Scaling a Promo Distributorship to $100M | skucast Ep 371

"We don't manage the people, we manage the work in our company. You can't coach someone if you don't know what they're supposed to be doing or how they're supposed to be doing it."

— Tom Rector

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[00:00:06] Bobby: What does a $100 million distributorship look like? Well, it might look something like this. Let me set the scene. It starts in a living room in 2008, in the middle of a recession, with a credit card and a dog as the sole employee. Fast-forward to today, Thumbprint is now 91 people in Indianapolis, Orlando, and Dallas, and a brand-new location in Toronto.

[00:00:28] Now, they are almost 40 million this year. Organic growth is running about 20% annually. Future acquisitions are projected to add another 10 to 15% on top. At that pace, 100 million in revenue is in sight, possibly within three years. Now, more on our guest in a minute. For regular listeners of the skucast, or even if you're new to the skucast, we just launched a brand new tool called Ask skucast, and it's an AI built on 350 episodes of the skucast. You can chat with me and my AI voice and get answers from our guests on topics that range from sales growth to building a team, or any question you'd ask a mentor.

[00:01:03] It's like having promo's sharpest minds on tap. And a big thank you to the many guests who have joined us here over the years. Ask skucast is possible because you've been generous to show up and share your advice. It's also a project led by our executive producer, Ritz. So thank you, Ritz. And you can access it by visiting commonsku.com/ask-skucast.

[00:01:24] I know that's a mouthful. We'll drop a link in the show notes. Our guest today is one of my favorite regular guests, who is invited back again and again because he shares the ups and downs of running a business and gives real practical advice and surprising details like this: he carries the company P&L in his backpack every day.

[00:01:43] Now, why is that important? Well, it's a clue to how obsessed our guest is with smart, strategic growth. Welcome to the skucast, the podcast for innovators and maverick thinkers in the promotional product space. My name is Bobby Lehew. I'm glad you're here. Tom Rector is the founder and CEO of Thumbprint, and this July, ASI's Counselor named him its 2026 Distributor Entrepreneur of the Year.

[00:02:05] Now, some of you may have heard Tom on the podcast before. He's back for a catch-up as we talk about all kinds of things, like taking calculated risks, like tackling six-figure orders, his vision for AI agents as we speculate about how someday bots will be transacting with bots, and more things like that, and the book that still has him making three phone calls a day, and why he says leadership is about presence.

[00:02:30] Today's episode is brought to you courtesy of us at commonsku. Over 900 distributors powering 1.8 billion in network volume rely on commonsku's connected workflow. Process more orders, connect your team, and dramatically grow your sales. To learn how, visit commonsku.com. Now, here's my chat with Tom Rector.

[00:02:49] Bobby: Tom, welcome to skucast.

[00:02:51] Tom Rector: Thank you.

[00:02:51] Bobby: One of the questions I had for you was, can you give us a thumbnail sketch of Thumbprint, where you're at now, and then we're gonna back into where you were and look at that growth.

[00:03:01] Tom Rector: Yeah, we're moving full steam ahead. I don't think the company's ever been in a better spot than we are today, which is so exciting, that there's so much opportunity that's coming our way.

[00:03:12] So as far as footprint, we're headquartered out of Indianapolis. I have office space and warehouse space here in Indianapolis, Indiana, and then a 50,000 square foot warehouse in Orlando. That's our big hub. And then Dallas, we just opened an office in Dallas, and we'll soon have warehouse space, most likely before the end of 2026.

[00:03:33] We'll have opened a warehouse in Dallas as well. We'll start working our way west. And then we just went through having a Canadian entity now. So we have Thumbprint Canada, located in Toronto, Ontario.

[00:03:46] Bobby: Okay.

[00:03:47] Tom Rector: So we're moving international.

[00:03:48] Bobby: Oh my gosh, how fantastic. So Orlando has a massive footprint there.

[00:03:53] Dallas, geographically, just you're able to get materials quicker, faster to the West Coast?

[00:03:59] Tom Rector: Yes. That, and the Dallas market is huge.

[00:04:03] Bobby: Yeah.

[00:04:03] Tom Rector: So we had seven team members in Dallas, so it started to make sense: "Okay, let's make a stronger footprint there." But our customer base is also driving us. And a lot of the decisions that we make in our company are because of our customer.

[00:04:16] I stay really close to our customers, understanding their needs, where they're going, how we're doing. I think even over the years, that has evolved our company, is by listening to what the needs of the market is.

[00:04:29] Bobby: Yeah, yeah.

[00:04:30] Tom Rector: How our customers are responding and what their needs are. We're in a service industry, and we have to know what it takes to service the customer.

[00:04:37] Bobby: Yeah. One of my favorite questions with a distributor that grows like you is, did you plot this chart? Did you plot it with customers? It sort of becomes this dance, if you will, where customers are expanding by asking for more services, and you do that for one client, you expand it to others.

[00:04:52] Has that kind of been your journey?

[00:04:53] Tom Rector: It's how it's evolved. And we're cracking that top 40 level with our DCX team members. We have 31 DCX team members, and we consider them a part of our team, so we're at 91 people. Soon to be 92. We have a new person that starts next week. But as we have grown, a lot of the growth has just become by being quick and nimble and saying yes when we're not really sure.

[00:05:18] But quite frankly, it's like, this is what a customer needs. We are nimble enough and creative enough to be able to do it. So let's give it a shot. And that mentality still lives with us today, and as we get into the AI world, we're saying yes a lot just because we want to test to see if things work, but that's just how we've grown and added all these capabilities.

[00:05:37] And the capabilities become immense. That's how the logistics part of our operation started. That's how the technology evolved and advanced, is by listening to those customers, and a customer has a need, and it's like, if it can be done, we can figure out how to do it.

[00:05:52] Bobby: I love that. Let's keep on the expansion topic for a little bit, and I wanna talk about AI, so those who are tuned in and wanna hear what Tom's doing with AI, we're gonna get to that, I promise.

[00:05:59] But building the team, so your leadership talent pool, you've also been expanding just leadership development. So Gabe has been president, been with you for a while. Mark Myers went from first employee to partner. You have Tommy now as chief revenue officer. Kirk Myers, director of business development.

[00:06:14] Talk a little bit about that expansion of your leadership team. What's been your top priority as you've been expanding that? 'Cause it's been high visibility lately, but I'm sure that's been something you've been working at for a while, knowing you.

[00:06:25] Tom Rector: Yes, and Jamie Fredrickson has moved up to COO as well.

[00:06:29] Bobby: Awesome.

[00:06:29] Tom Rector: I am very close to the details, and I like to skip levels within our organizational chart because I still operate as a founder. It used to be in a living room with a credit card and a little dog, and I did everything. And I also see myself as the chief product officer and the chief customer officer.

[00:06:48] And by staying really close to the customer, I can drive the ship. I can turn left and everyone is turning left at the same time, which is a great position to be in. But part of the ways that I can do that is by having those high-level, high-performing executives in the positions that they're in.

[00:07:08] And I think there's so much to be said about understanding the West model talks about the accountability chart, and we follow our own version of the EOS model, but the accountability chart, I think, is the most important piece of that whole operating system as a company, is you have to know the positions, what they're supposed to do.

[00:07:28] You have to have clarity on those positions. You have to know how they fit in within the overall operation of the organization. You have to have the position, and then you add the people to the position. And it's right position and right person, and making sure that those two match up are super important.

[00:07:47] As your organization grows, having those leaders in the right positions so that they can monitor the work. I'm in the details, but I expect them to be in the details just as much as me. We should know everything that's happening, and I think having the experts at the head of each of those functions of your organization helps a lot, because it helps you become a better manager when you know the work that's supposed to be done.

[00:08:10] We don't manage the people, we manage the work in our company.

[00:08:13] Bobby: Oh, that's a great point. Yeah.

[00:08:14] Tom Rector: And you can't manage the work, you can't coach someone if you don't know what they're supposed to be doing or how they're supposed to be doing it.

[00:08:21] Bobby: Yeah. I also love something you said, because as you grow, particularly at 91 employees, staying close to the customer becomes the clearest way to see.

[00:08:31] Would you agree?

[00:08:32] Tom Rector: Yes. There's, actually, there's two ways.

[00:08:34] Bobby: Okay.

[00:08:34] Tom Rector: I mean, we have a lot of moving parts, and the technology and the logistics and the operations, like behind the scenes of what seems to be such a simple industry. We joke that we're just like, "Oh yeah, we just sell T-shirts out of the back of our car."

[00:08:52] The production of those T-shirts is a whole different story. And all of the moving parts, you have to know how they're all supposed to function and what is supposed to be happening. And the way that I stay closest to it is skipping levels and talking to the team and making sure that we're very proactive that way.

[00:09:12] I know everything that's happening in our organization because I stay really close to the numbers. So on the accounting side, I can literally, through the numbers, see what's happening. I can see how the functions are performing. I can see if there's mistakes that are happening. I can see if there's reorders that are happening.

[00:09:30] I can see if vendors are being paid on time, if customers are paying on time. I can see margins. All of that stuff becomes so visible to me 'cause I'm in the numbers every day. This is really nerdy. I carry our P&L with me in my backpack every day. It's always with me, because the numbers to me are so important.

[00:09:48] And we're at a point in our organization where we're really starting to lean out the expense side and leaning out the operation and becoming very efficient. And that adds so much value to what you're able to do, and it speeds up your ability to grow. You're gonna have some fat, but you have to know, at least for us, because we had so much change that happened through a couple big acquisitions that happened a year and a half ago.

[00:10:14] But it was really hard to lean out the organization during that time because there was so much I still didn't know. I didn't know how some of the systems were supposed to perform. I wasn't as close to the customers yet 'cause I was still working my way through there. So there's a lot of things I was still learning, so it was hard to make some decisions to clean up parts of the operation, 'cause I didn't wanna make a decision on something that I was a little naive about until we actually have truly understood what the future of that area or function or decision needed to be.

[00:10:45] We're now at that point where it's like, all right, we know enough of how things are supposed to run. We know what our roadmap is going to look like, and we're able to start making those decisions that make us leaner and meaner as we go. I think about it like I work out. I did tear my bicep, so I've been not working out for the last couple of weeks, but I work out a lot.

[00:11:05] I think it's such a good discipline, is that it's not something that happens overnight. But you can see results if you're consistent and you stick to the plan. And I think it's the same way in business. If you stick to your plan, know what you're supposed to do, just stay diligent long enough, you'll start seeing those results.

[00:11:24] Bobby: I love the iterative way you think, and the P&L in the backpack is a really good takeaway for me. One of my mentors was our CFO, who, I came in as a sales guy, and I was a top line guy, and he taught me to be a bottom line guy. So much so that we ended up debating more, me becoming the bottom line defender and him becoming the top line, and we switched roles, and it was because he had me attached to our P&L and helped me, schooled me in that, and that was so big.

[00:11:47] Real quick, service lines. How do you define the service lines that you do at Thumbprint? 'Cause you have so many things going on. You have packaging, fulfillment, kitting, print, promo. How do you define it?

[00:11:56] Tom Rector: We sat down literally days as a team and just like, "How do we wanna go to market?" In our core, and I think for most of our industry, our core is we're in the branded merchandise business.

[00:12:08] It expands, and that has lots of different means, but in the core, everything that we do has some type of correlation to either branded merchandise or print. So we start with that. And then through our sales process, that's where we start to then incorporate all of these other capabilities that we have.

[00:12:24] And those capabilities, in my mind, is what sets us apart from our competition, is like these are the things that we do that are unique to us, that are different from other companies, or they may do them in different ways. But in the core, we're all kind of doing the same—

[00:12:41] Bobby: Yeah.

[00:12:41] Tom Rector: Same, buying the same merchandise from the same suppliers with the same kind of price points and go-to-market.

[00:12:48] And it's like, what we do outside of that is what really starts to separate us. And how well we do it also starts to separate us. The making sure that we are executing and delivering flawlessly and with service in mind is the key.

[00:13:05] Bobby: So to unpack that a little more, what's fascinating about your business journey, you hired people, bought equipment in 2008 when the job market had collapsed.

[00:13:13] And so there were habits that you built back then that have to be driving the company still today. You wrote that you still remember waiting for your first real customer, hoping someone would trust you enough to place an order. And you said in your living room or kitchen with a dog and a credit card.

[00:13:29] How does that still live in your DNA now at 90 people and at the revenue at which you're at?

[00:13:34] Tom Rector: It's still there every day. And people have asked me, "Who are you afraid of in your marketplace? Who is the biggest threat to your organization?" And most would think it's the HALOs and the Nadels and the Geigers and the 4imprints, and it's really not.

[00:13:51] They don't worry me as much. Who worries me the most are those startup entrepreneurs that are the go-getters that are able to move really, really fast and attack the market. And that's who we used to be, quite frankly. That's why I think it worries me as much, is if 26-year-old Tom could go back, man, we'd be dangerous.

[00:14:12] That's why I like to keep that mentality, is like I want us to be able to make quick decisions. And I think that goes back to being in the details and having really good team members that are experts at each of our functions, is that we can move really, really quick. Because we all know the direction that we're trying to go.

[00:14:29] I'm so entrenched in the operations, and we're all on the same page, which I think is the key, is that we can move really, really fast because we all are going in the same direction. I said, "If I turn left, everyone is turning left at the same time because we all know what we need to be doing." And I think that that's what really lives in our DNA, is that founder-type mentality.

[00:14:50] Bobby: Speed and agility seem to be something you've always been really keen on, and keeping that at your size and growing further, it sounds like it's just something you feel like you have to press into.

[00:15:00] Tom Rector: It makes it fun. It causes us to be able to play in lots of different worlds and try new things and experiment and have some hypothesis, and with AI coming into the picture, it's a whole new world again. If you don't jump on board, you're—

[00:15:17] Bobby: Yeah.

[00:15:17] Tom Rector: Next, you're done. It's over.

[00:15:19] Bobby: I totally agree. Yeah, speaking of, so Tom, I've been there, managed those six and seven-figure clients where we're doing kitting, fulfillment, packaging, print, promo, and we're managing now international relationships, which we were never really good at, but it sounds like you're expanding that and good at that.

[00:15:34] It feels like global is a big challenge that a lot of folks are facing, and the bigger you get, the more global becomes important. But even smaller mid-size distributors now have customers that have a global impact. So I have a twofold question. One is just about global and how you think about global right now, but second, let's get into AI too.

[00:15:51] How is AI already beginning to augment the operation side? We can get into the sales side if you want, but the operation side.

[00:15:57] Tom Rector: It's changing so fast, and it can literally take over your team as they try to experiment ways that they can use the system. So having a strategy and having a roadmap behind it, I think, matters a lot.

[00:16:09] Bobby: Yeah, for the AI, for AI adoption, yeah.

[00:16:12] Tom Rector: For the AI side of it, but it's then trying to predict what the true capabilities are going to be, and that's where the futuristic part starts to play in, is like, it may not be possible now because there are some limitations to the data that's available and the cleanliness of the data and how you access the data. Those things are really important, and there are some gaps in that, in the market right now, which limits AI to do its full potential. So we're always asking ourselves, what is the opportunity here? If we could strip it all down to the studs, what would we rebuild it as? We ask that a lot every day, honestly.

[00:16:53] Bobby: Yeah.

[00:16:54] Tom Rector: And trying to find new ways to think about the processes that have always existed, and are they the right process in today's world?

[00:17:01] Bobby: Yeah. I feel like us as distributors, we have this brand-new shiny toolbox that sort of entered in our realm. We have old tools, now we have these new tools, and we're trying to figure out how to use them, and some of them are powerful beyond our own ability, really, to adapt them and adopt them.

[00:17:14] We're in this liminal space where experimentation does take a lot of time, and you have this trade-off between time and ROI. But can you cite an example of how you've applied AI in your business in a way that has helped you and your team, either on the ops or sales side?

[00:17:32] Tom Rector: Yes. In lots of different ways. So I'm trying to stay much higher level on the AI side, is like I'm more interested in fundamentally changing the way that we do business.

[00:17:42] Like I'm thinking at a really, really high level. And a lot of that is, I think the interface of AI is going to... I don't think we've really experienced it yet. I think it's gonna be a very rich and involved interface. Which is, really, right now we're like, it's a chatbot. We're either chatting, we're clicking a button, or there's some visual that's in there.

[00:18:03] But I think it's gonna be way more rich than that, and I think it's gonna be way more involved than that. And being close to the customer helps me a lot on how we project what the future's gonna look like. And knowing that our customers, they really don't wanna interact with people. Like they want to have their self-service, and they're becoming more familiar with that in their own worlds, because the access to information is getting better and better and better, and they can move faster.

[00:18:29] And I think what is really, really important for our industry to keep an eye on is that in the future, which it may not be very far away, it is most likely gonna be two agents, two AI agents that are talking to each other, and the people stay out of the picture. And we're preparing ourselves for that, and we're building systems where we can have these AI agents.

[00:18:54] And when the customer's agents are ready, specifically for enterprise customers, like the procurement world is gonna change drastically. And a need is gonna happen from that customer, and the agent is gonna take over, and it's gonna go find the best solution that fills the need. It's not gonna be a person doing the—it's gonna be an AI agent that's doing it.

[00:19:17] They're gonna communicate with our agent, and our agent better be really well prepared and ready to understand the customer, understand the needs, understand the timeliness of all of that. I'm picturing a world whereas all of the information that is happening within an order is always readily available to the customer and the customer's AI systems.

[00:19:39] 'Cause you think about it, for like tracking an order through UPS, right? You see it when it hits different distribution centers. What should be happening, and what I think will really soon, is like, you'll see that order be produced. It'll get picked up by a truck. The trucks will have GPS. The intelligence of what we're tracking will be able to show you where that truck is at any given point, and when it gets on a plane, instead of just waiting for it to show up in a certain location, you can see the plane flying.

[00:20:08] Maps become way more important. Like, all of the information that's gonna be available should be accessible, and we can be much more accountable to what is happening within the systems. And the tracking of something is just scratching the surface of it, but it's how we get that information to the customer and making it readily available.

[00:20:28] And I think even, when I talk about it being more rich and more involved, like we right now are using AI to just mock up logos before we even get to the sales process. But I see it as like, we'll be showing you, like in true lifestyle situations, what you know you're going to be using the products for.

[00:20:51] So it's like you're at a trade show. I was like, "I'm not just gonna show you the product with a logo. I'm gonna show you the product with a logo in the trade show, how you should set up the trade show." Like where you should move all of the things for the best results of what the need of what you're trying to accomplish.

[00:21:08] Bobby: Yeah.

[00:21:08] Tom Rector: So your sales process drastically starts to change in these situations, because I'm not just asking, "Who are you giving it to?" I'm just like, "How are you giving it to, and why is this important? What kind of interaction do you want?"

[00:21:19] Bobby: I'm so glad you shared this. So we have been thinking, on our team, Charlie, Nathan, the crew, we've all been thinking about how bots figure into this. Because someone said it well, that the internet's basically gonna be full of bots and sometimes humans.

[00:21:30] And the fact of the matter is, last week, just as a little anecdotal story, I downloaded GrokBot, and we've all had these experiences with agents so far where sometimes they can be cumbersome to set up, activate, and all of that. GrokBot was one of those moments I crossed with AI last week, where it's my job to sort of mess with these things, tinker with them, figure out where it's gonna be.

[00:21:49] We've done all kinds of things, like play with MCP connectors and Claude with commonsku, and just things we're experimenting with all the time. And bots are a huge part of our conversation, like being able to create production bots or pricing bots or ways to do that. And last week was a really good glimpse of this when I downloaded GrokBot.

[00:22:06] Within minutes, I was having a trip planned with my shopping bot, food bot, travel bot, all of them working together to organize this trip on my behalf because they all had my preferences and everything loaded in. And it was amazing to watch them work together and they're trading information. "Oh, I'm gonna go chat with your food bot real quick to get your download on that, and then we'll figure out what restaurants are in those particular areas."

[00:22:32] And it was just astounding, but it's a glimpse of what's to come. And we had this threshold moment. We keep crossing these threshold moments with AI, and that was one of them I felt like we're starting to cross, with the simplicity of enacting bots, and that's our vision, too.

[00:22:44] Tom Rector: Yep. And when I talk about the access to data, right now we're only thinking of it in just a computerized, like, systems data, but there's real world data that also lives out there.

[00:22:55] So like cameras and those types of visuals. If we get that information into the digital world, we're gonna make some really cool stuff.

[00:23:03] Bobby: Yeah, I totally agree. It's funny. Who would've known that we are sitting on the precipice of what are probably some of the best years to ever be in the merch business, because you and I have been at this for a while, and we have seen some years where you had to really slog through.

[00:23:17] But now you have these interesting dynamics happening where the merch medium itself has reached a level of respectability that we've never seen before, and then you have this technology that is right at our doorstep that is going to allow... The biggest thing that you and I have struggled with building business models like this is the myriad of details, just the thousands of touchpoints that we activate on behalf of a brand.

[00:23:41] So there's some real promise, I think, ahead.

[00:23:43] Tom Rector: Oh my gosh. This is my 18th year in the business and in the industry, and I really think for the last five to 10 years, it's been kinda stagnant. There hasn't been a whole lot of advancement.

[00:23:54] Bobby: Yeah.

[00:23:55] Tom Rector: This past two years, maybe even year and a half at the most, it has just skyrocketed.

[00:24:00] Just the capabilities and possibilities that we can do now—

[00:24:03] Bobby: Yeah.

[00:24:04] Tom Rector: Just is mind-blowing.

[00:24:05] Bobby: Yeah. You would appreciate this. I was talking with a distributor, and distributor's around 60. I'm protecting the identity of the distributor, who said, "I was thinking of selling my business, and honestly, because I was basically managing three roles.

[00:24:17] I was the CEO, I was doing some HR, I was doing some accounting. I had too many roles involved in my role, which should have been leadership, vision, making sure my team had the tools they need, all the things that a CEO does well." And he said, "I was doing all three poorly." AI comes along, and he said, "I was thinking about selling my business, and for the first time I've actually thought I may not sell my business, because the business has become interesting to me again."

[00:24:37] That was a really great signal for where we're at in the market.

[00:24:41] Tom Rector: And just to have the ability, even at the age of 60, you can still have that fresh, like, renewal. And it's something for all ages. It really is. And just from the merchandise side, it's gonna change the game. And we have to be ready.

[00:24:57] We have to be ready to move. Being able to move fast matters. It's like you have to be able to adapt and try new things, and the companies that are built to be able to handle that kind of change are the ones that are gonna start jumping ahead.

[00:25:09] Bobby: For sure, yeah. Like Denise with Fairware was talking about this a bit too, just that ability to adapt and change.

[00:25:14] The flexibility demands, the agility demands, it's gonna be more important than ever before. You still have mergers and acquisitions on the horizon for your growth strategy, right?

[00:25:23] Tom Rector: Yes. Absolutely.

[00:25:24] Bobby: Yeah. Okay. And how do you view organic growth through sales teams versus mergers, acquisitions?

[00:25:29] Are you leaning heavier into one or the other, or how do you think about that?

[00:25:34] Tom Rector: They're both part of the strategy. And like right now we're growing organically, at least year over year right now, we're up about 20%, and that's right where we wanted to be. And we think adding some acquisitions, which we're gonna start looking back into.

[00:25:48] We had some big movement happen these past two years in merging systems and all that stuff, so it was a lot. We finally have all of that stuff back together, and we're gonna start looking at the acquisition and M&A world again. So next year we're gonna look at that. But I think we can grow another 10 to 15% just through the acquisition.

[00:26:06] So if we're growing at a 30 to 35% year over year, we're pushing our way to 100 million. We should get there within the next three years.

[00:26:15] Bobby: That's amazing. So you're tracking organic versus mergers and acquisitions. Organic's growing 20% overall. You have 10 to 15% growth in acquisitions. Are you finding you're taking bigger risks?

[00:26:26] You've always been a very calculated risk person, so when I use the word risk, you've never been that kind of let's go to Vegas and gamble everything risk. You've always been super calculated, and if you want to really learn about finance, listen to our previous episodes with Tom. Anyways, are you taking bigger projects, RFPs, larger deals?

[00:26:42] How are you viewing, now that you have these capabilities that to me look very expansive, how are you approaching those?

[00:26:48] Tom Rector: That's a great question. And it's all a little relative to the size of your organization, too. We do not have all of our eggs in one basket, per se. I'm very strategic on let's not have one customer that takes up 40 or 50% of our overall revenue.

[00:27:03] That's just too risky for me. So we are very diverse in the portfolio. So we have at least our top 100 make up 80% of our total. But our top 10 is only about 20% of that. So it's very diverse across the board. At the size that we're in, we are able to take risks that we were not taking in the past.

[00:27:23] I can take some bigger swings, and if we miss, it's okay, because it's not gonna be something we can't dig ourselves out of at any given point. Matter of fact, it wouldn't hurt us at all. The things that I used to worry about that were... And this is also very relative to your size, but things that were $10,000 to $20,000 orders, fronting money for orders, is like, that's not a thing anymore.

[00:27:47] Now we're looking at 500,000 to millions. And even at that level, we're so well-financed that we're okay to front some of that stuff. But we still keep the same diligence of, like, we have a really strong collections policy, and cash flow matters, so we do stay on top of that stuff a lot. We're just a little more flexible where if something does go sideways, we're okay.

[00:28:10] We're protected. But it also allows us to make more interesting deals with our customers, as I can own some inventory if we need to, and we can create some, whatever inventory level project, or we can delay any type of payment if we need to and push things out 90 to 120 days if the customer needs it for a certain situation.

[00:28:31] Bobby: One other question I had about mergers and acquisitions is you have these multiple companies coming together. Often you have different ways of doing business that you're trying to assimilate. So how do you synthesize that? So let's say a distributor or leader is listening to this episode and they're like, "I hear you, Tom.

[00:28:46] I hear you about organic growth. I'm thinking of acquisitions." What should they get right about things like the systems they're using and the tech they adopt, and the just team and culture? Just a couple of tidbits that you can share with us.

[00:28:59] Tom Rector: It's hard. It's really hard.

[00:29:01] Bobby: It's hard, yeah.

[00:29:03] Tom Rector: And that's where I talked a little earlier, is like there's so much you have to learn when you bring on a new system like that, especially when there's lots of moving parts to it.

[00:29:10] You have to know the true inner workings of how they operate and how information and orders and customers flow through the process. So I'm a big believer in flow charts, mapping out what is your customer journey, what does the account team order process look like, how do you process an online order, and what are all the contingencies.

[00:29:29] That helped me out a lot when bringing these two systems together, these two big companies together. Everything in our company changed on how we did business and how we went to market. And so my advice is know your system. Spend the time to get in the weeds of just understanding how things are supposed to work.

[00:29:47] You don't have to actually do it, but you need to know how it's supposed to work. I think that's the most important piece. It allows you to make smarter decisions along the way. And because we did that, we literally saved $500,000 in renegotiating contracts and getting rid of different types of systems or software that we just didn't need.

[00:30:06] It was there, but we never used it to its full potential, and we found other opportunities that were much more suited for what we needed and cost half the price. So there's cost savings that comes with it. But I think knowing your systems and knowing how they're supposed to work, and then knowing the cultures, knowing the cultures of the people, I think is important in how they will respond to the change.

[00:30:27] I think that's a big key. And quite frankly, we had some people that they were great in the positions that they were at the sizes of the companies, that all of the companies that we merged together, they were phenomenal at those sizes. But then when you bring us all together and you triple the size of the organization and you start working with lots of bigger customers, the work starts to change.

[00:30:52] And we had some people that just weren't able to adapt to the new environment of enterprise level customers. And some, they struggled with it, but we were able to coach them through it. And I think we're getting to some of those, like the learning and the advancing and the growing of your team and finding opportunities for them to grow their career, I think is always important.

[00:31:12] Bobby: commonsku has been an anchor for your business, and we've been going through an evolution too, where you see the advanced customers, our ICP, and then enterprise customers growing. We've seen this big growth in the area of helping teams work together, and it's always been our MO, like helping teams work together.

[00:31:30] Now that you're bigger, commonsku is still an anchor in your business, how has that helped your business at this scale at which you're at?

[00:31:37] Tom Rector: It's actually helped a lot, because commonsku is one of those systems that's very systematic, so it's easy to train people to get into the systems. And I think almost every department in our organization is in commonsku, and almost daily.

[00:31:55] So even logistics and technology and graphics and accounting, they all have commonsku licenses. Even though they're not creating sales orders and they're not creating presentations, they still have needs to be within that system. But that system's kind of been this glue that has kept us all together because of the information of how we communicate within that system.

[00:32:17] Like, the sales team is talking to our graphics team and our technology team through commonsku. They're communicating through there. They're literally telling each other how to do certain things within the need of the customer by how they create an order or how they create a, we call it, a master sales order for something that's going online.

[00:32:36] All of that stuff starts to matter. But it's literally been the glue, because you learn, and it's very visual, and I think—

[00:32:42] Bobby: Yeah.

[00:32:43] Tom Rector: It helps a lot on just getting people familiar with that system if they've never even been in it.

[00:32:48] Bobby: Yeah. Let's talk about your leadership, just how that's changed over the past two or three years.

[00:32:53] You can't go through the kind of massive shifts in growth, both through acquisition mergers and just organic growth, and I know you're always a deep thinker. How do you feel like you've changed as a leader and through these processes? What have you learned about that experience that you can pass on to other distributors who are listening?

[00:33:11] Tom Rector: I have a really good one, actually. Back in the day, it used to be really easy to communicate initiatives and projects and the vision. It used to be really easy to do that within the organization. There wasn't enough of us, where I could communicate really, really fast and get everyone on the same page—

[00:33:31] Even through an email sometimes. As we've gotten larger, 91, almost 92 people now, I have to be much more systematic on how we communicate those types of things. So a lot of the stuff that we're doing on the AI side right now, and the roadmaps and the initiatives and the things that we're trying, I first will go to my executive team and I'll get them on board.

[00:33:54] And it's not a one sum game either. We're seeking feedback and we're massaging situations and problems and brainstorming and troubleshooting, but we're ultimately getting to the product that we're wanting to roll out, or the vision or the idea or philosophy or whatever it is. We're trying to get that through.

[00:34:12] We're trying to get that massaged, to get that in a good place. And then we slowly start to open the aperture. So then we go to the leadership team, and then we get them on board, and then we go to the next level and the next level. And you're slowly getting everyone on the same page. And I made some mistakes at this early on, is I like to move really fast, and it's like, "Hey, here's the idea.

[00:34:31] Here's what we're trying to do," and I send out an email. It's really hard for your team when I'm informing the directors and the managers and the specialists all at the same time. Then they're all going to their superiors and they're like, "Hey, tell me more about this." They've just learned about it at the same time as me.

[00:34:50] They have no... So, having to get the buy-in and roll things out in more of a systematic way has mattered a lot. And I think that it's one thing I struggled with a lot, is I am very hands-on and I like to move fast. And I obsessed with learning, so I learn a lot about what's happening even if I'm not actually disclosing it in certain areas.

[00:35:12] So I know a lot of what's happening before I even talk about it. So I did have to start to change a lot of that, and I'm still in the weeds, but it's now a systematic approach of how we roll things out, and trying not to freak people out along the way.

[00:35:26] Bobby: There's a lot of systematic approaches to your business when you look at the way you analyze things and data and even team.

[00:35:32] It's interesting that you've adopted this very intentional regulatory way of communicating so that those messages can get across. Because it's a fast business, and you know what it's like to suddenly have the shift in momentum where you're running 100 miles an hour already in this direction, and suddenly you're like, "Oh, we're going west now."

[00:35:49] That quick pivot can throw a lot of us off, so that's good advice. Speaking of things you read, heard, learn, you're a deep learner. What have you been processing lately that has impacted you as a leader?

[00:35:59] Tom Rector: Actually, I've been reading this book called Outgrow. And it's by Alex Goldfayn, and it's a sales book, but it's the fundamental of sales.

[00:36:11] And really where it gets to is us picking up the phone and calling people. Not emailing them, not messaging on LinkedIn, but it's getting back to the old school methods of, hey, just being present, and the idea that leadership is presence, not absence. And it was a really nice reminder. Actually, a friend of mine gave it to me.

[00:36:33] We were having coffee, and he said, "You should read this." But basically, the premise is we should be making three phone calls a day, just calling people. And we call them warm leads, but either current customers or potential customers that we've had some relationship with, or even some friends that we haven't talked to in a long time.

[00:36:52] But just having regular check-in calls with them, but doing it in a way with empathy and with an idea that I'm here to help. And I think what we do helps so many people, but you have to go in with that mindset. And when you do, you get business out of it. And something that was interesting to me that I don't think that we always do that really moves the needle, and this is a very systematic process, too, which fits me really well, is that you make three phone calls a day, you're recording all of this.

[00:37:20] But when you call, and especially if you only get a voicemail, always follow up with a text message. And the statistics show that you have a 66% higher probability that that person's going to respond to you if you follow up with that text message.

[00:37:42] And that just blew my mind. And it's like, 'cause we're so comfortable with sending emails and just doing it the safe way. Even, especially on the sales side, I think we're terrible at that. And not just salespeople, people in general are just terrible. It's like, I'd rather just fire off an email because it's safe and I don't wanna hear nos or rejections, and just trying to do it in a mass effort rather than a very laser-focused effort. But it really works. I've always said that if email came out before the telephone, that we would think that using the phone was this amazing, sophisticated new tool that it just blows your mind, right?

[00:38:19] Email was there before the phone. How differently would we think about using the telephone?

[00:38:24] Bobby: Yeah. Tom, being in AI now, and this is my world where I'm obsessing about AI, I'm learning it, everything I'm processing, who knows how many countless articles daily just to stay in tune with what's going on, what's more obvious to me is the human moats that we're gonna be building in our future going forward, and that's really what you're talking about.

[00:38:43] Because so far we've talked about radical flexibility, we've talked about deep, deep empathy, curiosity and action, and there are so many things, and I can think of visceral storytelling, something Jonathan Isaacson from Gemline talked about, in terms of understanding what we as humans are gonna be exceptional at.

[00:39:00] And this is why I love your advice here about picking up the phone and doing those things, 'cause that's uniquely what a human can do.

[00:39:06] Tom Rector: Yes. And I think the combination of AI and the human aspect to it, I think it's gonna supercharge the AI, the capability to what we know. I think they both have to live in the same world, is that the person is going to have to be there, and those same mentalities have to be there.

[00:39:22] And I think you supercharge them with AI and data and access to information and some speed of use and some mass efforts there. I think that combination is gonna be killer.

[00:39:33] Bobby: Yeah. Agreed. Tom, let's talk a little bit about sales, sales process, salespeople. I'm sure you have tons of advice for folks.

[00:39:41] Because with AI, for example, you now have ways to reorient your day, rethink how you're doing your work and all of that, but what do you think of the sales process and salespeople now in this new age of technology?

[00:39:52] Tom Rector: For us, it's been very interesting. And again, it goes back to understanding your customer and listening to your customer, but we've changed the way that our account teams are structured, and they're very service-oriented.

[00:40:04] And in basketball, there's the offense called motion, where you have triangles of three, and there's always two people that you can pass the ball to. And I look at sales, or at least our account team, in that same manner, is that for any customer, there's always two or three team members that can help service them.

[00:40:22] So we're doing some interesting things on that side, where we have actual teams. They all are copied in on every message that are coming from the accounts that they are managing, but there's always a point person, but everyone else on that team also knows what's going on. But it allows the rest of the team to offer advice and give suggestions, or if that person, the main point of contact, goes on vacation, the others can fill in and not have to pick up from scratch.

[00:40:48] They're all part of it. And we can respond faster because we have more people that are involved in that process. I think that's important for the team, but it's also the compensation of those team members matters. And in our system, we separate our hunters, our sales hunters that are out finding new opportunities and new logos and building a portfolio.

[00:41:11] We separate that person from the team that's actually managing the accounts. So our account team is our director and managers and specialists, and they're the ones that are writing the orders and doing the day-to-day stuff. And I think they're two separate jobs, and I don't think they can be the same. So our account teams are a little more—

[00:41:27] We try to stay as proactive as possible, but they stay a little more on the reactive side of the proactiveness. Our account executives, the ones that are out finding new business, they're all proactive. They're proactive selling, finding opportunities. But how they get compensated matters, and it's specific to the type of work that they're doing.

[00:41:46] And being in the M&A world, I've seen a lot of companies that don't have their comp structure in a manageable position, and they're overpaying for certain things, or they've gotten stuck into these legacy—

[00:41:59] Bobby: Yeah.

[00:42:00] Tom Rector: Type scenarios, and it makes it really hard for them to grow. It really does.

[00:42:06] Bobby: Yeah.

[00:42:06] Tom Rector: So I don't think we're perfect, but I do think we're at least going in the right directions, and we have thought through what those should look like and how we should incentivize the right behaviors.

[00:42:15] Bobby: I love how you've respected the disciplines that it takes in both of those categories. It's like, in the industry, it's like we constantly keep trying to put football players in basketball games. Or to use your sports, you know I'm not a sports guy, but you are, Tom. I know you follow basketball religiously.

[00:42:28] But it's like what we're trying to do with these disciplines, how you're structuring your team so that they serve a client. This has been a huge shift that you and I have seen over the years, where we had this lone salesperson who basically owned all the chips, had everything. If that person went on vacation, you were kind of screwed.

[00:42:41] Now you have these teams. Are those teams functioning in the sense of even their own business units? How do you assign those roles? What kind of roles live in that? Account manager, account coordinators? What's that pod look like?

[00:42:54] Tom Rector: So the pods, they're all led by a director. So the director is a more experienced individual.

[00:43:02] They basically work their way up the ranks, so they know suppliers, they know product really well, they know our sales process really well. They're really good at interacting with customers. But we have them basically hunting on the farm. So their objective is finding new opportunities within an existing account.

[00:43:20] Bobby: Okay.

[00:43:21] Tom Rector: It could be... And they ask the same sales questions that our hunters are asking, but they're like, "Hey, is there something more that we can be providing you that you're getting from another vendor that we could also help you with?" Or, "Is there another department that you think could benefit from our services?"

[00:43:35] They're asking those types of questions to try to grow business within theirs, and they have an objective to grow at least 5% on just existing business alone. That's their objective. So they're doing more of the kinda higher level stuff. Then our account managers are the ones that are doing the more day-to-day stuff.

[00:43:52] They're writing the orders, they're doing the quoting, they're creating presentations. They'll do more of the product sourcing, and then they'll lean into the director when they need some guidance or some help, and the director's reviewing the work. Everything we do, we review work all down the organizational chart, so they're reviewing the work.

[00:44:09] And then we have account specialists. Account specialists, they're typically DCX team members, but they're helping us with proofing and they're tracking orders and they're following up on just the ins and outs of the order so that the rest of the team can stay customer focused.

[00:44:25] Bobby: Yeah. Great structure. Tom, thank you, my friend.

[00:44:27] This is always a pleasure having you on to talk about business, and I love how you are always so willing to talk about it even though you're in the weeds. And it's not always easy to come on a podcast and talk about your business, because who knows what's going on in your business at that time, but this is fantastic.

[00:44:40] Thanks for this.

[00:44:41] Tom Rector: Thank you, Bobby. I love it. Thank you.