Tariffs, Humanoid Robots and AI in Distribution with guest Max Miester (Live from Germany!)

Foreign. Welcome to around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by Lead Smart Technologies. Tom, Kevin and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain. Whether It's M&A SaaS and cloud computing, B2B, E commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

Let's go. Let's spend. Spin, baby.

Here we are.

Yeah. And Max is like, man, it's happy hour here, but it seems like it's happy hour there, too.

That's right.

Sticking to water.

So, okay, very good. Well, Max.

I'm quite fine, thanks for asking.

Okay. You're not going to. Yeah. You're not going to let me use my seven German words today? As we were. I joke about that all the time when, especially when we're in Germany and my mother, being from Bavaria, not far from you, is that my wife thinks I speak fluent German because I can get dinner ordered in a hotel room. And what I described to her is, I know seven German words. It's just a different seven every day. And I've never once in my life said a complete, grammatical, grammatically correct sentence. But people understand my point. So, yeah, perfect. Yep. Well, Max, it's wonderful to have you with us. For those of you that are joining us, we have Max Meister here from Ludwig Meister, a Bavarian or German distributor of both industrial supplies and supply chain materials and material handling products. What did I miss out of that?

Biggest part is industrial products, power transmission, fluidics and tools.

Fantastic. Well, you've been with us before about a year ago, and it was one of our great episodes that we had here in the around the Horn and wholesale distribution podcast. And you know, as we've had many, many guests before, we don't often get an international view and. And I think you're more of a world citizen because you pay close attention to what's happening everywhere, including taking advantage of a lot of the distribution discussions and events and so forth here in the US So we wanted to get you back with us as we're kind of dealing with all the instabilities and the challenges in the world and get your take on things as well today. So we're happy to have you with us. I'm going to kind of do a little bit of our housekeeping that we do each week and then get the show kicked off. And then Max will like to see, to maybe introduce a little bit more about your company and kind of how things run there, and then we'll dive into the news. But again, I'm Kevin Brown. As I mentioned, we have Max Meister with us today, as well as my lifelong friend and business partner, Tom Burton. And we get together every Friday morning, unless there's an airplane involved, a hospital or vacation is what we typically say. And we discuss the newsletter that we publish every week, and that newsletter is called around the Horn and Wholesale Distribution and Manufacturing that goes out to 10,000 plus people each week, and it's growing every week. And what we try and do is we take the news of the week that's happened both in the US And North America and around the world, and we try and really unpack that and how that relates to wholesale distribution. So we look at things like the economy and supply chain and manufacturing and distribution and sales and marketing and AI and robotics and cybersecurity and marketing and mergers and acquisitions. We kind of unpack that a little bit each week and try and have guests. And we're doing this live this morning on LinkedIn Live, on Facebook Live and on YouTube Live. And so I suspect that we're going to get some comments coming from a live audience that's coming with us. We've got good friend Brian Connolly jumping in with us, and I'm sure we'll have many more coming in. And so we get to take some questions and comments from the live audience. But if you're listening to this later in the day on our recorded podcast on Apple or Spotify or Odyssey or wherever you might listen to that, then you will not be seeing these three handsome faces that are here as well as the newsletter as we post that up for you to see. So if you'd like to get that newsletter to review it later, we'd love to share that with you. There's three simple ways to get it. Fastest and easiest way is to just send us an email@helloadsmartech.com and we'll get that out to you right away. That's helloadsmartech.com Second is if you're active on LinkedIn, just search around the whole around the Horn, excuse me, in wholesale distribution and manufacturing on LinkedIn and or go to the Lead Smart Technologies webpage and you'll see access to that, or I should say LinkedIn page and we'll get that at you. And then finally we have a website for the podcast, which is www.aroundthehornpod.com and we'll get that to you. So each week we do this and we're extremely excited to continue to do that today. Tom is. What are we number? 145.

145, yep.

We've got five weeks to figure out what do we do for episode number 150. John, who's our producer and editor of the podcast, let me know last week that we crossed a couple of milestones and we're in the top, I think, 25% globally of all podcasts now, which just astounds me. And go back and forth. Number one or number two in the category that we're in in distribution and manufacturing. So something's going right, I guess, along the way. But we appreciate the work that we've got Lily on the front end and John on the back end of the podcast. And the reason I share that is there's costs that go with doing that. So we have the company that Tom and I work for sponsors the podcast each week. That's Lead Smart Technologies. And at Lead Smart, we've developed what we describe as an AI enabled customer intelligence and CRM and sales enablement solution that's solely developed for wholesale distributors, manufacturers. We don't work with school districts or contractors or whoever it might be, but solely with wholesale distributors and manufacturers. And what we try and do with the platform is we bring what we describe as siloed data from around the organization. Wholesale distributors and manufacturers are rich in data across their organization. We try and bring that ERP data, the E commerce data, the marketing automation and other silo data from around the organization into a single platform. And we use some great AI and other types of tools to uncover growth opportunities and even some risks. And what that does for our customers. It gives them very, very deep understanding of what's happening at the customer, insights into their team and their overall business, all on a single platform. We do that through what we call a crawl walk run implementation, which gets people up and running quite quickly and starts getting vast return on investment very fast. So if you're digitally transforming and you're a wholesale distributor or manufacturer, we would love to talk to you about how we support companies like yours to accelerate growth and understand your customers better. So there's my. My plug and my advertisement for the day. So, Max, well, before we dive in, maybe give us a little bit of a history on your company, where you're located, the markets you serve, and then we'll dive into the news.

Yeah. Thank you, Kevin. My company is located in the southern part of Germany. I'm running it together with my sister. We are third generation, 300 people in total. And I was already talking about the product lines we sell. But what I think is very important for you to understand or to know is that the customers we serve, the biggest part is OE business. So more than 70%, we, we sell products into the production of our customers, and only 25% of our revenue is MRO. So maintenance, repair and operations. So this is, I think, quite a challenging information in these actual unstable times. But most important, my company is a specialist in supply chain optimization. We just won the most precious award in Germany from Pricewaters Coopers, the supply chain award. And this is because we build software that connects the supply chain from end to end from our suppliers, where we collect all the data with web services and APIs, and then we aggregate it and we create value and then we send the data to our customers and try to improve their quality of production or to improve their work.

Yeah.

So you do a lot with visibility into the overall supply chain, Right? That's fantastic.

You know, quick question, Max. Are most of your suppliers in Europe or are you. Where are your suppliers located?

We source worldwide, but focus is, I would say Europe, Japan, Taiwan and the U.S. okay, great.

Well, we're going to dive into, obviously, like normal, some tariff discussions here shortly. So we'll, we'll discuss that a little bit more in depth as well. But, Max, one, in some of our past discussions when we met through LinkedIn and then watching and following you on LinkedIn, I would encourage folks, if you're here today, find Max and follow him, because I would say you're as advanced or more advanced and far more advanced than the average wholesale distributor in the way that you use technology across your organization and bringing that visibility that you just described of your supply chain across to your customers. And right now it's interesting, I remember talking with a guest we had about a year ago, and that was when, if we look back a year, things seem stable compared to today globally. Right. But I think from that standpoint, we were talking to a distributor and he said, you know, it used to be that, you know, monthly or quarterly, they were having, you know, regular conversations with key vendors and distributors. And then about a year ago, that, that was down to the doing it weekly. And. And now we're talking with people that have strike teams or teams within their organizations that we're literally working every day for a good part of the day on supply chain issues that in the past we've seen some struggles and some challenges, but right now it's how quickly can we get ships on the water before the tariffs come back in place and so forth. So now it's quite an interesting time. I think we're going to look back over the next few years at, at 2025. Well, hopefully in 2026 there's a little more stability. But I think we're going to look back and really have some, some surprises at what we've had to deal with.

So. Good.

Tom, you want to take us into the news here?

Well, we have a little bit about economy and supply chain to start things off.

Why don't we, why don't we hit real quick before we go, Tom, on the jobs report that came out this morning here in the US and then I was actually going to we'll get into that'll probably lead us a little bit into discussions about interest rates and Max, maybe you can throw some thoughts in there. I know the European Central bank made some adjustments to interest rates and with Germany, where you are being the largest economic engine within the European Union, maybe you can give us some feedback on that. Although we did have a nice comment there from our friend Jason Hein. It says Max firm is definitely more advanced than the typical US Distributor and he's been a fan of Max and, and the company for many years. So that's good to hear.

Thank you, Jason.

Yep, that's great. Appreciate you being with us today, Jason. But Tom, the jobs report came out this morning so why don't we hit hit that one first. That was basically a little softer than planned and it says added 100 than planned.

Better than expected compared to what depends on.

Depends on I guess which source you're looking to for that. It says it was slower than in prior months, suggesting some cooling as well. So it says described it as holding steady at 4.2. Is that what you were reading? Yeah.

And I think, I mean obviously the market loved it today or it's up pretty substantially. And I think it's was based on the ADP job report that came out a couple days ago for the employment unemployment claims. It was quite high and I think they were people were expecting oh what are we in, you know, the other shoes going to drop here with the job report. And it didn't, it wasn't great but it wasn't completely, completely a train wreck either. So kind of, I don't know, sort of in the maybe a little bit of a relief and not, not as great as they expect, but not as, as bad as it could have been.

So it gives us an opportunity. But I don't think we'll I don't think either one of us is willing to take it. And Max, asked about this when he joined this morning, was who won the bet from last year and on interest rate cuts. So we did have, we did have more than the, than Tommy said said one and I had said two or more. And we ended up with the cuts that we got last year. Nothing this year so far. I don't think we're going to see anything in July because there's a meeting at the end of the month. But in September, I think it's September 17th, I think I looked as the following meeting. I will not be surprised if we have a little bit of a cut. And I think there's a couple of parts of that. One is, I think there's the potential that Wall Street's kind of already, it depends on which day you're watching, what's going on on Wall street, what they really feel about that. But I think there might be some sentiment there. But I think the President came out this morning and said that big pressure on Jerome Powell at the US Fed to do a full point cut, 100 basis points, which is just completely unprecedented based upon how the Fed works and how they look at numbers and so forth. And the President's standpoint was you can always raise them again. But he called it rocket fuel of what it would do. And it does fall in line with, you know, the view of tariffs balancing the economy a little bit in trying to get a balanced trade deficit or the trade deficit balance with other countries. And then the goal of getting manufacturing going in the US if you can get taxes reduced and some stimulus going with lower interest rates. Obviously there's a whole lot of people that are going to want to build factories in the US So I don't think we're going to see anything remotely close to a full, full 100 basis points or a full percentage point this year. But it would not shock me whatsoever if we got a quarter basis point cut in September. So I went through, I went through an extra taco bet at that last year, max. It was stakes. And we have a couple of bets going this year on tacos.

Okay.

Which I said was September later when we originally made the bet, but which seems like that's going to be a foregone conclusion. But I, I would, my, I would put it at 50, 50, but you know, heck, for September, that's what, three months away or whatever. I mean, God knows what's going to happen between here and there. So.

But the challenge with all of this right now Right. Is, you know, Max probably laughing at us for this is, you know, who would have known that, you know, this time yesterday did we would know that we would have an, you know, intergalactic battle of, of the US President and the richest man in the world over social media. You know, I mean, the silliness that's just going on with that they, you know, if, if, if you didn't know better and you, you just read the headlines. Right. $34 billion was the impact on the Tesla stock yesterday. From, from now, I think that's the last thing that Elon Musk is paying attention to because the stock's going to come around and, and he'll be fine in that setting. But I think with this instability that we have globally, just not even just the silliness some and the rhetoric going on here in the US but just the global issues, it's pretty tough to, to make big bets.

Yep. Yeah, that's for sure. The bets that are more than, you know, 24 hours out.

So I don't know that 24 hours is the right window anymore.

Yeah, I, I, I just wanted to add that I have to admit that I'm watching every morning I'm watching the Daily show because then I have the, the most important news and I'm excited. So this is how I try to work with the situation.

Good. Well, you know what I tell you, I think I've shared with you, my, my uncle, who I'm very close with, is in Heidelberg, which is what, hour and a half or two hours from you? Yeah. So when we communicate regularly, because he'll watch the US News once in a while and I, it's, it's pretty funny because I watch German news and the BBC to see what the rest of the world is looking at of what's going on here. Because our news here, you know, it's, it's so bent one side or the other, both, you know, liberal or conservative side of that, that it's, it's very difficult these days to get unbalanced news. Unless of course, you come to the around the Horn and wholesale distribution podcast on Fridays. But it's, I turn the news on and sometimes I'll, you know, I'll listen to my wife and we'll have CNN on here and there's just this, the spin or the bend that goes on, it is just horrendous sometimes. But then if you were to look at the conservative side of the news with Fox News here, it's even worse. So it's tough to find that balance. And I think we all need really good filters that we put on how we get the news. So. But Tom, let's kind of dive in.

Let's say what news article do we want to cover here?

You had talked about. I thought we wanted to talk a little bit about the slowdown in manufacturing. Why don't we hit that kind of quickly and we can kind of bring these together across the board. I wanted to spend a little time while we're in our economy and supply chain section of the newsletter and we're going to kind of get Max's take on the impact of tariffs and maybe what he's seeing across to his counterparts and distribution in Germany and the eu. But we had this first article that came to us from Distribution Strategy Group, our good friends Ian Heller and Jonathan vine to do some great work there. They did kind of a recap on the manufacturing activity in May and talking about some of the heightened concerns coming from the shrinkage in manufacturing there. And they bring this from the ISM report and the Supply Chain Management Report and then the Business Purchasing Managers index. So that ISM report and PMI reports talked about a dip of 48.5%, down just slightly from April. But the reading below, any reading in that, below a reading of 50 indicates a contraction. So it doesn't. It's probably not overly surprising about this, but we're going to, I think, continue to need to watch these things.

I mean, and Max, interested in your take on this from the Living on high. But I would suspect that the manufacturing slowdown is not surprising in a sense that why do you want to get ahead of yourself? Right? You almost want to be as just in time as possible as you move forward here, not knowing is there, you know, going to be a slowdown and because of the tariffs or it's going to pick back up again or it seems, and honestly I'm surprised it's kind of sticking around that 50. I mean, it's pretty close to that level. But, you know, Max definitely interested in your take on that.

Yeah. Actually, what I wanted to add is that I think after the election of Trump already the pressure increases increased quite early because what I've seen at my OE customers, they also have small production plants, for example, in the US and what they did was that they shipped everything they had to the US to be ahead of time. So I think that maybe even they ship more than they plan to sell this year. But they tried to be as early as possible because they didn't know when the terrorists will start but it was very sure that they will start. So I think this, this is maybe one reason. This is how, how I see it because the stock levels from my customers are low here in Germany because they shipped everything to the US and this decreases manufacturing I guess in the first step and later on maybe it will increase revenue. But that there's a time shift.

Yeah.

So did they do the, the shifts I early shipments I suspect are to avoid the tariffs. Yes.

They front loaded it sound like as early as possible. Right. To. To get ahead of it. So that, that would make sense. Right. So then okay, maybe there was a increase in manufacturing to front load. Now we're kind of in a wait and see mode and so that would align with all of that as well. Yeah.

And this created some kind of small boost in Germany because even though they do not have a increasing demand now, the stock levels are very low. So they have to restock their production plants, their spare part logistics center and stuff like this. So this, I would say this helps us a little bit at the moment. So that's a one one of the positive aspects, I think.

Interesting.

Yep. All right, go ahead. I'm sorry, Tom, I was going to.

Say, did you want to move to the next one or.

Yeah, let's jump ahead. Why don't, you know, maybe that we just do a quick stop on this article from CNBC about companies that are raising already raising prices or plan to because of tariffs. You know, it's interesting, Max, I'll throw this out to you. We've had a discussion with a couple of different guests previously and in fact we think we've done it with two or three now where we've kind of talked about the opportunity that distributors have in this setting that are well managed, have strong balance sheets, good credit and so forth and very good and strong pricing models that can really do a nice job of taking advantage potentially of this tariff situation. Because folks that normally keep low inventories by the business model, maybe they don't have strong credit or strong balance sheets are you know, kind of just in time inventory and keeping up and so forth. But we're seeing some folks who are having great success. In fact, we had a guest a few weeks ago that was we're talking about their expansion and expanding branches and so forth because they're a very well run organization and they're able to kind of ease. And we see this in a lot of people that I talk to day in and day out because spend my life on the phone with wholesale distributors and chatting day in and day out and manufacturers both. But you know, we're seeing some of these folks who are really taking advantage of it, of the situation because while yes, they've now had some goods arrive that have been at a higher rate, they've got a lot more now on the, on the water that are coming in from where whichever country, but mainly China that they're having coming in where we've got a pause or a lowered tariff amount. But they were in a strong inventory position prior to all of this. And now rather than a big spike that some of their contracts competitors are hitting customers with, they've got this nice blended rate of priorly held inventory, inventory that might have come in at a little bit higher price and now a balanced price. And now they're able to give this, I'll say easing the blow to their customer and they're capturing business from that.

I guess this depends if you have longer contract. So with my company I sell 10,000 bearings for 1oe every year and then I have to also take into consideration the repurchasing price. So not only the price I paid for the product on stock, but also the price I will pay maybe in five months.

Right.

So I think this depends on what kind of wholesale distributor you are. Maybe if you have a stock level for h vac products, $50 million and you just sell these H Vac products, then this is possible. But I think it's quite difficult for, for some other wholesale distributors.

You know, I think it's, it's a challenge across the board. I think there are some. And I think your point is very well taken depending on the market that you're in for some it's, they're able.

To.

Take advantage of the opportunity and it's, it's not something that will last forever for them either. Right. There's going to be a point in time where everybody's going to have a balance regardless of how these, these tariffs shake out. I guess mix. I'd love to kind of just. We're going to talk about kind of some. There's. We have an article we'll talk about from impomag.com in a few minutes about some of the tariff, you know, what's the ins and outs of that. But before we dive into some of that is I'd love to kind of one just get your take and.

What.

What is the, what is the sentiment or the opinions throughout Germany or your other people that you work with in the eu because. Right. Was we're looking at things with, with tariffs. You know, Germany is the Largest economic engine of the EU by far. And. But the tariff is across the EU in general. And the new, new chancellor, is that correct, is like three, three months old now.

Yeah, about that.

All right. Yep. And who's in Washington D.C. yesterday and had to, had to meet with the U.S. president while all this fiasco with Elon Musk was starting yesterday. Right. But an article that I read said he left with some, some strong, you know, positive thoughts. What's, what's the sentiment? Maybe I'll start, Max, and ask you what's the sentiment? Just on, on the visit yesterday from the new leader in Germany on that, and then the general sentiment within your manufacturing partners, your customers and other distributors in Germany. And then maybe what you feel like the EU looks at tariffs in general.

Okay, so I do not want to be the grumpy German, but okay.

It's usually my role.

I think our Chancellor's meeting was quite good because he was able to at least drop the two messages that are the most important message, support for Ukraine. And he was referring to the history of Donald Trump. And I think this is quite important. And my take on the terrorists in general, if you go back one year, everybody was talking about TEMU and how they de minimis regulations and there should be terrorists and stuff like this. And now if you ask the people, they say, oh, I hate terrorists. It's difficult for business. I think that in general, stability is more important than making most profit today. I think it's more. You can earn more money if you have a stable partnership ongoing for years and not optimizing for the today's world. That's my point of view. I think that it will be difficult to produce all the products that are necessary in the US So it's a global economy. It's difficult to shut down the doors and try to build everything by yourself or everything in the US But I think it's more important to adapt the strategy of the companies. And I think there will be going up some production, but in the US for example. But I also think that some companies will look for different markets because it is too difficult, too unstable, and maybe it's not possible to produce some products profitable in the U.S. in today's world, if everything is automized, only robots, and you don't need any energies or resources or stuff like this, then it is possible. So I think when I look at my customers, some of them, I'm very sure they will focus on Asia, they will focus maybe South, South America, and they will try to find different markets and maybe Come back after some time. So I think it's not the truth that everybody is now building up production plants in the US but if I look at a couple of different customers, I also know that some try to increase the capacities they have.

So.

It will not be a loss, but it will not be a home run. So I think it will. And maybe I don't know because sometimes I think the people do not know how important a good partnership is. But my fear would be that a couple of American companies lose good partnerships and they are not responsible for it. I can separate between politics and people. So I know many nice people, great companies. I visited all throughout the States and. But I think other people from all around the world will have maybe different opinions than I have.

I appreciate that. It's an interesting take on that. I'm. I guess I would be excited to look back in three or four years now to see and have this discussion again. Maybe we could meet up for a Bayern Munich game or something and at the Schneider House or something like that and before the game and, and look back on this. But the. I think it will be interesting to see specifically what you described. And it's intriguing to me about. I'll just say EU companies in general shifting. Right. Of. You know, in America, we wake up every day thinking that the whole world revolves around us, which is where I, for me, I like to try and leave our country at least once every 12 to 18 months. So I can remind myself that the world doesn't necessarily think as much of the US as we like to think, although obviously the leading global economy. But your comment, and I'm interested in Tom's take on this too, is your comment about some EU companies looking at shifting more business to Latin America or time and energy there or Southeast Asia or other markets, while this tariff instability is there is not something I thought a ton about before. So I think that's an interesting thought. Tom, any thoughts on that?

No. I mean, it makes sense, right. I mean, they have different options. Right. And because they're not subject to the same tariff structure that we are. So the optionality that exists from the EU or other places in the world is different than the optionality that we currently have here in the.

Yep.

In the US So it's just playing the, you know, playing the cards that they're dealt.

Well, you know, Bob made a comment here about, you know, free markets provide a throttle and a break. And I think the reality, you know, what we need to see here isn't am I, how am I going to Say this best. I've looked at this from the beginning of the tariff discussions. I've kind of said these things before is, you know, it ties a lot, Tom, to what you, you were saying early on in this presidential or this current administration in this country is, you know, we have a bombastic or vocal president that's far more characteristic of traditional global leaders and what he's willing to say and what he's not willing to say. Max Thomas made a comment long, a long time ago and he said, just listen to what he says, wait 72 hours and watch what he does. Right. Because it could be very different. And I think when we look at, just thinking about 145% tariff in China, to me that just seems like cooler heads will prevail over time. And what we should come out of this with. But the question will be what is the. What is the collateral damage and what relationships have been damaged. And Max, you were talking about partnerships, what damage has been done to business in general and then global partnerships through this. But I think what we come out of this with is a fair and balanced trade would be hopeful where it's beneficial for everybody. But there has been, with many countries, a huge imbalance that's been detrimental to the US economy. So if we could find that balance and then bring on, we use the term either, you know, onshoring manufacturing or near shoring, bringing it to the continent would be quite beneficial. I think the German Chancellor was talking about that yesterday about, you know, I mean, the majority of The Volkswagens and Bam Bays or BMWs in the US and Mercedes are made here in the US at US plants. Right. So a great investment from, from Germany and other EU companies that I'm sure are supporting the parts and so forth that are coming in as well. So I just think, you know, it'd be nice to look back in a year and say that there's some balanced trade. I don't know if a year it's gonna. I don't know if a year is long enough though.

Actually, I don't think a year is long enough because some decisions will take longer. But things will change and we will see over time what the results will be. But I wanted to add one more sentence about shifting the focus of companies. So everybody in Europe was afraid now or was concerned that TEMU and Sheen, they now shift all the ad spend to Europe and push all the products they are not able to sell in the US to Europe. But what you see right now is that they shifted to smaller and smaller countries. So in the Arabic area.

Probably Latin America, too.

Yeah, and Latin America. So this will be very interesting to see how the focus shifts in one year. And this is, for example, something Mr. Zuckerberg won't be very happy about, because ad spend in the US Is maybe more valuable than in Latin America.

Yeah, definitely. Ad costs are way different in the US Than they are in the other part of the world. So. So, Kevin, why don't we wrap up here by kind of, you know, kind of going through. I think this was a good article about maybe a summary of where we're at on the. On the tariffs and the questions and.

Why don't you lead us off on that, Thomas, I just talked about answering your tariff questions.

Well, and, And I think this did a good job, but I think maybe it's good for us to maybe take a step back. We talked a lot about this last week. Right. Which is. Okay. How did this all start? Well, this all started by President Trump enacting the. Enacting the Emergency Economic powers Act from 1977 and declaring a national emergency and imposing tariffs around that national emergency. So that's what happened with the executive order back in whatever January, where. The first day he was in office. Right. What happened after that? Obviously, we all know, we've talked about that. Then a week ago, the, I guess a little over a week ago, the trade court said that what he did overstepped the bounds, legal bounds of the Emergency act, and that, you know, that wasn't a legitimate use or a legitimate scenario of applying that act. And then the Federal Circuit overturned that. Well, didn't really overturned it, but said while we're waiting for appeal, we will overturn that ruling and you can continue with the tariffs until we sort this out.

It hit pause.

Sure. I paused.

No, I said hit. The court said hit.

I thought you wanted me to hit pause.

All right.

I thought you were pausing.

Why would you listen to me for that now? You've never listened to me before when I've said it. Pause.

I know.

You just said it. So, you know, forcefully or clearly. I was just like, okay, you hit the pause button.

I'm the grumpy German.

Yeah. I don't know what's wrong with me today. Anyway, so. So what does that mean? Right. They had the. So both sides, the plaintiffs and the administration had until the 5th, which was yesterday, to submit their appeal arguments. And the Federal Circuit Court is going to review everything and they say, going to give an answer by Monday the 9th. That's there. So what can happen? What could they say they could say, well, we're going to allow the tariffs to continue as they go forward, or they're going to either allow them to they're going to basically go back to the originally ruling and say, nope, the tariffs must stop, okay, until we get through this appeal process, which will take months. Right. And of course, everyone tends to believe this will ultimately end up in the Supreme Court, but nonetheless, all that takes time. So if they keep going, then it could keep going. The other option is if they say, nope, you can no longer apply the tariffs under that Emergency Powers Act. As we talked about last week, there's three or four other alternatives that the administration can potentially leverage laws, legal avenues that they can leverage to continue the tariffs, at least to some level. I don't know that it could be the same level that they're doing now, but there's some level of that going forward. So this article pretty much goes into a bit more detail about what I just talked about, but I think it was, it was helpful for me to kind of take a step back and go, okay, what exactly has happened timeline wise and what is continuing to happen as they kind of navigate through this? And this answered some more questions on that.

All right, what's going to happen, Tom, I'm paused.

I'm paused.

What do you think's going to happen?

What I, I think what's going to happen is the Federal circuit on the 9th or early next week will continue to will say no, that this is will stop the tariffs or at least through the Emergency Act. I think they will not let it continue through the appeal, through the appeal process. Just what I think. And then there'll be a scramble to figure out these other options that could be applied in other legal things. But I think there's a lot of nuance in these other options that don't quite exist with the Emergency Powers act. And there's more complexities and there's more legal complexities. So, you know, they're not going to give up, right? They're certainly not going to roll over and say, well, we're done. But I, that's what I, that's what I think is the highest probability outcome. I know you think the opposite. That's okay.

I don't know about the opposite. I'm going to ask, I'm going to save my discussion on this till the end. Max, do you have any thoughts on this?

Actually, I'm not deep enough into that topic. I only can add that, as I mentioned to you by mail, that I'm a stoic So I only focus on things where I can have an impact. And actually in this times, I think this is some kind of superpower and I only wait for facts and try to prepare as best as possible because everything changes so fast.

It does.

A true German attitude there, A true German mentality. Yes.

I think it would be foolish to think that this is something like this is just going to have this administration roll over and not want to continue with the big picture, what they're trying to accomplish. You know, the one thing that we really haven't talked about here, you know, is there's these other acts that can be done. There's, you know, the whole idea of actually taking something to Congress. And, you know, I'm going to hit pause on myself for a second. I'm going to ask you, I guess, another question. And Max, I'd love your thoughts if you feel to it, but the last time to start with is, you know, the president that's behind all of this wrote a book many, many years ago, you can get it for 10 or $12 on Amazon, you know, called the Art of the Deal. Right. His whole world, whether you like him or dislike him, it's irrelevant. Right. His success and his failures in business have all been around negotiations. He has a number in mind, and let's just use China, let's not even use the eu. He has a number in mind with China. Tom, what's your, what's your guess that he wants to find a trade balance of a, of a tariff percentage number that would, would be acceptable?

25, 30%.

Okay. Max, have any thoughts?

So actually here, here in, in Europe, they, they say he's playing 4D chess in the tariff game.

Correct.

Or 5D or 70. I don't know.

It's certainly not two.

Yeah, but actually, I don't know if they have some kind of master plan. Maybe he has a figure in mind, but I don't see the plan and the master negotiation skills. But I think it's higher than 30% would be my guess.

Higher than 30, less than 50.

Yes. Because 50 won't be possible, I think.

Yeah.

So. And if you think about it, right, that's roughly a third of what he went in at. And I, I haven't tried to do any of the math or any of the research on what that would mean, but let's just say it was 35%. Right. That's probably very manageable. You know, that doesn't mean not going to make people happy. But you know, if you, if you think about it, right, you could, and this is certainly not the way this would play out, but if you took the third. Let's just say it was 30. Tom. Tom was on try. Hate to save Tom and right or correct and Tom incorrect in the same. You know, Max, Tom and I have been friends for over 50 years, so it's hard to compliment him. I only do it once a month. But if Tom were correct on this and it was 30%, if you think about it, you know, most Chinese factories would find some efficiencies or find something and probably take at least 10, if not 12, 14% of that themselves. Distributors should be working right now on focusing on everywhere possible to find efficiencies as well through that. And whether it's inventory management or it's pricing models or it's, you know, how your deliveries are, how you're working with your customer on these things. And then the customers need to be prepared to take some level of increase on these things as well. But if we could do that and then find some balanced trade from it, those might be reasonable numbers. And that's my view, you know, on all of this, is that I think we're going to be at a place where it's going to be way under 50 and, but way more than 10 in with China. And then if you start finding a, you know, a balance across the board of these small, lower numbers and find a very reasonable, you know, number with the UK and the eu, we might see some, some benefit out of this over the long haul. I think the challenge right now is, is the approach. Right. And the approach with the, the, you know, being so. I mean, I look at things as like. And I think that's one of the big struggles that people have in general. Right. Is just the silliness yesterday of the, the Trump and Musk thing. It's just like that's not helping us get more factories in the US and get a balanced, balanced trade. Right. There's no value to that. So my, my assumption would be it's somewhere between 30 and 35% is the number that he's been looking for all along and he'll intend to get to. And I can almost guarantee you that Xi Jinping in China knows approximately what the number is that they're supposed to get to and they're supposed to be talking today or this weekend. Right.

But remember, there's other philosophical issues above and beyond a number with China. There's just how they approach the whole trade game. They, the ability of even starting a business in, in China, US trying to Start a business in China is next to impossible unless you.

There's intellectual property issues.

There's intellectual property, there's the fentanyl issue. Right, right. There's good point. Remember that the China has a developing nation status, trade status, right. Which they received, I don't know, 20 years ago or whatever the case may be. Well, they're no longer a developing nation nor should they deserve that status, but they still are operating with that. So a lot of this is not just a number, right. It's how does this whole philosophical aspect of the trade relationship come together so that it's more on level ground and removing maybe some of the unfair advantages that they've taken advantage of, you know, when they were given that developing nation status. So again, and Bob said this, right? There's not one right. Correct answer. I think there's more of a. After all the dust settles, right. Are we going to have a better situation? I think and as we wrap up here, I think Max, your point is, hey, we may end up with a better situation but there's all this disruption, right. Created a lot of collateral damage that is offsetting that thing, offsetting that situation and maybe in some cases worsening what we had before even with some of the dust settling.

But anyway, maybe, maybe I can add an outside view.

That's why you're here.

I've been to China in November last year for one week, a couple of cities and we visited a couple of e commerce companies, logistic companies, live streaming, huge live streaming companies and stuff like this. And what I've seen there was incredible speed, very fast, very interesting UX developments, very good last mile services. This is due to lower wages but this is because the companies really want to offer it. And I think that not talking about how the country is managed but I think this is something we should in Europe but also in the States we should try to be very fast trying to really develop their own, their own companies to really push forward and not discuss about maybe stuff that is not right. But that's the same here. You can find people everywhere that, that are discussing about how difficult the world is. Yes, it is, but the world doesn't care. So this is what I think when, because I was quite impressed when I've seen Alibaba and we have been to jd Very interesting companies, very fast developing and I think it's more important to try to create an environment for companies to really develop, to prosper, to. To really build something big. And I think this is much more important for economy and for the, for the People in. In a country. And that is why I think Terrace is maybe a very difficult way to find a equal balance sheet.

Yeah, yeah. It's an interesting point. Right. It's kind of a punitive way of trying to create fairness rather than a more positive way of trying to get, you know, even more focus. And it's interesting what you're saying about China. I haven't been to China, but what I understand is their focus right now and their ability and speed to execute is very fast.

Yes.

Compared to how we operate or how we've unfortunately become a way of operation in the US Especially related to energy and, and, you know, just their innovation and all those types of things. And I think that's a. An area that if we don't really, really get our act together on the speed and the focus of what we can do, we are going to get left behind. But anyway, go ahead, Max.

I'm sorry.

The domestic market is not booming anymore in China, so they will push, never not looking at terrorists. They will push in other markets and they. They build good products and products also IT wise, great IT products and good software and good apps for the mobile phones. And I think, yeah, we should all focus on our capabilities and try to make the best CRMs and software to really create value. That's what I think.

Yep.

I think that at the end of the day that that's where we need to be. I think that the challenge with that is. And I think to Tom, and I'm glad you brought up the point of, you know, there's so much more to this than just what the tariff number is. Right. There's the things behind it. And, you know, we have a horrible fentanyl drug crisis in this country. That's, you know, a big part of what's. And this is. This is the bigger picture of what this administration wants to do here. Right. It's the. We've got the drug issues, the border issues that we have. I'm sure Germany has fentanyl problems and Germany has border issues too.

Right.

Of immigration issues that go with that, just like the rest of the world does. Right. But we push those things together and then we find some balanced trade to help manage the deficit in this country and that will help reduce taxes. So there's a big picture loop with all of this. But I think that, you know, really the challenge that needs to come out of all of this with the. Specifically with China is. I agree, Max, with all of the things you said about the things that they're doing. And it's part of. And we're going to shift in in a couple minutes here to start talking about AI and technology even further. The, the challenge is, is that the rules aren't the same. Right. We, we know when we're dealing with a, a German or, or, or you know, another EU company or country, I should say there's a lot more understanding of and transparency with what's going on. The German government isn't going to, or the EU isn't going to just randomly try and change the value of the, the euro based upon some external factor. Right. Where in China they can withstand a lot of these things because the current. They're not afraid to manipulate the currency and they're not afraid to backstop companies as a government which is, doesn't happen in other parts of the world. So I think there's. Tom, you did bring up some good nuances that we should pay attention to and continue to watch. But listen my friends, we're not going to go an hour and a half today because it's evening family time for Max. Max, you've got, we've got kids at home, right?

Yeah, but actually they are driving to a party. So.

Awesome. Very good. We're not closing out right now but we normally go a lot longer and we'll, we'll cut things a little bit shorter today. But Tom, we were going to talk and kind of let's jump through our manufacturing distribution segment here. Let's jump ahead to, through that just because of time, because I want to spend some time today talking about. There's a couple of marketing things we'd like to talk about and get Max's take on that, but would really like to also get and spend quite a bit of time talking about AI technology and robotics. So we have our E commerce and marketing segment. There was one article here from Digital Commerce 360 that came out and was talking about five B2B marketing trends. And Tom, you triggered on that one a little bit. You want to give us some of your thoughts for that particular one?

Well, nothing earth shattering, but I think that there's, you know what's interesting to me, or maybe not interesting is not the right word. I think exciting to me and we're even seeing this more every day. I think in our industry is that marketing is moving away from what I call kind of spray and pray. Hey, let's go send a bunch of emails or let's, you know, worry about our low. I mean people are still worried about their logo and their brand and all that. But as far as their outreach and so forth. I'm seeing more and more emphasis on the use of data and data driven and that's what this, this article talked about is that data and obviously understanding your customer more, communicating more succinctly using data and using AI to not do more spray and pray, but to actually have more meaningful conversations and so forth. So anyway, it's, it's, I thought it was a good summary of those things, but I think overall, and you know, Max, not interested in what you're seeing out there, but I'm seeing more and more a understanding from a marketing perspective of the importance of, you know, we talk a lot about sales using data. I, I'm seeing also an emphasis now on marketing really using that data, which is pulling the sales and marketing teams closer together and working more in lockstep. So anyway, this article kind of summarized a lot of those trends.

We talked a couple weeks ago about brand. Right. And I think we've got some marketing people that you know again and we talk to people every day and we're at events constantly throughout North America about distribution and manufacturing both. And you know, historically, you know, a brand is, well, I have a name that's been around for, you know, seven generations, but that's not necessarily brand. That's a, I'm well known in my market, but am I developing a brand and what my company truly stands for? And it's not to say that people aren't doing that, but there's a lot more opportunity. I think even some of what this article talks about as well is the idea of starting to use AI tools that go and help us really even understand the data that we have available to us in the business. We've got customers that are using some of our tools now that are doing things they've never before done of bringing marketing and sales together. I like to kind of refer to as more of a revenue department than marketing or sales. Yes, there's marketing functions and an ad functions and brand functions and there's feet on the street selling functions. But when we're thinking about a common goal, we have so many more opportunities now from the marketing world than we've never had before.

Well, again, the data is the common denominator, right?

Yeah.

So, and I like Jason's comment here, right. B2B was for a long time have friendly sales reps. And I think we're, we're moving away from that, both from the sales and the marketing to a more strategic, more valuable thing. Right. I think somebody said a couple weeks ago, don't ever underestimate donuts. But hey, you can bring donuts and still it still have value. So yeah. All right Max, we'll let you jump in on this.

Yeah, actually I, I think that the, I like the phrase of revenue department because what I've seen in a wholesale distribution is that usually marketing and sales is not very combined. They are two separate parts. And the one outside, outside sales guy who needs a flyer for a special product goes to the marketing and says I need a flyer. So this is the old world, but it still happens today. Actually I do not know if AI is really helping here or if it's only putting patches on some products. Problems that are below because you, I think Kevin, you said meaningful or great conversations with customers. I think if you really want to add value for the customer and this is what you should do as a distributor or as every company, you first really have to understand what is the value. So if you only have the perfect marketing machine and send out hyper personalized newsletters that have a great engagement rate, this is maybe even not adding value. And I think this is a discussion that is today not on the daily topic or it's not a daily topic at the moment, but I think with the AI features, with the AI capabilities this will help on the long run to create value. But today I see more flashy, shiny marketing suites that show off perfect analytics and say if you send this guy an email on Friday morning 7am he will buy more. And I think this is maybe nice for a marketing presentation, but that's not the core of a wholesale distributor. But that's my take. Yeah.

Well, I wouldn't argue that for a moment. I think, you know, and it ties back to kind of what Jason was saying there is. Right. Marketing is much more than having a friendly salesperson. It's also more than having a barbecue, you know, once a quarter at each of your branches or sending out a newsletter. Right. And it's, it's truly understanding what your value proposition and a value proposition isn't a friendly salesman or I have the best price on a Makita tool or whatever it might be, right. There's a lot more that that goes to that and it is kind of funny I would throw out to, to people in general is if, if you don't clearly understand what your value proposition is, you could use, you could use Chat GPT and do a deep research tool, right. And, and start literally asking some prompts about, you know, what questions do you need me to answer, right. So that you can help me understand My value proposition to share with my customers better and continue to add and adjust those prompts. Because whether you're using Cloud or ChatGPT or Gemini, asking it to ask you questions about your business will probably astound you. I did some of that a while back.

And if you do this, and then just imagine if you use the data that you have about a customer and then you do the same and you ask them, how could we really be of service for our customers? What should we tell them today? And usually it's not cross selling, it's not upselling, it's solving a problem. And this is what we try to do with our software and with our statistics that we run. But I think now there will be, for the next couple of months, there will be a time of millions of companies showing off very interesting slides. And then on the long run, I'm very sure that we will have solutions that really add value for suppliers and customers. Very, very, very sure. And in marketing, but also in real life. And I think the combination is that what gets where it gets interesting.

Yeah. Well, Tom, I don't know if you caught it, but Max, just a couple of moments ago shared with you with one of the agents that we need to build is.

Yeah, exactly. But I think, just to summarize what, what I think, you know, Max, I think you're saying, and I tend to agree, is that AI has, has created more noise than it's created value in the marketing world up until, well, up through now. I do think though that we are seeing this, and I'm not saying it's a rapid switch and I'm not saying everyone's doing it, but I'm starting to see that more and more organizations are starting to figure out how to use data and AI to add value versus create more noise. Right. So to your point about sending emails at 7 o' clock or generating a whole bunch of LinkedIn posts that are AI generated or, you know, emails that are. And that's just noise, right? That just creates noise. It reduces your credibility. It doesn't really allow it. But if you are using that value and you said, you know, doing things that provide value and using the data to provide value, I think we are starting to see that application emerge. I don't know how fast it's going to sort of overstep or over, you know, basically trump all the noise that's out there. But I think it, I do think that people are realizing really quickly that creating more noise with AI is not going to. It's basically wasting their time and, and not helping their brand overall.

Yeah.

And I think this will this is for a new development. It's always the same. It starts with loud ideas and and with with people bragging what they are doing and with the CEOs sitting in hotel bars and bragging what they do with AI and in marketing and then just give it a couple of more months and then it's quite interesting. I'm very sure. But maybe I can add something on the AI development in general. But this is maybe for one one of the issues later on.

Yeah, good. Tom, let's kind of there wasn't I just want to reference this again and I'm a little bit late on doing this. If you're listening in on the recorded podcast on Apple or Spotify or wherever you might be listening in, you're not seeing the newsletter that we have here. And then the newsletter goes out every Friday. It's called around the Horn in Wholesale Distribution and Manufacturing. You can get that by sending us an email@helloadsmartech.com or simply if you're on Active on LinkedIn, just search around the Horn and Wholesale distribution and that should pop up for you. Subscribe there and you'll get that each week in this newsletter. I don't want to put time into it, but I do thought that do think there was interesting article article here about SMS and text marketing as well. So there's a number of companies here in the U.S. max. I don't know if they're in Europe as well, but there are a number of companies here in the US that work closely with wholesale distributors on doing mobile messaging and mobile marketing and so forth as well. And they do it on their own platform. So it's an app that your distributor can download and so forth. So kind of cool to look at that. But let's dive into the technology, cybersecurity and AI segment and a number of different articles. But let's jump off here and we happen to have published the article from impomag.com but this was in general news, whether it was Reuters or or BBC or whoever it was earlier in the week that Meta or the company behind Facebook and Instagram as we know it, becomes the latest big tech company turning to nuclear power. So let me just preface this before we dive in and talk about that a little bit further is there is a race to see who is going to take the lead. And I'm not sure that we actually need someone to win the race because I think it's a journey versus a race. But China is way ahead of the US in energy production. Other parts of the world are doing the same and in China they're using coal and hydroelectric and wind and solar and all of these different pieces. The critical factor of can we ever get to and certainly before we get to AGI within in AI we're going to need some further power sources. And I heard a great presentation about a year and a half ago from Zach Cass who's now kind of a futurist and AI speaker but he was very one of the early employees and one of the leaders in the go to market strategy at OpenAI and or and or ChatGPT. You know, he shared that, he said, you know, it's almost impossible that I won't solve cancer and other health issues just because every day we get new data sources of, you know, Mr. Mueller who is fighting this type of cancer is having this result. We have these new inputs every day. We have mortality rates and all of the things that happen with that. And these models are going to just learn and learn and learn and extrapolate and grow that we'll find those answers to those things. The problem is we can't power the AI properly. So now Meta is cutting a deal, 20 year deal to secure nuclear power to meet surging demand for AI. So I think this is the, the, the first big one of its of its kind. Amazon announced a couple of weeks ago doing that, but it's a fraction of the amount that they're looking to do.

So Meta's not only did they also did they not only commit to a bunch of purchasing a bunch of power, but they also committed to upgrading the facility or helping to upgrade the facility there. Yeah, I, I look, I in every day I start to look at this closer. I think one of the biggest challenges that we have that honestly are more important than tariffs in my opinion is getting our energy together and really starting to. I think it was Bob or somebody said earlier, right the US when they need to can really focus and get stuff done like in World War II or even the Apollo project or some of the other things that we've had in our life. I think we need to be making this emergency or this energy situation a very focused effort. Otherwise we are not going to be the leader. Even if we have the greatest AI technology, if we can't power it and we don't have the infrastructure to power it, it's a moot point, right. So, and there are a lot of in this article talks about it, right? It goes into other sort of forms of energy and different things that other things are doing. But man, I mean it just, you know, if it takes 10 years to get a new energy source off the ground because of regulatory and all that stuff, that is not going to get us where we need to go. And so I'm really hoping that. And I think there's becoming more and more of an awareness in this and I think that some of the political and the regulatory things are going to get broke. In fact, I think there were two. I think it's article said there were what, 200 law or legal initiatives. You know, law sword I'm looking for where you, you basically, you know, try and pass a law or try and get a new law to reduce regulation in the energy space that's come out this year from different things. So there is definitely some awareness, but industry taking it in their own hands.

Yeah, Max, what are you seeing this in, in Germany or in the eu.

We have initiatives for AI mega facilities and also some power grid efficiency programs and stuff like this. But if you, I think listen to Eric Schmidt, he, He said that 99% of the today's energy will be used by AI or so. So I think this is a drop on a very hot stone. So I fully agree, Tom. That's also a topic maybe more important than terrorists. Very, very important. Also to have decentralized capabilities, to have a better power grid, to have smart meters. You have to adapt the power change. So I can. But that's a very boring podcast. But we could do a show about the situation around power in Germany because I want to build a new facility. Very complicated.

Okay. Based upon if you want to build a new distribution center or new branch location.

Yeah. And you have, you have insurance companies that want to talk about regulations. You have official laws, you have a minimum percentage. You have to have renewable energies. And they sometimes even do not agree. So it's.

Are you suggesting that the Germans are complicated?

Yes.

Actually no. It's really crazy.

Yeah.

That's good. Well, I think, you know, the factor is. And I think a lot of what we, I think specifically in this country, but I think it's probably global is with people that first glance at this thinks about Chernobyl or Three Mile island and these, you know, big nuclear accidents and so forth and how dangerous it is. But what they're talking about here are these small modular reactors which you know, are a fraction of the size and dramatically safer than, you know, we don't have those big, you know, boiling cores that they've had. And they're very, they work Very differently. And I'm not far from an expert, something that I want to learn more about. But this is very different than nuclear energy. The way we've thought about from the, you know, 1970s and 80s and even early 2000s.

Yeah.

But I think they are too slow. So they also take too many years to really are up and running and reinstating old power plants, nuclear power plants is also not maybe the best strategy. So that's also. I agree with Tom. We have to find solutions that are faster. And I think in that case, renewable energies are very fast.

Yeah.

Well, and it's interesting with that, you know, too is in. Again, I, I always joke, Max, that we're not economists right here. And so I'll, I'll also say that we're not experts in, in energy. But I think what the, the, the view of what's, what they're doing in China right now is it's everything. It's not one thing, Right. It's hydroelectric, it's solar, it's wind, it's coal, it's nuclear. It's all of these things. And when you put all of those things together now all of a sudden. And again, I don't know what it takes to, to feed the grid or exactly what it's going to take to power what we need from an AI standpoint. But that broad approach to me sounds very interesting.

Yeah. Not being dogmatic.

Correct.

Yeah, Great, Great way to put it. Great way. All right, well, let's talk a little bit about some robots. A couple of articles here, it's on humans to adapt to working alongside humanoid robots. And then it talks about the next article, talks about battery life and so forth and the challenges. Back to this power discussion. So we can probably lump these two together. Max, you said I shared with you. My take is that as I'm starting to watch a lot of these different companies and a handful of Chinese companies and then Boston Scientific here in the US and we're starting to see these, these humanoid type robots where they can, you know, look at a, at a bag of groceries and know which goes in the fruit basket and what goes in the refrigerator. And they can take a banana without smashing it, or they can grab something and solder something or cut something, you know, just. And you put that together with then some of the videos we're seeing about, you know, their ability to run and jump and move and pick up heavy objects and roll around on the ground and pop back up and not get knocked over by other forces. You start putting those things together with the sensors that go in there and then the ability to do precise movements. I think we're getting very close. I was saying earlier, I, you know, I think, I don't know that we'll have one, but I think in 18 to 24 months, the availability of a, even a home version of a humanoid robot is there. But one of the challenges that, you know, we're seeing from one of these articles here is the idea of energy, right? The one article about running out of energy talks about one that ran a half marathon, but that they had humans that had to run out multiple times and plug new batteries into it. Go, Tom.

Well, I mean, what do you, I mean, I think that's a great point, right? Because if you, let's say you did have a home robot, but you're having to charge the, the thing every, you know, day or maybe more than once a day, is that, Are you really going to do that? Is that going to be. I mean, it's like I get irritated with my Apple watch that I got to charge it once a day, right. That's constantly going off and things like that. I think that the energy part of it is going to be in terms of wide scale adoption, certainly from a consumer spec standpoint is going to be a big deal. But in a, even in a business standpoint, right, it's like if you have to go recharge these things three times in a day or whatever, I don't know, it seems like a, it definitely seems like a deterrent to widespread adoption.

Well, I think the issue of this is. Right. You know, I just gave the example of the humans having to go take the robot that was running the half marathon and add the extra batteries. The. I think when you start looking at this, at the, from the, this is a view, right?

It's.

I don't know what, I've not researched this enough to be an expert, but, you know, my view of it is the one at home. It'll go just charge itself in the garage when it needs to. I don't need to worry about what it's doing because it's, Unless it's cooking me dinner, which I don't ever plan to have that happen. But unless it's like the Jetsons Rosie, that's cooking dinner. If it only cleaned two hours of the house and then goes out to the garage on its own and charges itself for an hour. As long as I have the energy and the energy is available, I don't care. I don't care if it's on the hillside behind My house weeding at 3am because it doesn't impact me. But I do think that's a different factor when we bring it to industry and, or factories or distribution centers and warehouses is, you know, if we're constantly needing to be charged, then you are in a situation where you probably need more of them.

Yeah, that's actually, that is how it's working. So we have in my company today three different kind of robots, some of them already more than 10 years picking up bins. And I would say 15% of the robots are for charging or maybe 10%. But you only have to adapt the processes and have a better process design so that you can reduce the amount of robots you, you need at the same time. But I wanted to come back to the humanoid robots so maybe there will be a, a big consumer market. So having a humanoid robot at home, but really having humanoid robots in the industry, that won't be the first step because in my point of view they need too much energy, they have a low level of physique. It's very difficult to grab a box like this. And if you have specialized robots, usually they are much cheaper, much faster because they only have one thing they have to do. So there will be like figure one maybe or so that there will be companies that supply distributors with brownfield applications, but you can also build brownfield applications for other kind of robots today. So my point of view, I always make the joke that the first humanoid robot I will buy, he will make my company tours. So he will have a speaker and there is a flag and he will run around my logistics and tell funny stories to my visitors. Because I don't see any application today where the humanoid robot is really better, faster and cheaper than a humanoid robot. But that's, that's my.

So imagine that they, that they would actually get in the way, right? Yeah, they're going to get in the way. Right. So the value is not going to exceed the, the downside.

Yes, they will be very, very slow. So for example, I have a robot with a full AI vision without master data. They can identify single piece products and they can grab it out of the bin and put it into another bin or into a customer package that's based.

On RFID or barcode or whatever. Right?

No, even better, it's an AI technology that only has a vision camera. No, no barcodes. Because we live in the stone age power transmission distributors, we still have suppliers without barcodes. So the camera is identifying the product. So for example, if I have a humanoid robot, he has to look inside of the bin. It takes seconds every time, but for us, it comes outside fully automatic of our auto store. The camera checks the content. It says I can identify three products. And then we put the three products to the customer order or to the other bin.

Is your auto store stocked by robots or is it stocked by humans?

No, it is today. The receiving area is still humans, but we will move here to robots 2. And then the picking is still humans, but we have certain applications where the robot is already learning our. Our assortment and products.

Yep. So I would throw out to both of you, Max, you're living this and your business is a good example. And what you've described in your business is what I see. And some of the. I get out on the road and visit some of our customers. That's pretty much what I'm seeing. I think if we were to have this discussion in 6 months and then again in 12 months and then again in 24 months. Battery technology is improving every day. There's Silicon Valley companies now that are, you know, putting together battery program or packages for both automotive and other uses that are far beyond, you know, they're in testing still, far beyond. They're, they're charging in a fraction of the time and they're lasting much longer and they're using a small percentage of the rare earth minerals that other historic batteries have used as well. So I think we're going to be at that spot and I'm going to kind of take a little bit of the optimistic side of this from the standpoint is I think sensors are getting better, the robotics I think will get better, and the battery technology gets better. I think we will be in a place, I don't know where it is, but where we have a humanoid robot that can do. And Max, your point about, you know, the cost when you do lots of different things goes way up. So maybe we have, you know, five tasks that something can do and there's three sensors in it versus the one that can pack boxes, it can sense for smoke and fire, as I've kind of talked about before. And it could wander the yard, you know, or the outside of your facility and, and monitor for intruders. But maybe we have some that can do a four or five functions that work in shipping and receiving, and another one that works in order packing. And then we have other ones that are checking inventory levels and sensors for carbon monoxide or something like that. But I think we're going to see much more advancements pretty quickly.

Yeah. So if you want, maybe we can make an episode about robots and what I think is worth working and stuff like this. So I'm always open.

I love that we, you know, so we've. I don't know if you've seen it, Max. And you know, we, we host our show on as your weekend is getting started, so. But we now have a second version of the show. We call it around the horn 2.0. And we, we developed it because it's so we can do whatever we want. So we don't have a newsletter in that one and we can, we can do that. So let's work on that. I think that'd be fun. Maybe Tom will work on getting a.

Bunch of videos talking about just robots and energy power and energy robots.

Well, I think we could find some of the great videos out there and then we could maybe. Max, I'm sure you have some images or some videos about some of the things you're doing or some of your counterparts are doing. So I think that's good. That'd be fun.

We can have him live from his facility.

Yeah. Tom loves Germany as well, so.

Yeah, always welcome. Thank you.

My, my wife would hear about that and you know what she would say? She would say Garmish part in Kirchen. That's one of her favorite vacation spots.

So I can bring you there.

Yes, we know the way. So we, we love going there. I've been there many, many times. So listen, we've got to. We covered a lot of ground today, but I appreciated the discussion about the, the robots and so forth. We didn't get to our people and leadership segment. There's a whole discussion in there about business leaders expect agency to take over customer service. That's the one thing I did want to talk about before we left today because, Max, I think you had some thoughts on that. I have some concerns about that as well. So why don't we hit that one before we wind down? Max, you want to give some of your thoughts on customer service and AI agents?

Yes. I had a couple of interesting discussions over LinkedIn the last couple of weeks, and I think it's very natural that you think that you can get rid of thousands of people in customer service with AI bots and stuff like this. But I think the even bigger chance is to increase the service with a better curated style of presenting information for people that work with the customer. And when I look back, the last 30% of our growth we made with 3% more people. So I do not want to get rid of any people, but I want to provide the best Service and the best value for our customer. And I think it's even better to focus on that in the AI game because it is far away from the customer. Even if you make a fault, you still have some kind of next level that helps applying the results of AI.

So that is my take, augmenting versus replacing.

Yeah.

But I think there's an interesting point that he's bringing up here which is not only just augmenting but taking up leveling. Right. Taking the service level and the service experience to a whole nother level. Right. I think we've all become jaded, if you will, related to customer service. We expect a kind of a mediocre at best experience and, and we, and we tolerate it. Right. You know, even we're happy with a mediocre experience along the way. Whereas I think to max to your point, if you could use this to really provide a extraordinary experience on the customer service side, it would make a huge, it would, I mean why wouldn't people do more business with you? Right. Why wouldn't they buy more product lines from you? You don't have to go, you know, force cross sales and upsells. It'll happen organ organically if they have that experience. So I think that's an interesting viewpoint if I assume that's what you were saying.

Yeah, exactly the same. I think it's more important to, to have great service. So maybe one last figure. Our error rate going to customers is 400 order lines per million. And this is benchmark in my, in my segment in Germany. And so the customers are usually happy but if they are not happy, I want to know it before they know it. So I want to call them and say we expect that there will be a problem, for example. And I think this should be, this should be the AI world to help my people, helping their customers.

Well, it's one of the few real, in fact it might be the only real statistic that's of true value that you just brought up. Your most recent 30% of growth comes from 3% additional staff.

Yes.

Now you can sit down with your finance team and your bank and start looking at the future with that and look at what it takes to grow your business. And I think those numbers are probably just going to get better. But I'm so happy to hear those than you sharing those numbers next. Thank you. Because that's been my view all along is, and I, I've said this on this show and you know, at conferences and speaking engagements and so forth all along is look at this as what what if, you know, just a simple example is what if you could 2 or 3x the size of your business or the effectiveness of each of your people, let alone the potential of 10 times the productivity with the same amount of people, you know, people are still going to need jobs. And then the argument is always that, well, look, you know, the Internet, the Internet was going to, you know, replace people and the, you know, production line, you know, was going to eliminate people. But there's just going to be more and more investment into this to make AI better for business. And I think if you have the mindset that says I'm going to still have plenty of employees and I'm probably still going to hire more people, but it's going to be a fraction of the people to get the exponential growth and efficiencies and service levels in my business. That's where the win is. Good, let's do this. Because I said we weren't going to go an hour and a half and we're almost there. Let's wind down for today. And Tom, maybe you could jump to full screen here for a second and we can chat our way into the closing. But I like the idea of having another discussion about robotics and energy. That might be nice. And Max, if you know, any other third party in Germany or the EU or another gentleman or woman that might want to join us for that, we love doing this. And as we've thought today, you know, is we're five or six thousand miles apart, but we're only an Internet connection apart. So, you know, having more guests, Tom, internationally would probably be good for us. So we'll start working on that and let's do an around the horn 2.0 and talk about robotics and, and, and AI and energy. So good. Yeah, yeah. Max, thanks so much for being with us. We, we appreciate it. Just in kind of winding down, we'll do this again. We think about Max Meister from Ludwig Meister and joining us today from Bavaria. And you're what, about 20 minutes a half hour from Munich? Is that where you are, roughly?

Yeah, 20 minutes outside of Munich.

That's what I thought. So good. Well, Max, thank you again for being with us. Tom, thank you. As always, as we wind down, we thank you for coming each week. We thank you for everybody with the comments that came in today. Very appreciative of those. Again, I'm Kevin Brown, this is Tom Burton. We do this every week. If you'd like our newsletter, as we mentioned before, you can reach out to us, we'd be happy to share that last little plug for our sponsor, the company that Tom and I work for, Lead Smart Technologies. We work with wholesale distributors and manufacturers to help on your digital journey to bring siloed data from across your organization together in a single platform that helps with sales enablement, customer intelligence and what we call Smart CRM by using AI tools to gain deep insights into the business, the customers and our teams to accelerate growth in the company. So we look forward to next week. So until then, Max will wish you a wonderful weekend and Tom, I'll be seeing you on Monday up in Ventura and we'll wish everybody a great weekend and be kind, be safe and do good things.

Thanks everyone.

Yeah, thank you Tom. Thank you. Kevin was great. Thanks.

Cheers.

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