Jason Sullivan joined Hugh Hornsby on Blue Collar Smart to talk about putting AI to work in a distribution business without losing the thing that makes it work, which is the people. They get into what a branch loses when a 40-year specialist retires, how to bring along a sales floor where some people already use ChatGPT every day and others have a process they like, the questions to ask a vendor about where your data actually goes, and how private equity is changing the math for owners thinking about succession.
The video version is on YouTube, and the episode is also on Apple Podcasts.
In this episode
00:00 Why AI is really business transformation
02:50 Combining cognitive science with artificial intelligence
07:00 Preserving expertise as the workforce ages
11:31 Introducing AI into a people-first business
18:42 Protecting your data when adopting AI
24:39 Why founders need the right support system
31:40 Private equity, succession, and competitive leverage
40:09 Jason’s “yellow pad” leadership lesson
Transcript
Jason Sullivan: Take the term AI out of it entirely. Forget about AI. Just think about a business transformation, as I mentioned before. That’s what this is all about, and holding a mirror up to your business. So if you’re an entrepreneur, if you run a distributor, whether you’re the owner or the president, whatever the case may be, you’ve always got to be in the mental space of how can I understand my business better? How can I be an enabler, a force multiplier for my people? Whichever department I’m thinking of, how can I understand how things are going and how can we make things better?
Narrator: Most trade leaders are working harder than ever and still stuck. There’s a better way to compete, and it starts with people. This is Blue Collar Smart, hosted by Hugh Hornsby, 40-year trade executive, industry award winner, and the only media voice built for leadership on both sides of the trade. Every episode, one truth, one action, one step forward.
Hugh Hornsby: Welcome to Blue Collar Smart. Hello, this is Hugh Hornsby. I am the founder of a new podcast called Blue Collar Smart. Blue Collar Smart, underdog proven, trades tested, and built different. You know, last week when I was at the grocery store, a friend of mine came up to me and I was telling him I was doing a podcast. And he asked me what it was named, and I said it was Blue Collar Smart. And he says, what does that really mean? Well, I went on to tell him that at the age of 10, I was diagnosed with epilepsy from a head injury. And my entire life, I’ve had to kind of look at the world from a different perspective. And I used to go through life saying, hey, I was blue collar smart. Well, I stopped saying that about 10 years ago. But what I really realized is that Blue Collar Smart is not about how you dress, it’s about how you think. And today, I’ve got a really good friend of mine on. It’s Jason Sullivan, who is the owner of Distro AI. Jason, how are you?
Jason Sullivan: I’m doing great. I’m so excited to be here, Hugh. Thank you so much for having me.
Hugh Hornsby: Yeah, I am, I’m excited as well. Jason and I met each other about three years ago, and I’ve kind of watched him evolve. When I was doing some of the history on Jason, you went to Stanford. And, you know, at Stanford I think you got a computer science degree. But then you’re one of the few people, I don’t know anybody else that went to Yale and then got a cognitive science degree. So those two don’t normally go together. How did that happen?
Jason Sullivan: Yeah, you know, it’s funny. As you said, I did my undergrad at Yale. It was focused on a field called cognitive science. And you can kind of think of that as a lot of human psychology, a lot of the study of perception, a lot of study of how people make decisions, how people relate to one another. And it’s been a passion of mine for such a long time, my whole life really, understanding how people think, make decisions, and act. And that’s a lot of how my academic background has informed how I built Distro. And that’s a lot of how I approached, as you said, my graduate degree in computer science at Stanford. It’s a bit more of a human kind of approach to things.
Hugh Hornsby: When I met you, and let’s go on, you know, AI is such a big topic nowadays, and we’re going to jump into AI, but when I met you, I think you were starting early on and you were trying to figure out AI. And I really think it was maybe three and a half years ago when you said the word AI, and I don’t think most of our industry was even paying much attention to that. Is that accurate?
Jason Sullivan: I’d say that’s accurate. I’d say at the time, a lot of different industries weren’t really paying attention to what AI could do. And, you know, as you said, having met about three and a half years ago, I came from outside the industry. I had been in finance and financial technology my whole career. That’s where a lot of AI techniques historically, that’s where they show up first, because folks are going to take that and they’re going to try to make money in the markets. It was a great training ground, along with my graduate degree in the subject. But I really needed to build relationships in this industry. And you were, I think you were literally the first advisor that we connected with.
Hugh Hornsby: I think I was, but Gary says he was first, and I didn’t want to upset him. So Gary is an advisor, and it’s the most incredible company I’ve ever been with. Just really great people. And, you know, one of the things as I take a look, and I’m thinking that the wholesalers and the people that are out there really kind of want to know: how in the heck did you end up in the financial side and then coming over to the distribution side with wholesalers and HVAC and plumbing and refrigeration? Which that does not seem like something that typically goes together.
Jason Sullivan: Yeah, you know, it’s funny. I think the world today is very different, obviously, than it was three, three and a half years ago, and people have a better understanding of what artificial intelligence can do for various industries. But at the time, it really was not super obvious what AI could do for the distribution industry. And so it really took meeting folks like yourself, like Gary and others early on, to really understand what was possible. And a lot of my process, as you remember, I was driving out to, flying out to, meeting with distributors, all the way from distributor executives to VPs of sales, to branch managers, to counter staff, to warehouse people, just trying to understand, hey, I’ve got this skill set that I’ve built in another space. What are the challenges? What are the day-to-day problems that I could potentially help solve with a skill set that the industry really hasn’t seen before?
Hugh Hornsby: I love that, because I do remember you going and spending time on the counter. If you remember, we talked about the aging out of the industry. I thought that was a big part, that maybe you helped identify that, hey, this was a place that had a gap. Was that something that you had studied beforehand?
Jason Sullivan: Yeah, you know, that was definitely part of the idea, of the thesis going in, because in my earliest conversations it just became clear that in an industry that takes such a high degree of expertise to be effective at selling, in particular selling technical products, there was just this lopsidedness where a lot of folks who were very, very experienced and further on in their careers, well, they were a lot closer to retirement. And unfortunately, I think the world has kind of set things up in such a way that not a lot of folks have backfilled those roles. It’s getting a little bit better right now, but it’s still not quite there. So there’s this big gap. It’s kind of a labor shortage, if you think about it.
Hugh Hornsby: Yeah. I mean, one of the things we talk about is a people-based business. And I think the conversations that we all had was that, you know, there was a lot of those 60-and-overs that were going to be walking out. And when they walk out, they walk out with all that knowledge. Is that what you found?
Jason Sullivan: It’s what I found. And I’d say there’s even like an additional level of nuance, because once we got into the details, because our focus at Distro really from the beginning has been helping folks who are customer facing. So folks on the sales team, whether that’s a counter person, a branch manager, inside sales, commercial sales, outside sales, it became clear that that retirement lopsidedness was especially difficult, because you’re seeing a lot of that at the specialist level. So disproportionately you look at folks who are in, let’s say if they’re in the plumbing and PVF space or the HVACR space, disproportionately you’re seeing a lot of really experienced people in that specialist position: commercial quotations, they’re working the plan and spec opportunities, maybe in the refrigeration space they’re working commercial refrigeration opportunities. And those people are just going to be sort of disappearing from the space. Those are the hardest positions to fill.
Hugh Hornsby: Yeah. And when you lose that, when it walks out the door, it walks out the door. So as you took a look at that, what I really liked is that you were jumping on planes and you were having conversations with people. There was something that occurred while you were doing that. And I think there’s a comment, you know: “We came for the opportunity and we stayed for the people.” Can you talk a little bit about that?
Jason Sullivan: Yeah, that’s really kind of the motto here at the end of the day. And it’s an interesting time, because you see a lot of folks entering not just this space but other spaces that were previously overlooked by high quality software builders and AI specialists and things like that. And the capabilities, the possibilities, I mean, they’re kind of endless. But simultaneously you see a lot of people entering the space from a software building perspective and they don’t necessarily have that people-oriented mentality in mind, you know, and they’re not necessarily geared towards, like you said, hopping on a plane or getting in the car, rolling up their sleeves and actually spending time with people. And that really, for me, is energizing. You know, that’s what I like to do. And when I had the good fortune of meeting yourself and some other folks early on, and I just understood better what the personalities were like in the space, I said, okay, well, you know, I’m not just here to build a software platform, a software product. I’m here to enable people, to be a force multiplier, to help them be better at what they do day to day. And ultimately, you know, folks are happier with their day to day with Distro.
Hugh Hornsby: Well, and talk about some of the challenges that you’ve had, because our industry is very family oriented. I mean, there’s a lot of independent, you know, family companies out there. But then we have a handful of large companies such as Ferguson Enterprises, which is what, 34 billion, and some of the others that are out there. It’s a very different industry. It’s a very people-oriented industry. What’s the challenge that you feel like a lot of these people are going through in trying to figure out, you know, where is AI going to fit for me?
Jason Sullivan: That’s a great question. So I would say, you know, as you said, there’s quite a bit of difference between the large multi-billion-dollar distributor and the single location, smaller distributor. And we’ve had the good fortune here at Distro to have customers that run the gamut from the multi-billion, uh, all the way to the single location and kinda everywhere in between. And as you said, fundamentally, uh, kinda different personality sets when you look at the different segments of the market. And- The one constant that I would say is the care that folks have for their people, um, especially in that mid-market when you see a lot of, uh, family-owned mu-multi-generational family-owned businesses or ESOPs.Um, folks have been working at these distributors for, in some cases, decades. Yeah. Uh, and the process of not just selling to, but, but working with on an ongoing basis, uh, let’s say your, you know, maybe 50 to $100 million, uh, multi-generational family-owned HVACR distributor. Uh, it’s a really consultative kind of advisory process.
It’s not just a matter of, “Hey, here’s a software platform. Set it and forget it. I’ll see you later.” It’s a collaborative process, it’s a partnership, and it’s important to the folks that we’re working with that we care about them, we care about their people, and we, again, wanna make their day-to-day better, and we’re not here, uh, to be replacing people.
We’re here to, to, to be a force multiplier for them.
Hugh Hornsby: So is customization something that’s really important in, in trying to make it work for, for a distributor?
Jason Sullivan: It can be. Yeah, it can be, and I’d say it spans, you know, a bit of a spectrum, right? Some folks, uh, have their own processes, their own systems that they’ve built over years, and they need a little bit more care and maybe a bit of customization, and we kind of work with them on that.
Some cases, some folks are working with different systems that, you know, maybe slot in a little bit more easily. Uh, what I’ve learned and what we’ve learned at Distro is that there is no one-size-fits-all. It just doesn’t really exist. And if you’re coming to this industry as, uh, an AI specialist or a software builder, it’s a reality you have to accept and really be excited about.
Uh, I’m excited by it. I like the idea of being able to work with folks and really get in the weeds, understand how they do things, and build to their specifications. And in some cases, that’s making customizations to the product. In some cases, that’s, as I noted before, just being advisory, being consultative, helping them understand how they, for instance, can apply AI in different areas of their business, sort of being that partner for them in years to come.
Hugh Hornsby: When you’re talking about some of these wholesalers, and I, I guess, you know, it’s like you said, they’re all over the gamut, you know, and, and all of them are looking for different things. What’s, what’s the one question that typically comes up from a wholesaler that, that they have to have? Or are they, uh… Or is there one question?
Is it kind of depend on each wholesaler or each, um, you know, rep that, that you’re having conversations with?
Jason Sullivan: It’s a good question, and I would say There are definitely some unique e-elements to, to every distributor, but there are some constants as well. And I’d say one of the biggest constants that we see that you really, again, wouldn’t necessarily understand if you were just entering this industry yesterday, is the importance of, uh, working with the people who are gonna be using the product, the platform on an ongoing basis, and helping that executive, that sponsor, that VP that we’re working with directly, helping them with the messaging internally, helping them with the philosophy, helping them obviously with the rollout of the product, and really understanding that you’re just gonna see such a wide variety of different folks that are gonna be using the platform from somebody who is maybe on the younger side, uh, a little bit more comfortable with AI solutions.
Maybe they’re using some, like the Chat GPTs of the world or the Clods of the world in their daily life and their personal life. Whereas on the other end of the spectrum, you might have some of those folks who are later on in their career, they’ve got a process that works. They may be a little bit, uh, more hesitant to dive in, and that just takes a different kind of type of care, level of care, and understanding that and making that part of our process here at Distro.
Uh, and Helping the executive sponsor understand that we really have to get in the weeds with their people- Yeah … to get them to accept, understand, and work with it, that’s such an important part of things.
Hugh Hornsby: And so how do you typically do that, Jason?
Jason Sullivan: I think it’s a combination of having real hard-earned process in place.That is, we’ve just got so many at-bats at this point. We’ve kind of seen, I like to think, just about every version of somebody who might need a little bit more help or might be a little bit resistant, right? We’ve got a bit of a playbook that we’ve built, uh, to work with folks on that front. But I’d also say it’s just time in the seat.
We, you know, a-as a c- as a company, as a partner, you really just have to be willing to put on the live training session. You gotta be willing to fly, like we do. We’ll fly our people out i-in some cases to, to meet with folks in person and, you know, buy folks lunch and just get them together and help them understand what it is we’re doing.
Um, and it’s an ongoing care thing as well. You really gotta be there because, again, it’s not just a one, you know, kind of set it and forget it type piece of software. It’s a collaborative thing. It’s an interesting, dynamic industry. Lots of new things come up. And so if you’ve implemented, right, if you’ve imple- implemented the platform day zero, day 30, you gotta be there six months in when some new and interesting type of format of plan and spec might come up, or this customer of ours brings on a new customer that has a different need on their end.
Uh, and you really just gotta be there on an ongoing basis is the key.
Hugh Hornsby: It’s, it’s not that different than selling copper fittings. It’s, and it’s a crazy thing because copper fittings are nothing but a copper fitting, but they’re not because the difference is the person that, that brings the value that’s gonna take care of the problems back behind, um, you know, versus other things, and it’s, it’s about caring.
You know, one of the things that, that comes up from time to time is security, and I know that, uh, you know, I’d love for you to speak to that because as AI has become bigger and bigger, uh, I think security of people’s systems is something that they, they’re really concerned with. Can you, can you s-speak to that a little bit?
Jason Sullivan: Absolutely. It should be very much top of mind for anybody who’s a potential buyer or partner of an AI solution. You should be thinking about security in a few different ways, uh, and ownership too. So ownership of your data, privacy of your data, security of your systems. These are all very key things. And one unfortunate consequence of what you might call the AI rev-revolution is that- It’s never been easier to build a prototype of software.
And I say prototype very specifically there because it’s arguably just as hard, in some cases even harder, to build a true production quality software platform that’s sellable and marketable and something you can really deploy. But to spin up kind of something small, internal has never really been easier to do.
And so we come across increasingly folks that spend time, uh, let’s say in an IT department at a larger distributor, spending time working with, uh, Claude and various services to build some internal software Now, the challenge there from a security standpoint is suddenly you don’t necessarily know what your software developers are installing, uh, what various, uh, services that they’re kind of wiring into your systems because things move so quickly.
It can just be really easy to let that slip by, and so that just creates security holes where you might not realize they existed for weeks. That happens with increasing frequency. So what that really means, on the one hand, is you’ve got to be careful about what it is you’re trying to build internally versus working with an external partner that’s professional, that’s, that’s only focused on this, that’s very securias- uh, security-oriented.
Um, and when you’re working with or considering working with a partner like Distro, for instance, you’re really gonna wanna have your IT team, your head of IT, spend time, uh, with their counterpart at the, your potential partner’s side and understand how is your data being stored, uh, how is your data kept separate from the data of, uh, other customers, for instance.
What security best practices are they engaged in? Uh, how are they handling and how would they handle any sort of incident, for instance? These are considerations that are really key in the evaluative process.
Hugh Hornsby: And I was gonna say, how do you handle that with your clients most of the time? Is that a, a- is that a flight out to go in and sit down with the IT department and, or is there something else that you typically do, you know, that’s different than that?
Jason Sullivan: Well, it can be. It really depends on the preference of, uh, of the prospective partner. I think the most important thing is just making sure you do have a meeting of the minds between, uh, the, the counterpart, our head of engineering typically, head of product typically, uh, with the head of IT, uh, or digital on the part of, uh, our prospective distributor partner.
Uh, and getting those folks together, typically, you know, they’re able to run down the list, make sure that they’re all on the same page about how they want things implemented from kind of a safety and a security perspective, and setting those expectations out the gate, uh, is really, really important, and a lot of folks don’t necessarily think to do that.
Hugh Hornsby: A lot of the people that we have on here are founders, and, um, you, you are-- This is your second, um- Yeah, it’s your second startup. Your, your first startup w- was what?
Jason Sullivan: First startup was a company called Vested, which is… You can think of it sort-- It’s in the financial technology space. You can think of it as sort of, uh, a marketplace for, uh, startup securities, uh, startup options.
Hugh Hornsby: And so this one is DistroAI, and you were, you were able to get some funding, which, you know, congratulations on that. Has that helped?
Jason Sullivan: Oh, it’s been fantastic. We were, uh, fortunate enough to go through a, uh, a well-known startup accelerator called Y Combinator. Uh, it’s sort of the top 1% of the top 1%, uh, of folks in Silicon Valley investing in the top founders.
Uh, uh, and it was a fantastic opportunity kinda earlier in our journey, uh, to build relationships, to build out our go-to-market motion, to build out our product suite, and served as a fantastic launching pad into raising additional capital, larger funding from, from venture capital. Um, not every founder, uh, has to go that route.
Not every founder necessarily goes the, the VC route or the private equity route. It’s worked well to go the VC route for us. Um, and, uh, you know, it’s kind of the, the world that I’ve lived in in the past. But, uh, it’s been fantastic. We’ve got great partners, investors that we work with to continue to build the business.
Hugh Hornsby: So do they invest, but they also, um, give you guidance? Uh, y- I mean, obviously, uh, uh, if I remember correctly, you left New York and you went to, to, um, you know, California for a, a period of time, and it probably wasn’t an easy You know, it’s, it was probably a lot of training that went on there.
Jason Sullivan: Yeah, exactly.
When we did Y Combinator, uh, it’s a, it’s an in-person pla- it’s an in-person program, so you, you fly out from wherever you’re based, and you spend three months out in the Bay Area and, uh, in the San Francisco area. And we were, as you noted, previously based in New York, and we fully intended to go back to New York at the conclusion of the program, but we just kinda fell in love with it out here and ended up relocating the company to Palo Alto, kind of the heart of everything, uh, which has been fantastic.
And again, the, the Y Combinator program was, uh, was great for us and was a great launching pad for us to grow, you know, pretty rapidly.
Hugh Hornsby: So for, for those founders that are out there, and I know there’s all different types, is there, is there a piece of advice that you can give somebody that’s, you know, that it’s, you know, founding a company and, and, and building it out?
Because obviously you’ve made all the mistakes, and, uh, you know, you, you, you’ve got some, you know, you’ve got some guidance that… Is there anything you can share?
Jason Sullivan: You know, it’s funny. My perspective, uh, on the one hand, I’ve-- I’m a second-time founder, as you mentioned before, so in that situation, I had some co-founders.
And in the situation with Distro, I’m a solo founder. Uh, I’ve obviously got a great team, uh, around me. Uh, but just from a founding perspective, uh, it was me early on, uh, and then I kind of built up the team and, and raised capital and so on and so forth. But from a founder’s perspective, I’ve kind of seen both sides of that coin, so working with co-founders and specializing in one area.
So in my case, I was the chief technology officer at my prior startup, and I had co-founders that focused on, uh, other areas of the business, whether it’s operations or data, things like that. Um, my background is somebody with, uh, both kind of the technical side of things, given where I went to grad school.
I went to Stanford and focused on artificial intelligence, and I’ve, I’ve been a software engineer for many years. I’ve also got, uh, the commercial side as well, so I spent many years in finance too. So from a skill perspective, I was in fact able to, to kind of tackle everything early on as a solo founder.
Um, but you’re only one person, and you’ve only got so many hours in the day, so you really do need to align yourself with the right folks at a leadership level who are skilled, who care, who can, uh, act in a way that, uh, you know, sort of they’re acting like an owner, right? So whether it’s the case that you’ve got formal co-founders or whether you’re a solo founder and you’ve got great leadership level folks, you need to have a network.
You need to have the support system. You-- And you can’t just do it by yourself is really the point, one way or another.
Hugh Hornsby: Oh, I love that because that’s- That’s another chapter in my book. It’s like when we try to do it on our own, um, that’s a hard way to go. I always respect it, uh, and I kind of wonder where y- y- where you picked it up, where you came into an industry that you didn’t know anybody, um, or at least I don’t think you knew a lot of people, but you were able to, to maneuver and find people that have been, you know, leaders in the industry and, and really a big part of it to, to help you figure out how to, to, uh, figure that out.
Um, where, where did you pick that up, Jason? ‘Cause that doesn’t, that’s not something that typically just shows up. Um, but m- maybe it was something that you, from your last, uh, situation, you, you, you kind of figured out, you know, how to maneuver that.
Jason Sullivan: Yeah, you know, it’s a good question. I would say it’s maybe a running theme in how I’ve operated and, and really how Distro operates is you gotta be, uh, people-oriented.
You gotta be working with folks. You can’t assume that you know everything. I mean, that’s… If you look at how we work with our, our customers, our partners at Distro, we know what we’re expert in. We’re expert in the AI side of things, and we’ve had enough at-bats in the distribution space to be strong there, but we always, uh, you know, are open to learning new things, right?
And so we spend a lot of time forging relationships, building that network to understand what folks need, uh, and how we can be helpful, what opportunities there are. So if you walk that backwards into my initial entry point into the space and into my prior career, it’s kind of the same philosophy. You can be amazing at what you do, but you cannot assume that you know everything, and the only way to cure that is to build relationships with folks who do have that expertise and do know things.
And that’s, again, you know, I, I entered this space early on, uh, about four years ago at this point with Distro, uh, knowing that I didn’t know a whole lot at the time. And so I deliberately sought out folks like yourself, Hugh, and, and others that we brought into our, our fold, our advisory network, um, because I wanted to have that kind of student mentality early on.
And same idea, like, where did that idea, uh, come from in the first place? Having worked with and spent so much time with other founders, uh, earlier on in my career, I just knew that that’s something that you had to do. If you’re entering a new space that you didn’t really have a whole lot of ties to, you just needed to build that relationship with the right folks early on, and it has worked out really well.Hugh Hornsby: That’s incredible, ‘cause I always wondered that, and of course, I’ve been in this industry for 40 years, so seems like I know a few people. But at, at the, um-- But turning around companies and building them up, uh, it is all about people, and, uh, it, uh, you know… And first of all, con- congratulations on that. Um- Are you getting any sleep?
Jason Sullivan: That’s the question, huh? Um, it waxes and wanes, I would say. You know, again, going back to the, uh, the being, you know, a solo founder and, um, I’ve got a great team, but I also find myself pulled in a lot of different directions in the business. That’s kind of how I operate. If there’s a challenge that, that we’re looking to solve on the product or the engineering side of things, or on the sales, the go-to-market side of things, I’m all in.
I’ve gotta, you know, sort of get tunnel vision for a little while and make sure that I’m focused on that. And sometimes that just means, hey, you gotta burn the midnight oil and get it done. And I think of it as, from a leadership perspective, you know, I wanna set an example. I, I’m, you know, at the end of the day, the person who is setting the tone, setting the pace for the rest of the organization, and if I’m not out there getting it done, burning it at both ends, not all the time, but when need…
when, when that’s needed, you know, how can I expect other folks to do that?
Hugh Hornsby: But that just shows leadership on your side, and it’s what I love about our industry because I, I think when we say blue collar, it’s like, you know, you, you… It doesn’t mean that you’re going out there and digging a ditch. It means that you’re gonna get it done from where you are.
Uh, I have a couple more questions. One of them is on, you know, PE is enter- entering our space, um, pretty heavily, and it’s, it’s, um, happening both on the h- on the wholesale side, but it definitely has happened down below with, with the, um, with the contractor side. What do, what do you think about what’s happening there, and do, do you have, do you have any input on, um- On how that’s gonna affect the space and, and what people really l- need to look towards.
Jason Sullivan: It’s a great question. It’s a, it’s a very fascinating dynamic because like anything else, you can’t just put one label on it. So when you think about private equity as it might apply to the contracting side of things versus the distribution side of things, and who’s actually out there as a private equity sponsor, um, you see anything from somebody who just graduated from business school who decides because they had a class, uh, they decide they wanna do a roll-up of contracting businesses in their area, right?
All the way up to real professional mid-market and above private equity firms that have been around doing this for ma- you know, many years, right? And so because private equity sponsors have such, uh, an influence in some cases on their portfolio companies, you see this new dynamic entering the space where, you know, if, if you’re a distributor and you’re selling into contracting businesses and they’ve recently been rolled up by a private equity sponsor, that might affect what that contracting business expects in terms of level of service or pricing, uh, you know, versus what they were doing before, and that might impact, you know, how you think about maintaining that relationship, right?
Um, when you think about private equity as it applies to the distribution side of things, you know, it, it’s an interesting dynamic as well. On the one hand, a lot of folks in that sort of multi-generational family mid-market area, you know, they’re always in this position where they’ve gotta think about succession.
What do they do with the business? If you’re on generation three and you’re passing it to a son or daughter that, um, or you’re thinking about passing it to a son or daughter Does that make sense? Is that a business that they want to continue with? Does it make more sense to go the ESOP route or does it make sense to go the private equity route?
These all have different implications on what impact that might have on the business, your own outcome, your employees as well. Uh, and, uh, it’s just a, it’s a really interesting dynamic. And for us at Distro, when we think about that case, if you’re in that kind of multi-generational, uh, family business, and there are a ton of those in the distribution world as you well know, Hugh, um, y- you at least want to be in a position where you have a choice, you have influence over the matter.
And part of what allows you to do that, whether it’s, you know, feeling like you’re pressured into, you know, getting acquired by a private equity sponsor, for instance, uh, is do you have leverage? And part of that leverage comes from how productive are your people. And from our perspective, what we do here, uh, at Distro is we arm distributors, uh, of all sizes, but particularly that kind of size, with the ability to help their salespeople, their revenue generators, be much more effective at what they do day to day.
We act as that kind of force multiplier. And the aim is, you know, you don’t have to necessarily feel forced into a sale to private equity or an acquirer. Suddenly you’re actually able to, uh, uh, pound for pound be more effective than the bigger folks out there.
Hugh Hornsby: We find a lot of those companies, founder-based companies, the founder’s making all the decisions, really doesn’t have the systems to go with it, uh, that, you know, you have that ability to go in with a company and maybe it’s a company that maybe they don’t want to sell for five years or so, or maybe they want to, you know, they’re, they’re putting a transition plan in place.
Um, uh, do, do you find AI being able to go in and help them with those systems on the back end position themselves, not that they have to sell to private equity, but at least they have, have those systems so that when the founder walks out, everything doesn’t walk out the door?
Jason Sullivan: Exactly. That’s a great point.
I mean, we’re in the business of business transformation at the end of the day. And I, I try to-- I really try to shake folks out of the mentality of, “Hey, you know, you’re buying a piece of software,” because I think that era in history is kind of passing us by now, and it’s really more about investing in a partnership.
And when you’re thinking about this example and, and how we approach our partners, our customers It’s all about business transformation. So we’re here to help, uh, implement a, a platform that will help, for instance, your, your commercial sales team, quote, plan and spec much more effectively and profitably, right?
But zooming out, zooming way out, we’re here to put systems and processes in place and, and ultimately kind of put a mirror to your business and act as a cons- as in a sort of consultative way, uh, to help you, uh, be as kind of AI-enabled as possible really throughout the business. And what you do with that longer term is up to you.
I mean, that puts you in a better position to succeed, uh, in the business that you’re in now. It puts you in a better position to be able to compete against your larger competitors. Also puts you in a better position potentially to be attractive as a, an acquisition target if that’s down the road the, the way that you go.
Hugh Hornsby: You know, I’ve been in a lot of businesses and, you know, you, you, uh, I’ve seen the founder-based businesses and I’ve seen the ones where the founders are making-- still making decisions, you know, m- making all those decisions. And I, I think that, um, there, there’s a book out there, um- And one of the cha- it’s, it’s about restaurants, and it’s about restaurant smart versus systems smart.And in that chapter, and I, I’ve got one called blue collar smart versus, you know, corporate smart, is that you need both, and that, um, you know, some of the old way of doing it, you know, you’ve, you’ve gotta have those systems to go along with it. I would, I would think AI would help them with that, and not only help them with where maybe in the transition part of it, but help them to be more efficient with their salespeople, you know, getting in front of, you know, their, their clients.
Um, I, I don’t know if I asked a… I don’t think I asked a question there, but, you know, I, I, I am interested in your opinion on that.
Jason Sullivan: No, I think there’s something in there and, and I’d love to, to dig in. So, you know, take the, take the term, uh, AI out of it entirely. Forget about AI. Just think about a business transformation, as I mentioned before.
That’s what this is all about, and holding a mirror up to your business. So if you’re an entrepreneur, if you run a distributor, whether you’re the owner or, uh, or the president, whatever the case may be, you’ve always gotta be in the mental space of, how can I understand my business better? How can I be an enabler, a force multiplier for my people?
What- whichever department I’m thinking of, how can I understand how things are going and how can we make things better? And AI, whether it’s applied to the sales team, uh, in our case, or whether it’s applied to anything, marketing or HR or whatever the case may be, it’s just a tool to enable, uh, that business transformation.
And so it, it goes back to that idea of investing in a partnership and not just a, a, a piece of software. You know, can you find somebody, can you find a vendor or a partner that can help you think about all these different areas from a 360-degree angle and understand the concept of business transformation?
Hugh Hornsby: I, I love it because I think that’s what business is about, and it’s what our industry’s about. Um, you know, Jason, w- as we wrap this thing up, uh, when I, when I was a kid, uh, you know, we had, uh… My mom-- I, I used to-- W- when I’d come home and they’d say, “Hey, Hugh, you need to go to special needs,” I’d come home and I’d get upset, and she’d, she’d say, “Hey, take 15 minutes for the pity party and then go upset and write-- upstairs and write on this yellow pad, you know, what you’re gonna do differently, and then come back and tell me w- you know, how you’re gonna take action.”
So, uh, I just wanted to ask you, uh, if you had a, a yellow pad moment that you can share, um, you know, with the audience, what would, uh, what would that yellow pad moment be?
Jason Sullivan: Oh, that’s a really good one. I like that. Uh, so I can, I can think of a few. I’ll say there’s maybe a yellow pad moment that I can think of internally in terms of how, uh, I have built and how I run Distro, and maybe a yellow pad moment that I could think of externally in the way in which we’re working with our customers, right?So when I think about internally, uh, I mentioned, you know, maybe a few minutes ago, the idea of if you’re in that startup founder position, you sometimes really do have to go get tunnel vision, go super deep. There was a term that got popular a couple years ago, founder mode. It was a pretty popular term, uh, by Brian Chesky over at, uh, Airbnb.
And you really have to get deep in the weeds. But simultaneously, you have to be kind of managing all aspects of the business. And one of the insights I had was there was a, a period of time that I had to go super deep in the weeds on the engineering side of things. We had to make some really key decisions about how we were architecting some pretty important parts of the Distro platform.
And given my own background in software, I spent a lot of time partnering directly with our head of engineering to scope things out and to build things out in such a way that made the most sense for Distro. But part of the way through that process, I realized, oh, well- I’m looking over at the growth, the marketing side of the business.
I’m looking over at the, uh, customer service side of the business. I’m looking over at the product side of the business, and things are, are humming. But the leaders over there and the teams over there, they really need… They need the, the leader’s personal touch. I need to be able to put my head above water and spend time with all those teams and address everybody, even while I’m going super deep on one area.
And so the mechanism by which I’ve, I’ve figured out a way to do that is internal one-on-ones and internal all-hands meetings. So I’m meeting with the folks who are leading these various areas of the business on a weekly basis and spending time understanding how things are going, how can I be helpful, what are you seeing out there talking to our customers?
And I’m also spending time with the entire, the entirety of the company in what we call our, our monthly all-hands meeting, giving everybody, “Here’s the top-level view on the business. Here’s a top-level view on the product. Here’s our highlights. Here’s our challenges.” And that simultaneously allows me to do that tunnel vision, founder mode motion, while making sure that every area of the business is covered.
And so there was a moment during that, during that time going deep on engineering where I sort of had that yellow pad figuratively. I said, “Okay, I need to do this,” and it’s been night and day, um, just, you know, making sure everybody’s got the attention they need. So that’s, that’s maybe the internal facing version of that yellow pad.
Hugh Hornsby: I, I, I think that’s huge for any business that’s out there, uh, because especially with founders, right? Because you get in the weeds and, uh And sometimes you’re getting to the wrong weed and, and maybe you need to be overseeing it. That, that, that’s-- congratulations on that because there’s a lot of people that never figure that out.
Jason Sullivan: Yeah, no question. Uh, it’s, uh, it’s an insight that, you know, you always wish you had earlier, but when you do have it, it’s a, it’s a pretty big game changer. And, you know, I, I would say when we think about that external-facing version of the yellow notepad, it’s maybe an extension of, of some of what I had mentioned before around spending time with the individual users and understanding what their day-to-day challenges are.
You know, some software companies out there, they sort of view the day-to-day users of their product as just a consumer. They don’t pay a ton, ton of attention to them. But early on in our journey, what I realized and what our customer success team realized is, you know, what I mentioned before, everybody’s got their different day-to-day challenges.
There’s a lot we can learn from people who are using the platform. And so what we decided in a bit of a yellow pad moment, as you said, early on, is, hey, we need to really understand and get in the head of our users from, from that example of somebody who is newer in their career, maybe more AI-oriented, all the way to somebody who’s less AI-oriented but more experienced.
We need to just do the work and spend real quality time, sometimes in-person time, with these people. You can’t assume anything, and I cannot tell you how many just golden nugget, you know, gem, uh, conversations we’ve had, insights that we would never have had, uh, without spending the time regularly meeting with our users, with our customers at varying levels, from the individual user level to the branch manager, the VP of sales, and the executive.
Everybody’s got their own perspective. And so we took that yellow pad out early on and we said, “Okay, well, we need to just roll up our sleeves, say we’re gonna dedicate real time across the organization, from me all the way to folks on our, on our customer success team and product team, to be that student on an ongoing basis, be that student of our users.”
And that’s been A huge differentiator for us relative to, I think, other folks who are, are serving the space
Hugh Hornsby: Well, it just says a lot about you. Um, and it says a lot about your leadership, which, you know, when we say building a people-based business movement, you know, that’s what it’s about. Sometimes the hardest one that we, we need to look in the mirror at is ourselves, right?
And making that decision, and I wanna say congratulations on that. Jason, if there was one question that I haven’t asked, um, that when somebody’s driving down the road, they say, “Man, I wish Jas- I wish Hugh would’ve asked Jason, you know, this question,” what question would’ve that b- would, would that have been?
Jason Sullivan: I mean, I, I could probably fill a book with that just ‘cause there’s so much to talk about you. Um, look, I would say, um Plenty to talk about. The one question I would say is, is how do you reach me? And, uh, I, I would welcome anybody from the industry that wants to spend a little time in a consultative way understanding, uh, how they can think about the application of AI to their business, uh, to reach out and just spend a little bit of unstructured time with me, uh, with folks from our team.
And, uh, we can just kinda help think through whether it’s the areas of the business that Distro, uh, can focus on, that is the, the sales team, uh, or, uh, or some of the finance team accounts payable, for instance, or if it’s totally different areas, or if it’s, you know, how can I get more out of Claude or Chat GPT in my daily life?
Um, it’s the same idea of find the right partner that’s willing to do that upfront work of being consultative. So I’d say, uh, you know, folks should just reach out and, uh, we’re happy to be helpful however we can.
Hugh Hornsby: So if, if they’re gonna reach out, um, uh, do it through the website or y- you have… What’s the best way to get ahold of Jason Sullivan and Jason Sullivan’s team?
Jason Sullivan: Absolutely. So I would encourage everybody to take a look at our website. It’s distro.app, D-I-S-T-R-O dot A-P-P. I’m sure it’ll be in the, the notes section, uh, of, uh, of this clip, uh, this video. Uh, reach out to me directly. My email is jason@distro.app, J-A-S-O-N at distro.app. And, uh, please, you know, spend some time and let’s, uh, let’s talk about how we can be helpful, uh, to you and your business.
Hugh Hornsby: Love it. First of all, thank you. Thanks for the friendship and, uh, and all the support. You know, I, I’ve been in this industry for a long time and I, I got to know Jason. Uh, he is the real deal. Uh, I’m honored to call him a friend, and I’m honored to call him somebody that has, in three and a half years, invested in our industry in a way that he’s just taken ownership of it.
So Jason, thank you and, uh, just keep it going and, you know, thank you very much.
Jason Sullivan: Thank you, Hugh. It’s been a pleasure. I appreciate it.
Narrator: Every great trade organization was built by someone who chose people over price. Blue Collar Smart exists for that leader. If you found value here, subscribe and share this with the operator who’s ready for the next level.
Built different. Trades proven. Hugh Hornsby, Voice of the Trades.
Keep reading
AI in Wholesale Distribution: Why Leadership and the Right Partner Shape Success. More on the executive sponsorship point Jason makes about halfway through.
Solving the Distribution Labor Shortage with AI and Quoting Automation. What a branch loses when its most experienced people retire.
How Distributors Should Evaluate AI. The questions to ask an AI vendor before you sign anything.
Building AI Technology for Distribution with the Human Mind in Mind. Jason’s earlier conversation on Distribution Talk with Jason Bader.
Written by:
Jason Sullivan
Founder & CEO of Distro
