd commented that they've already been hearing they've been working to move their a lot of their business out of China into either India, Pakistan or other parts of Southeast Asia. Interesting. Component of that is there is a whole lot that happens in other parts of Southeast Asia, Laos, Vietnam and so forth. That's just Chinese companies that are actually doing business there.

Right.

So there's a little bit of a smoke and mirrors that can go with that. But he said he's already been seeing some. Some Chinese vendors of his that he still has coming back with price concessions ahead of all of this. But one of the things that I wanted to throw out was into this discussion is, you know, as we talk about the impact of Canada and Mexico, I think there's. There's two components to this. One is. And this is the challenge, Right. When you have an administration that's trying to do diplomatic things by using tariffs, because we can't just talk about the economic impact of that. There's a political, geopolitical, or diplomatic issues that go with it. And I think what we're really seeing to the. Maybe at least the most aggressive that we've ever seen is that there are political agenda items being managed through tariffs. Right. Basically, one of the things we've seen a number of times in print and we talked about on the show here a couple of times is, you know, this administration is extremely focused on the border security and immigration. And fentanyl. Right. Well, part of the leverage clearly being earned, the pressure on Canada and Mexico is fall in line. And we saw this when the first announcement was made about tariffs on Mexico is within, I think, 48 hours, there was 10,000 additional troops heading to the border. Right. So I think we have to put our head around part of what we're seeing on this is not there. There's a. An economic factor and there's a political or geopolitical factor that goes with it as well. And there's a balancing that goes with that.

Yeah.

And.

And the administration, it was very clear that this was not a trade war. This was a war on drugs. And so. And a war on illegal immigration. And if that's still the narrative, then I do think that we find some resolution in advance of these tariffs in place.

Yeah.

Sometimes it's a little unclear if, if we've moved away from this being a war on immigration and on illicit drugs to something more broad.

So I think, and I'll throw this out to both of you for, for thought or comment or to the audience is what goes through my mind. Right. Is when you and Sean, you mentioned earlier Europe, if we think about this from a component of Europe in this, that to me seems a little bit. And we're going to talk in A few minutes about rare earth stuff and the Ukraine in a moment. But that's kind of an additional component of this. But if we think about, you know, let's just say Western Europe and, and the tariffs there right now, this could change with an announcement in the next five minutes. But right now that really appears to be a balancing of tariffs there. But when we look at Canada and Mexico and China, there are geopolitical influences that are major there. And, and I've. I heard a senator comment on this. I can't remember who it was, but it was on CNBC about a month ago and they said they were talking about, or as soon as the announcement was, maybe it's three weeks ago about Mexico and Canada. They said we need to start looking at Mexico in a different lens than Canada. And I don't think we see the, specifically the Chinese, and I've been saying this for probably nine months, is we really, really need to be paying attention to what's going on in Mexico because the steel embargo that we have on China, there's so many different things that are happening there. And while, yes, there's automotive plants in Canada and there's a lot of natural resources coming from Canada into the U.S. the manufacturing buildup in Mexico is so much far greater. And it feels like right now that there needs to be a little more attention. No offense to my Canadian friends and our Canadian customers, but the impact that Mexico could be having through this seems to be far greater. I don't know if you're in alignment with that or what your thoughts are with that.

Yeah, I think the impact for Mexico is. The impact that Mexico tariff on Mexican imports would have is definitely more pronounced on the US Economy. But I do think that tariffs on Canadian trade would be impactful, especially to certain sectors. Homebuilders who rely on a lot of material coming from Canada would be impacted. The auto sector. And there's just nuances there that I think many of us just don't realize. You know, Canada is a big exporter of electricity to certain regions of the.

US and oil and gas.

Oil and gas, other things. And we have seen, you know, some carve outs there. But I think the other risk is what do retaliatory tariffs look like? So if we were to implement 25% tariffs on Canada, do we see them retaliate in a strong way that is detrimental to the US Economy broadly and more in particular to US Households individually?

Hey, Kevin, can you hear me?

Okay, now we can. A little bit better.

Yep. All right. Should we move Move on to the now.

Now you sound like Vin Scully at a Dodger game.

I do. Is that a good thing?

That is a good thing.

That is a good thing. Okay.

Yeah.

Well, good afternoon.

Hey, that's pretty good that a Nationals fan knew who. Vin Scully at a Dodger game.

Oh, yeah, for sure. It's a beautiful voice.

Yep. Tom, why don't you hit Bob's question there real quick? And then I want to talk briefly about this rare earth stuff that we've been hearing about so much and what that really means.

Yeah. So Bob's question, I believe, would it not benefit the U.S. mexico and Canada? I think that's Canada. To form an economic bloc, such as the eu. EU does today. It would eliminate the labor arbitrage.

Yeah. And it might be. It might be California that he made.

I was wondering.

I didn't know if it was California or not.

Yeah.

Yeah. I think. I think California in particular has looked at how, you know, are there things that they could do unilaterally, bilaterally, and maybe there's, you know, a possibility there. So I think there's a lot of dynamics that are playing out, and I think California and other border states are trying to figure out the implications there. I mean, obviously, we also import a tremendous amount of agriculture from Mexico, so. And from South America. We love to have strawberries in December, but we can't get them. You know, we can't grow them pretty much anywhere in the US In December. And so we're. We're forced to rely on a. On a global supply chain, much of that coming from Central and South America, from Latin America. And so, you know, there's little impacts like that. I mean, that's not even an economic impact. That's a taste and preferences impact. Right. The idea that it's not just avocados that are going up, but it's your strawberries in December that are. Are impacted and other things like that.

So Bob says he meant Canada, but California is probably the same as we call it sometimes here, the People's Republic of California. So I'm happy to be lifelong resident of California, but there's a lot of. A lot of challenges when you're the fifth largest economy in the world with the. The political framing and the taxes that we have in this state. So it does tie in, you know, for Bob, I think Canada and California can almost intermix there. But great, great point about, you know, to your point, Sean, about produce and, And. And things that are impacting the grocery store because, you know, I, I live, I don't know, 60, 70 miles from the Mexican border. Big percentage of produce that we buy is coming right across stuff and from. In either Mexico or other parts of Latin America. So let's, let's jump here, though.

Quick comment before we go here, just to let him know that I don't need a GoFundMe page. I'm in the process of renegotiating my contract with around the Horn, and they promised me a new microphone cord as part of that deal, among other things. So I think I'll be okay. But I'll let you know if that falls apart, Will, and we can. We can set that up.

Hey, I. My rebuttal, I'm just gonna hold. Okay, so. But Will's right. I'm gonna hold on my rebuttal to your comment there, Sean. We've just been. Tom has this. This phenomenal setup, but there's a connection problem. So once in a while, his mic bumps in and out, and Will's a. Will was Quinn that made that comment to regular guest. He. He's been on the show and he joins us regularly as well. And so he was. That was the reference point there. But actually, Will, Tom and I are both getting ready to do some upgrades.

We.

We figure, you know, I think today is episode 100, episode 131. Probably should get serious after 131 episodes about the technology we use for the show. And we were. Tom and I were joking this morning. We just had read about somebody on LinkedIn that we know that was starting a podcast, and Tom commented, said, wonder how many episodes that'll. That'll go. And I think something like 98 of podcasts and live shows don't get past 10, 10 episodes or 10 shows. And here we are at 131, and we started this on kind of a whim and a lark and said, let's publish this newsletter that we do every week now and see if anybody wants to read it. And. And Tom said, hey, let's go live on this LinkedIn Live thing and see what happens. And, you know, now we've got two people, you know, supporting prep, preparing the show and producing and editing it, and it's just kind of taken off.

So that's awesome.

It's kind of. It's kind of funny because, you know, and it's. It's interesting. I talk to people all the time and, you know, they'll ask about, you know, our statistics, and they said, you know, our statistics are not what we're. We're focused on. It's the WHO and the value that we're bringing to the who and our typical audience. And our show sponsored by Lead Smart, the company that Tom and I founded. And, and we don't have any other sponsors. It's just one. And, and we talk about wholesale distribution and manufacturing, and we bring that back. And it's just been kind of a fun journey as we, as we look back on it so far. So appreciate that comment. Will. We will solve this problem, my friend. So let's talk a little bit about, you know, this again, tying back to the broader conversation we've had. We've already spent 45 minutes talking about our first section of the newsletter today, which is, is just fine because I think it's really important as we look at what's going on. And Tom made a great comment in reference to Peter Thiel, the Silicon Valley investor made a comment, Sean, that we've talked about a number of times here. And Tom's had some additional comments to this. And Peter Thiel said around the election, he said, you know, look at this president. He said, take him seriously, but not literally. And Tom comments and has commented a number of times and said, you know, look quickly first, wait 48 hours after you see an announcement, but look quickly about what's likely behind it. And you know, one of the things that the bumper discussion on the, our recorded podcast on Amazon and Spotify and Apple podcasts and all the other podcast formats is we like to peel back the onion on what's going on. And I think, you know, we saw this in Sean used the term earlier saber rattling.

Right.

Is this negotiations and this, this negative back and forth between Zelinsky and Trump to get to a point where now we're negotiating something and now all of a sudden it's like the first conversation is, well, we want these mineral rights to, you know, get some money back that we've got put in. But I think it's really not about that. It's about the fact that the deficit that the US has in minerals that are needed for the future of EVs and technology, and if we want to not rely on Asia for chips, we don't have the minerals for that. So I think this particular topic and why I included this in this week's discussion is really about the story behind the story related to that. Tom, you're making me dizzy.

Yeah, I'm trying to figure out what article you're actually referring to.

It's the one before that previous one. It's right there. It's about. Yep. So the vital elements that go on. And we have a. I think we have a map even that shows where, where some of those pieces are. But Tom or Sean, I just, I made a broad statement there. But what are your thoughts on this whole? Rare earth minerals from the Ukraine and generally in general, the need for those.

So, yeah, I mean, two thoughts. First, going back to, you know, talking about the different dynamics in Washington and with the Trump administration, I think there's even a different dynamic between the second Trump administration and the first Trump administration. The first Trump administration was a bit chaotic, and some of that, frankly, was that running the executive office is complex. There are a lot of. You have to fill. There are a lot of roles. There's diverse agencies. And so, you know, we were, we had the pandemic. I mean, there was a lot of chaos in Washington at the time. This time, it's intentional chaos. I think Trump better understands the levers that can be pulled. He better understands the influence that he can have. And so while times feel, it might feel chaotic for those outside of Washington or even inside of Washington, it feels to me much more intentional. And so everything that the administration is approaching, I think there is this element of intentional chaos that is embedded in the way that they are approaching it, from the tariffs to their shrinking of the government footprint to, you know, the need for conflict minerals. And underneath that, intentional chaos is often a real issue that does need to be addressed. You know, the unfair trade practices and rebalancing trade is, is something that does need to be addressed. And, you know, one of the great challenges there is that we invited a country like China into the wto, and it is essentially not an open economy, it's a closed economy. And so that created some imbalances that do need to be addressed. The government deficit in the national debt do need to be addressed. They're getting to uncomfortably high levels that do make operating the way we've operated difficult. And I, I, and we run the risk of having some real issues moving forward. So those are all things that need to be addressed. And then you hit on this third point, which is the need for critical minerals, for rare earths, we often call them, for, you know, EV transitions, for the broader electric transition that's happening in every sector. And then also just, you know, more broadly, the push towards advanced electronics. And so you've seen China amass a massive stockpile of these rare earths and in other ways control a significant share of the supply of these rare earths. So those do become very sensitive, delicate, and in some ways dangerous aspects of, of continuing to grow an economy. And so you see the administration trying to address those, looking at using and leveraging our support of Ukraine to, to do that. And, and it won't stop there. I mean, this is a, is a topic that will need to play out over the next decade. Some of that can happen in North America. And you can see, you know, your maps in North America, where there are. There, there are options for rare earth mining, will probably see mining efforts increase or probably should consider increasing mining efforts in North America so that we can have more resilient supply chains, also developing better relationships with other countries that have access to that, looking at, you know, our friends more closely and figuring out how we can support them so that they can support us.

Yeah, well, I think this was a unique one, right in talking about it from a standpoint is what started off looking like, you know, whether Trump was kowtowing to Putin. And we had all this stuff just kind of happening in the last, what, 10 days or so related to the Ukraine. And then at the end of this whole processing, been back to, you know, Tom's point is just hold on and wait, wait and see what happens a little bit. Because I'm not going to say it's the whole thing behind it for one second, but all of a sudden now what's coming out of this is this opportunity for us to. One, part of it is recoup some of the investment, so to speak, of helping protect Ukraine. But two, it's getting access to these rare earth minerals. And I would assume there is a whole nother component of that, of what is wanted from Russia out of all of this as well. And so it's interesting and it made me just think, you know, one of my favorite TV shows ever was the West Wing. And then there was a lesser show about Washington, oh, eight or 10 years ago, madam Secretary. And I think I'm going to go back and watch, maybe start re watching those. I think they're both on Netflix and kind of watch the diplomacy, so to speak, or the inner workings of things, because all of these things, right, of, of looking at, you know, wanting access, just using, wanting access to rare earth minerals as an example. It's not that other, other administrations haven't had a long, a long game planned with these things. It's just happening behind the scenes and very slowly, right? We're just seeing it all happen in like, almost real time. It's like turn the super bowl on and you can, you know, in the same time as a Super bowl, you can watch some major geopolitical actions happen through this particular administration, how they're going about it. So interesting times.

And so I think the other thing that a lot of people outside of Washington don't realize is, you know, how important timing is on all of these types of things. So, you know, in 2026, we'll, we'll move into the midterm elections. If you look at the last 40 to really 50 years, the incumbent president has lost significant control in Congress in almost every single election. Even going back to 1984 when you had Ronald Reagan win, you know, landslide victory. He won every state but Minnesota. He also lost Washington D.C. so he, he loses the, you know, the only state he loses is where Mondale was from his person running against. He also loses Washington D.C. but in the midterms that he had in 86, he lost control of, of Congress. He lost seats in, in both the House and the Senate. And on average, the incumbent President is losing about 30 seats in the House, about five or six seats in the Senate. For Trump, that would mean he would lose control over both the House and the Senate. So if you really want to move things forward in a big way, he just using the averages of the last four years, he's got to move quickly. He has to move really in 2025 because as we start to get into 2026, you're going to see elected officials moving back towards their, their home districts, working on re election campaigns. They're going to have to be a little more judicious on the things that they do because they've got to, got to win in that election. And so there's a big push to get everything done here in 2025. I think everybody in Washington feels that and, and sees that. And so, you know, I think the rare earths become a piece of that because I think as we move into 2026, if the averages play out and we see the administration lose control over, over both sides of the, of Congress, both the House and the Senate, then you will I think, see a lot more gridlock in the city. You'll see the, the Congress constantly moving to block anything that President Trump tries to do almost immediately. And so he's trying to, trying to work through some of these big agreements quickly.

That makes good sense. I'm glad you brought that. I don't think we've ever talked about that component of it. That makes a lot of sense. I think it almost kind of ties into or they saying, I think Doge is only supposed to be here in existence for 18 months. Right. Probably tied to what you're saying is there's risk that they couldn't get anything done. So in the, in the focus on our time here left today, one I want to do a little bit of our what is supposed to be our mid show housekeeping, but I'm doing it way into things right now is for those of you listening on, on the podcast recordings on on Apple, Spotify, Amazon, Odyssey, wherever you might get your podcast run. I think 50 of them now or so is you're not seeing the newsletter that's up on the screen and we're putting some maps up related to that and so forth. If you're watching on YouTube or you're with us on LinkedIn Live or Facebook Live, you're obviously seeing those. If you don't get that newsletter and you would like to just reach out to us, there's three simple ways to do it fastest and easiest. If you're active on LinkedIn, just search around the horn and wholesale distribution, multiple options. One is to follow the podcast will pop up and to the newsletter will pop up and you can subscribe there or just send us an email@helloadsmartech.com Lily will grab that information and get you added to the list. It's I know 10,500 I think people now get the newsletter. So happy to get you on that list. So Tom, what I'd like to do is really quick, let's just literally take between the three of us no more than five minutes to talk about the port strike ending additional tariffs or additional taxes on port fees for Chinese ships and near shoring and onshore. Because I think those things kind of bundle together with what we're have been talking about so far. Tom, is that fair?

Yeah, I don't, I mean I think we've hit a lot of this already.

I mean we haven't talked about the additional fees on Chinese ships. Yeah, we haven't mentioned the doc. The doc strike dock strike that was basically averted. Right. Earlier this week. That whole piece is a big factor in and I think this even ties together with those port fee pieces because what came out of that was. And the big issue was when we had, you know, Sean, we have regularly guests from the national association of Wholesalers that are are based in D.C. we've got Eric Coplin there, their CEO has been on with us and Dan Schubert has been with us a number of times, their chief revenue officer. And we try and support their organization regularly because big part of what we do at Lead Smart is supporting wholesale distribution. So you know Eric has taken a big stance on the need to be automated in our ports. Right. And keeping up with the rest of the world and the factors that that bring. Well, now what we saw out of this settlement or the, you know, the funnel of the negotiations was that basically they have to keep a net positive number of jobs. So these basically, in a nutshell, yes, you can start to do some automation, but it's going to be a net positive number of jobs that are required to come along with that. So I think the union got what they wanted out of jobs and the ports seem to get what they want to be able to start automating. Yeah.

And you know, I think that that's a good solution for right now and we'll see if that's still a solution that makes sense for everybody in five years or 10 years or 15 years.

Yeah.

My sense is that the unions of the future that are operating our, our ports are going to be looking for more technology because that's how they'll attract the younger workforce. That's how they'll attract new people to, to, to their numbers. And you know, great point.

Yeah, I love, I love that. Hadn't even thought of that component of it, but we talk about that related to, you know, digital transformation and wholesale distribution and manufacturing is, you know, we literally was visiting with one of our customers yesterday up in LA and the comment, we, I made the comment to them and as a reminder is, you know, close to 70% of B2B buyers are millennials. Right. Well, guess what? So are the people that you want to hire.

Yeah.

And so if we want to keep that cycle going, we need to make have businesses that are attractive to that. My concern out of this is the quote that came from the, the Longshoremen association president was that, you know, now we have labor peace for six years. It's like, gosh, that just. And I have strong opinions about where unions fit now versus where they did when they started, but that's for another show. But it just that just even that thing that says, well, we'll allow there to be peace for now, it's like that doesn't sound like forward thinking.

You know, I don't think there's, I think that the, the terms in there, from what I can tell related to automation are a little vague and got a little bit of tit for tat. So I, I will see how much liberty they end up taking. I, I don't think it's going to be all that peaceful for the next six years. And if you think about Technology and the speed of which technology is changing over six years. You know, that's, that's 100 dog years or whatever. That's a long, that's a long, that's a, that's a long time. So yeah, maybe we got peace for six months. We'll see how six years plays out. So yeah. Good.

Well, before we kind of dive to our technology session section, I wanted to just kind of talk in our manufacturing distribution section a little bit. We talked, there's an article there from Industry Today about near shoring and on shoring. We talked about a lot of that already. But I thought what was interesting is the follow up article to that is that Stanley, Black and Decker is talking about cutting Chinese production and the tariffs. And this is the first time with that article that we talked about from Stanley, Black and Decker and that was from supplychaindrive.com is this is the first time people have put some numbers that I've seen at least from a large, well recognized both B2B and B2C manufacturer that's looking at, hey, we're talking about some real numbers. They said, you know, through strategic supply chain adjustments and pricing action, the net financial impact for them for 2025 is 10 to 20 million dollars. But they had another quote that said that had they not been taking actions on near shoring and on shoring, it would have been 10x of that number. Right. So I think we're going to just see more and more of this and then if as we talk about that near shoring, the vast majority of the near shoring is going to be in, in Latin America. Back to the Watch Mexico, Watch Mexico comment.

Yeah, and I think it'll really be product dependent. You know, I think there's, I mean the beauty of supply chains is, is that they are agile, that they're constantly adjusting to whatever the risks are. They're, you know, dynamic entities. Even if you look at like mobile phone imports and we've seen mobile info, mobile phone imports, cell phone smartphone imports go from essentially 0% coming from India to now 12% coming from India. In the span of about three years, 36 months we've seen that shift happen. And you remember that cell phones, smartphones were carved out of the initial Chinese tariffs, but yet we still saw the supply chains around smartphones evolving, moving, shifting based upon a number of factors. Wanting to decouple from China, wanting to move manufacture elsewhere, wanting to serve growing markets and then also anticipating maybe further down in years to come, as we are now here, we might see tariffs that would impact that category. And so I think when it comes to, you know, making these decisions, these are big decisions because you're investing not a two year time horizon. You're investing in a 40 year or 50 year facility in some instances. And so I, you know, like you, like you said, I think you'll see we are seeing tremendous amount of investment coming into us from US Manufacturers, but also from manufacturers outside of the US that want to build facilities here. If you look at states like Georgia, and they just barely missed it in the last year, but they had three years in a row where they were recording record investment commitments each year, breaking the record from the prior year. North Carolina, South Carolina, Tennessee, all seeing significant investment in manufacturing capabilities and capacity. And I think that's the other, the other big thing that we miss sometimes is that this isn't just about capacity, this is also about capabilities. Like what do we have the capability to manufacture and what are the things that we want to ensure that we manufacture. So it's not just, it's not just a numbers game, it's also a knowledge game.

Great, great points. I think this is the big challenge though, like the earlier article that was talking about additional taxes on ships coming from China of as much as 1.5 million per port, right. And so you might have a ship coming in and this is very common on the West Coast. Here you have a ship that stops in San Diego, stops in Long beach or la, stops in Oakland, Alameda and its way to Seattle. Right. And so when you start seeing the added costs of those things, plus the tariffs, right, and all of the other costs of shipping and so forth, based upon, upon fuels and fuel prices rising, you know, we have at least a window over a few years not knowing how long tariffs are going to last and so forth, which is the wild card. But all of a sudden, what, nine months ago, what the, the value of near shoring or on shoring was is exponentially higher right now than it was. The challenge is who has the crystal ball to how long those tariffs will be in place and what the impact is, which is such a challenge when you think about that. We're kind of mostly talking about manufacturing now, but when you think about wholesale distribution for them, it's not about near shoring and onshoring because their vendors are doing that, but it's. Well, wait a minute. Based upon all of this, do I really want to open three new locations right in the next two years or do I, can I afford to based upon this in what would I call it? Lack of certainty or uncertainty. Right. Do I, do I want to make the investments in, you know, new. Just we're seeing lots of it is actually happening, but the decisions I think are a lot harder. So. Good. Hey Tom, let's roll in to talk about a little bit of AI, a little bit of technology. And, and you know what, Sean, I didn't mention is when you jumped in and I should have. You know, for all of our listeners that join us regularly, in fact, the majority of them that I, at least the people that I know that join us regularly, are reasonably active on LinkedIn. I was going to mention if you don't Follow Sean on LinkedIn yet, you should. And most importantly, you share great stuff all the time and you know, I'm a big fan of the stuff that you do, but the last 30 days have been like the coolest because you, how did you refer to it? 30 and 30. 30 days of 30 technology points. Yeah, yesterday's point about robots. And, and I, I made a comment about it on, on your post about. So go, go. If you don't follow Sean, go follow Sean for, for his insights on this, but then go back and look at the last 30 days of some of the posts that he's done of these deep insights into different technologies. And I just, I love it that that robot that you showed yesterday is what I've been talking about. And my wife thinks I'm nuts that we'll have a robot cleaning the house. But you know, the world is a world of sensors right now and the sensors you can put into a robot will do things around, forget about the business applications because they're clear and definitive, that we've known for years that robots can weld and solder, but now when we can have them identify that there's a slip and fall hazard on the floor while they're picking boxes that they can read the codes on them, it's just a phenomenal place to be. So I just wanted to mention that as we're diving into our Technology in AI and Cybersecurity segment here, some great posts in the last 30 days from Sean on LinkedIn. So Tom, why don't you jump into this. I always ask Tom to kick us off in our technology segment because he's a computer scientist here and I'm a.

So, so which ones do we want to focus on at the time that we've got? Well, this first article here was talking about prompting how to Write the perfect AI prompt according to the OpenAI President. I thought it was good, but I Think that. And what it laid out in the article, right, was how do you construct a prompt to get obviously the most accurate and best results that you, you can. And I don't know, Kevin, if you have in front of you the, the kind of the key things there, I can grab them if you don't.

But yeah, I, I, I can grab.

Them real quick, but I thought something was missing on there. And you know what I have found? I found that you, if you prime the pump a little bit. And what I mean by that is when you ask a chat GPT or whatever and you're asking for a prompt, I found that if I ask it what it knows about a subject and have it tell me everything that it knows about a subject and kind of push on it a little bit, well, what you really know about this and what do you know about this or whatever. And then I use that to then kind of put some context to building the prompt. I get much better results. And I didn't have that as an angle in there, but I did think it was a good structure to talk about prompt building in general. We don't need to spend a ton of time on it here, but again, I thought it was a good article.

No, it's it so it talks about rights and this again, to your point, it's. The article is from the president of OpenAI and who's the maker of ChatGPT. The article starts off with a quote from Jensen Huang from, from Nvidia and it says, if I were a student today, the first thing I would do is learn AI. And that probably starts with really understanding prompts and becoming a great prompt engineer is key. First to state your goal and there's some things that go with that. Specify your preferred format that you're looking at. Is it academic citations? Is it, you know, particular parameters that you want to. This is the, the third one is, I think pretty important that a lot of people miss is put warnings in guardrails. And it's interesting we've started trying to do just for this show and shine Lily would have sent it to you yesterday. We just in the last couple weeks started trying to put a building an agent where it can give us recaps of these articles. Well, the first couple of times we played with it, we didn't have enough guardrails into it. And what it was doing is it was taking more than just that URL, it was giving us more data. I think this week it was much more refined than it had been previously. But that's to that point about, you know, putting some guardrails in. And it's important. Something that I've had to run into a little bit. It talks about context dumped is you can kind of overwhelm these things as well. And so some good, some good points to go with it. Tom, before though, we, we talk about this too much, I wanted to ask Sean a question because, Sean, you're, you know, you have a two year old at home, but you also have, was it. You have two in college right now?

I have, yeah, pretty much college.

One in high school, Is that right?

Yep. One graduating? Yep.

So are you hearing from your. Because all three boys, great athletes, and are you hearing from them anything that they're getting in school about prompt engineering or AI?

Well, I think one of the great misses in education today, especially K through 12, is that they're not integrating enough AI into the curriculum there. Many school districts still ban AI use and ban generative AI use, not even just for the students, but also at times for the, the teachers and the instructors as well. So I think there's a lot more that we can do there on the, on the K through 12 education front on, on integrating AI and ultimately changing what we teach, how we teach as a result of, of gen. Generative AI and preparing students for a future that will inevitably have generative AI, you know, in their future and be a key component of that. So I think, you know, we were lucky that we got to develop a lot of our critical reasoning and critical thought in advance of AI. I think the next generation doesn't have that liberty. And so I think as much as we can help them develop some of those critical reasoning skills so that they can decipher between, you know, a good answer and a bad answer, I think will be, will be very helpful. And so I'm hopeful that schools will start to do a lot more around that, you know, less worried that students are going to cheat and more concerned that they're not going to be able to really decipher a good answer from, from a bad answer.

I'm not, you know, I'm thinking back, right, I was out of college before the Internet launch. In fact, I'd been out of college for a long time before the Internet. But, you know, with. I have three boys as well. They're a lot older than yours, but the youngest in particular is, I'm thinking about, he's 26 now. But through high school and college, I don't think there was anything of significance. They even ever were trained on or, or helped to learn how to use the Internet effectively. And so I really hope to your point that we see something in education levels and that to really help people get an understanding because the impact, you know, I heard, you know, a number of other futurists, I think you're probably in line with this as well. You know, the, the Internet was the biggest thing we've probably seen since fire and AI is probably even greater than that of its potential impact for us. So I'm hoping that we start seeing a lot more of this in the education system. Will commented here, Will Quinn commented that his son's a middle school math teacher in Salt Lake City and he has embraced AI and LLM to help him in his job. So hopefully he's able to help his students with that as well.

Yeah, and I think there are clearly a lot of instructors who have spent the time to learn it and are integrating it and certainly using it for their own, their own work. And we're still very early on, frankly. There's still a lot to learn. Just, you know, it's good that you guys have this section in the newsletter because in just the last week we've had a tremendous number of, you know, new, new releases, new announcements, new thinking models. And so there, there's a lot of developments just in the last five days.

Well, it's what's interesting, you know, now I'm, I'm, I'm really realizing that this is. In fact, the Amazon has an assistant, but if I say her name, she'll answer me if from the one next to me on the desk here. But you know, just earlier this week, when that setting is that, you know, they were. Now it can, you know, for $20 a month, I think it is as well. Right. So everybody's. Our price point for access seems to be $20 for, for everybody. And you know, just one, you know, how many more subscriptions do we get? But in that setting is now that one's supposed to be able to help us with plane reservations and, and all kinds of things. So I think we're coming into this place where it's going to be a challenge to figure out which, you know, in businesses we're gonna have to figure out what models were we're relying on or ideally like some of the things that Tom and his team are working on, on the development of, you know, with our product is the AI components of our products in our tool. We'll have eventually we'll have multiple LLMs behind them based upon what the needs are right now for all of us. We're Kind of stuck in a place of having to side. It's almost the Ford and Chevy discussion. You know, am I, am I a cloud person, a chatgpt person, a Gemini person? Oh, now Gro's out with their advanced models and it's this much money a month and which am I going to use and am I really ready to go bounce between them? If I'm a day to day user, it's going to be an interesting time for that.

Yeah, for sure.

Tom, where do you want to go next on this?

Well, the next one here was really kind of talking about and we've just already started to hit on this, right. What is the, I guess evolution of where we're at from an AI perspective and from chatbots moving into agents, which we've talked about for quite a few weeks here on, on the show here. Sean, love your take. You know, we've talked a lot about agents as it relates to, you know, in this, in our world, wholesale distribution, manufacturers, B2B business application, predominantly in the area of sales and operations. We haven't talked so much about supply chain and back office. It's more been the front office because that's the world we, we live in. And you know, we every day are working with some customers and prospects on how to use AI and how to even be thinking about agents, if you will, to really enable sales teams and enable their, their business people to get, you know, more, get more out of what they're already doing, have much more organic growth. And you talked about, hey, maybe we want to think twice about opening new branches or opening new locations or whatever. But we believe there's a lot of revenue to be generated out of just organic growth and things they're doing already and to be able to do it more efficiently. Would love your take on that. And you know, that's really what this article gets into is hey, we're starting to move into these more advanced capabilities. We're not seeing them so much in practice yet. But you know, over and over we see it being kind of where the future is headed.

I definitely think the great challenge over the next, call it 24 months is figuring out how do I take some of these tools and integrate them into my existing workflows. How do I think about those workflows differently as a result of some of these technologies moving beyond just simple augmentation and to really integrate it. And I think some of that will naturally come as, as it gets more deeply embedded in the tools that we're already using on a, you know, on an ongoing basis. There's still a lot of experimentation as well, you know, and figuring out where that, where some of this technology shows up. But I, I think the, the next 12 months in particular will, will be really focused on very practical AI applications. How do I adjust some of the things that I'm doing? What are some new insights I can gain as a result of, of this? And, and all, you know, while all of that's happening, the tools underlying these changes are getting better as well.

Yeah, I think we're in a great time to live right now. It's just a couple comments coming in about Grok 3. It's interesting about 2, 2 comments about you know, having success with it equal to or similar to the chat GPT4 and. But then I read something yesterday from somebody else that uses a lot of these. It was a quite questioning whether it was as good or not. So I think we're in this place where we're going to start and what I'm most excited about right now is I think most of us are having some more personal interactions and maybe using it to do some things within our job. Tom and I are actually, you know, outside of the technology uses that we have with it, we're trying to build some agents and so forth within our company that can really help us do more with less. We have in some instances, I'll just say a fraction of the number of employees that some companies that are similar size to our company do because of our use of these tools. And it's just getting better all the time. So I'm excited about watching full scale adoption in a business that says we're using agents in these places and we're doing this, but we have an actual plan for it and here's what doing we're going to accomplish versus people using it to augment their jobs individually and that's I think going to be a next big step for us. Good.

Yeah, I, I think and just to wrap this up, I think even over the last six months the conversations we have with prospects and customers have swung more so to hey, I really believe that I can leverage AI to make our again more mostly sales and revenue side of the business way more efficient and way more productive and drive growth through there. Which before that wasn't the conversations that were taking place. In fact we had a call this morning Kevin, before we got on here with a prospect where they were like hey, the donut run days are done. We're going to go in, we're going to be adding value, we're going to be doing these things here that again, AI and technology will be able to facilitate. So these were not things I was hearing six months ago.

That's it. Good. Well, Tom, we've got just a few minutes here left, so we couple things we talked a little bit about. There's some comments here from Cyber Security Dive about Deep Seeks AI shape could boost cybersecurity risks. We talked about that a number of time on the show already. It's, it just astounds me to people out there that were concerned about TikTok and the implications to their data and, and so forth, but we're more than happy to go download Deep Seek. So that was just, just makes me laugh even thinking about that in general. So, but kind of diving out of there into our sales and M and A section. Great article from PricewaterhouseCooper's on there. And we're gonna kind of wind down, so we'll just, if you guys don't mind, I'll kind of reference some of these articles that we have left. If there's anything that you want to comment on, hit pause on it. But good article from there about M and A markets rebounding with some larger deals happening. And I'm hoping we're not seeing that much of it, but maybe, maybe this would be something for both of you to look at a little bit. You know, we had hoped to see the doors open a little bit right away, or ideally the floodgates open right away on M and a activity and IPOs, but we haven't really seen that with a new administration yet. I was, I had been kind of thinking that as soon as we saw somebody new at the FTC that we would probably start seeing and, and, and the SEC that we would start seeing the IPO markets. And I know there's, there's market implications of that as well, but seems like there's a glut of people on the sidelines right now kind of contemplating IPOs either, when you have any thoughts on that.

I mean, I do think that President Trump and the administration starting to get a little pressure on. You know, you're really focused on all these tariffs. Why are you not also focused on all of the other regulation you vowed to dismantle in order to facilitate business growth, which would be also M and A growth. So you're starting to hear a little bit of those rumblings. You know, you could see that pick up a little bit more like let's focus on what can help drive businesses and, and ultimately that will drive, I think the M and A work as well.

That's good. We're hoping to see that. So the last piece here is there's a, Sean, there's a, a new group, they're publicly traded group qxo, which is basically a large PE fund that was put together solely for acquisitions in the wholesale distribution space. It was put together by a gentleman by the name of Brad Jacobs. Brad Jacobs was one of the founders of United Rentals and a number of other peripheral companies in the distribution and manufacturing space. Their first big deal out of the box though was basically almost a hostile takeover of Beacon Roofing, which is a monster wholesale distributor. So there's been a lot of back and forth even with Beacons CEO being on the Jim Cramer's MSNBC show and having some discussions about all of this going on. So we'll know next week. We'll see. Well, we'll, we'll see if they hold to it because their, their offer had been open until March, till February 23rd, but they extended it to, to March 3rd. So that's Monday. So we'll be chatting about that next week if that happened. But Tom, that you know, kind of covers a big piece of our, our key articles for the show. We have a Leadership and People in Leadership segment has a few articles about organizational changes, some growing demand for talent within manufacturing logistics. We see that amongst the trades as well. So again, if you don't get our newsletter and you'd like to please let us know. We'll get that out to you fairly quickly. Kind of just let's kind of recap the day. Sean, any major takeaways? And I was going to start off with a thank you again for being with us but anything you'd like to leave our, our listeners, guests, participants with from your insights into the coming year.

Well, I think you hit on it. It's, there's a lot happening on the technology front, there's a lot happening on the economic front and the importance, you know, the, the importance around staying vigilant is I think Quite pronounced and 2025, not just around economic shifts and changes there but you know, policies coming out of Washington could have significant implications on long term strategy. So I think there's, there's that dynamic and then you've got a lot happening on the technology front as well.

Now is not the time to be on the sidelines and not paying attention. Yeah, right. I mean things I think are just moving and to your point, right, it's, we're watching what's going on and in Washington we look at what's going on geopolitically and we look at what's going on with technology and even we didn't really touch on this today, but even on cyber security issue definitely out there right now, there is as we see these AI tools probably never a time to be. And we talk about this, we're starting to talk about this more and more with our customers is we had a competitive company that we ran into once in a while that, you know, major CRM company provider into the industrial distribution space or a wholesale distribution space down almost four weeks with a cyber attack.

Right.

But the vast majority of people don't spend on a non sophisticated, I'll say a non sophisticated enterprise level don't spend a lot of time asking questions about cyber security of their vendors. They're thinking about internally. So so many moving parts right now going on in the marketplaces to be paying attention to. So I'm very appreciative of you being with us today, Sean. So other than LinkedIn for our listeners or our audience to follow you and continue to gain your insights, is that the best place or.

LinkedIn is a great place to connect. Sure. I'd love to hear what, what you're all working on and what you're worried about and some of the opportunities that you see ahead. So you know, LinkedIn is a great place to find me.

That's fantastic. So we every week come to you again, folks. I'm Kevin Brown, this is Tom Burton, my lifelong friend and business partner. We didn't talk about this the beginning of our show today, but we couldn't do our show without the sponsorship of the company that Tom and I work for. We work for a company called Lead Smart Technologies. They pay the bills to put this show out. And like I joked about earlier, we started and it was, you know, one newsletter and the two of us yapping on LinkedIn and LinkedIn Live. And you know, now we're at episode 131 and so but Lead Smart supports all of this and Lead Smart, we've developed a product called Channel Cloud which is an AI enabled CRM and customer intelligence platform solely for wholesale distribution and manufacture. So what we've done is we've taken Tom's 30 plus years and some other support team on that in technology and SaaS computing and we've taken my 30 plus years in wholesale distribution and manufacturing. We brought that together to develop a really out of the box solution for solely those markets. We take silo data from across an organization, we bring it together on a single platform so we can use AI tools and other types of tools to help companies make better decisions, gain deeper insights into existing data and accelerate growth and focus on serving your customers better, understanding your team better, which gives you deeper insights into your overall organization. What we found is the approach that we take with that we get better adoption than typical technology companies do and we're able to do that in a cost effective and manageable way to help companies accelerate growth. So if you're thinking about digitally transforming further, starting to try and work with your silo data across your organization into one single place to get deeper insights, we'd love to talk to you. So Sean, one last question of you other than my thank you. Will you join us again down the road when you have?

I would love to join you again. Yeah. These are my favorite topics on the planet is what's happening in the economy, what's happening with technology and what does it mean for manufacturers and distributors? So what does it mean for the real economy? I, I love these topics.

The one thing we didn't talk about today is how's the stand up comedy side gig going?

I, I tried it once last year. Maybe we'll try it again this year. So I haven't, haven't done too much.

Around around that, but I was contemplating the Instagram clip, but we held off on that today. So.

Yeah, very good. We might give it another shot here this year.

That's good. But you're, you're, as I was describing to my wife this morning, I said Sean is the most fun geek to be around that I know. That's good.

That's my, that's my target audience. So I'm, that's what I'm aiming for. So that's good.

Perfect. Hey, well, thank you again, Tom.

Thank you.

We appreciate everybody that was with us again. We do this live every Friday morning unless somebody's in the hospital on an airplane or a scheduled vacation. And we've even done it a couple times on scheduled vacation. So we, we thank you. For those of you that are coming and on a regular basis and those that are listening for the first time today, don't forget to subscribe to the newsletter and certainly follow us on on LinkedIn as well. So that'd be great. Anyways guys, have a fantastic weekend. Sean, thanks again and we'll see. In fact, I hope to be in D.C. before, but going to be speaking at a conference in September at the latest and it'd be great to break some bread and meet your wife and baby.

Yeah, definitely. Let us know.

You got it. We'll talk soon, guys. Thanks, everyone.