Noob School - Episode 60: The Success Story of ScanSource with Mike Baur

Episode Date: April 18, 2023

On this episode of Noob School, John sits down with CEO Mike Baur of ScanSource, to discuss the challenges of building a successful sales team, how to overcome them, and much more. I'm going to be sharing my secrets on all my social channels, but if you want them all at your fingertips, start with my book, Sales for Noobs: https://amzn.to/3tiaxsL Subscribe to our newsletter today: https://bit.ly/3Ned5kL #noobschool #salestraining #sales #training #entrepreneur #salestips #salesadvice

New School. All right, welcome back to Noob School. Today we've got my good friend, Mike Bauer, who's one of the founders and the CEO and chairman of ScanSource, one of the best businesses in Greenville. So, thank you for doing this, Mike. Thank you, John. Appreciate it. One of the best businesses. Wow, that's a high bar, dude.

Isn't that true? I'll let you say it. We aspire to be. Well, I haven't known you for a long time. I've just seen it grow from the humble beginnings that are every business to what it is now. I mean, you have three or four thousand employees? Well, we're a couple thousand, 2300. Right, from six 30 years ago.

From six to 2300. And they're spread out where? All across the U.S., some in Canada. We used to have a big operation in Europe, and so we did have more employees then. We sold that business in 2019, but we have 900 people in Brazil. So Brazil is one of our largest markets now in terms of number of employees. Wow.

But we're principally a North America and Brazil company, a little bit in the U.K. Okay. Got it. And describe the company to us. It's hard to describe what we do, because a lot of people, if I say what we are, are, which is we're a distributor. That means we buy products and we sell products. We don't manufacture. A lot of companies in the Greenville area start with manufacturing. And these days, of

course, there's all kinds of companies in Greenville, but we're one of those companies that have been in Greenville a long time. And there's always been, believe it or not, three or four and sometimes five different technology distributors. So we buy computer technology equipment and we sell it to other businesses. And these businesses are companies like ours. They start small. And they get sometimes a lot larger. So we have 30,000 customers across the U.S. and Brazil who take our products and sell them into a company like a Michelin, like a restaurant in town. And so we're a business to business company. And it's one of those where every day we kind of start over. Our business, almost $4 billion in revenue. And we do it,

$2,000 at a time. It's a lot of hustle. It's a lot. It's a big operational business. Every day we take orders and ship product and our customers get them in one or two days. Right. That's very cool. So you have built over 30 years, you know, a $4 billion company, a public company,

2,300 employees, again, one of the best companies in Greenville. So one of the things I thought that the Noob School people might want to know is just kind of how it all started and, you know, take back to high school and kind of how you, high school and college and your first couple of jobs, how that created the mindset that would lead you to create something like this. Well, that's a long time ago, John. I turned 65 this year. I don't know if we got time for high school, but growing up in Anderson, South Carolina, I went to Clemson. That was like the only school for me, and I thought I wanted to be a chemical engineer. Okay. My gosh, that was a big mistake. I did. I did last.

for three years. And along the way, I was taking some computer classes. And one of my buddies said, hey, Mike, you really ought to get in the computer business. This was in 1980. I'm like, what are you talking about? What computer business? And he said, we're selling computers at Radio Shack. I'm working for Radio Shack.

I said, you're kidding me. I said, I don't even know what Radio Shack is. So I started working for Radio Shack in 1981. I took my buddy's advice. This was a high school buddy. And one day you're selling CB radios back the end. And capacitors and capacitors. and adapter plugs, and somebody walks in and wants to buy a personal computer in 1981.

That cost probably then $3,000, and it had a tiny amount of memory. Matter of fact, we used cassette tapes as storage. So that got me excited because I had a sales mentality, even from being in college. I never wanted to be an engineer. I wanted to sell as a chemical engineer, but I didn't want to be an engineer. But I love the idea of selling and working in a retail store, you learn real quick whether you are going to enjoy selling. Because people come in and you've got to choose. Am I going to be the guy that makes a lot of money selling or not?

And so working retail sales was a great training ground for me as an early, early, from a career standpoint. Right, right. Okay. Yeah, Radio Shack, that timing couldn't have been better for the computer business. You were dead on in the beginning, right? I mean, Apple had just come out. Apple and Commodore, for those who remember Commodore, because they had the TRS-80, and we were the TRS-80. It was really those three companies. And then IBM, a year later, a year later, before IBM. Yeah. Wow. That's wild. And so you got the bug early.

Yeah. And then what happened? Well, I decided that I really liked the computer side of the business, because frankly, I could sell some resistors and capacitors, and that was like, you a buck 98 sale or I could sell this $3,000 computer. I'm like, I need to, I want to sell these computers. They're the most expensive thing we have in the store. Right. And they created at Radio Shackay, Computer Center here in Greenville on East North Street. Right. And there you only sold computers. So we were selling to businesses. So I learned what it was like then, how do you sell a computer to a business? And one of our biggest customers back then was one of the textal companies, JP Stevens. Yeah. And they needed to be able to schedule their workers and, and manage their

payroll better. And so one of the early applications for selling computers to business was to have a spreadsheet so that you could keep track of everything. And so we sold our own software that was made by Radio Shack for somebody like J.P. Stevens. Those were probably $5,000 systems. Yeah. And so you sell a few of those and you can actually make some good money. Yeah, absolutely. So you, okay, so you went there and you were selling, actually selling software. Yes. I didn't know that part of the story. Okay. Well, we generally pretty much gave it away if you buy the hardware. We didn't understand it. It's so funny. It's how it's where the money is. That's like giving away the razor. Yes. Or giving away the razor, making them buy the device. Yeah. The blades, right. Yeah. Yes.

Okay. And then how did it go from the computer thing, the computer thing to starting scan source? Well, along the way at Radio Shack, I got a call from a head hunter. And that was to go and run and be general manager for a local computer business that was within another company. And that was modern office machines. And that was a company where I first met you, John, and your dad, and T. Hooper. So Jack Sterling, T. Hooper. And they brought me in and interviewed me and said, you're a Radio Shack sales guy. We need somebody to run our computer business.

I said, well, what do you have? And this was a company they had acquired here in Greenville, small company, Carolina Computers. And they had the vision of there was going to be this merger in 1980. 84, 85 of fax machines, if anybody still remembers those, typewriters, copy machines and computers. And that was the vision was, one day this is all going to be together. It might be one device, might not, but this is what businesses want. Some place where they can help them with all of that.

And so I came in as the computer guy, not knowing that again, I was into selling hardware and some software, and the rest of that business was about recurring revenue selling toner and paper. and very profitable, but it helped me learn about other companies in the space. One of our suppliers at Mom, Modern Office Machines, was a small Greenville-based company, and they were selling us cables and modems, and that's a company that was Gates-F-A, or became Gates-F-A, which is where I was when we started ScanSource. So I had just left Gates. So I went from Radio Shack, was a manufacturer of computers, to working for a local dealer, a VAR,

and then working for a distributor, Gates F.A. So I learned the computer business through all of those different opportunities with three different companies. Okay. And so Gates was a supplier of yours at Mom, and that's how you made that jump over there, is that relationship. And then how do you go? This is very important for the new schoolers, they want to start a business. How do you go from that good job to starting a business? Well, I was lucky that I had a great mentor, advisor, friend, and later, really business partner, and that was Steve.

So when Steve Owings hired me at Gates as a product manager to help them with their computer business, he then along the way, literally after the first year, he said, Mike, I need somebody to go start this other business within our business selling computers that has our name on it. This was a little company that we literally start from scratch. but it was like a little fledgling idea. And Steve gave me the idea. I said, what do you think? And I said, I'll do it. And so I volunteered. I was leaving a business that I was already working on within a company.

And he said, would you like to try this? And so I said, I'll do it. That business was called Argent Technologies. And after about a year and a half, we decided to take Argent out from underneath Gates FAA and make its own separate company. And that was really an idea to make that go big. and then six months later, we decided that business was going to have to be shut down, six months into it.

Because compact computer, one of the big computer companies, decided to compete very strongly against companies like ours. And so we had to actually decide to shut down that business and go find another one to start. This was all within a year. And I was feeling good and then I was feeling terrible. Like, what are we going to do? Right, right. Yeah. And that had to really sting because that was from an entrepreneur's,

perspective, the thought of creating the next computer. Right. You know, it's so cool. Especially one named Arjun. Doesn't that sound cool? Yeah. Yeah. Yeah.

And so you all had to make the grown-up decision to shut that down, not going to compete with Compaq and Apple and some of those people, IBM. Right. Lots of competitors. But you already had, I would say, the experience that you had gotten and the experience Steve had running distribution businesses, and you said, how can we make this work? Right. We said, what can we do with the team of people we have?

Yeah. How do we then leverage all of our relationships? And that was the idea of let's go find another business like Gates that we were in selling computers that needs distribution. Let's go find another industry that lacks efficient distribution. Right. And that's how we got in the barcode business to start a scan source. There was this gaping. whole. There were customers that we were used to, technology resellers, and they were buying

these barcode products, but not from a distributor. They were having to go to multiple manufacturers, multiple contracts. It wasn't easy. There was a lot of friction. And there was a lot of extra cost because of that. So we came with the idea of, well, is this a big enough industry first? And if it is, can we bring the scale of distribution that we were used to in the computer industry to this niche industry. And it turned out it was a much bigger opportunity than we thought. Much bigger. But nobody wanted us to be successful. None of the manufacturers thought they needed a distributor. They all said, no, guys, we don't need a distributor. But if you want to do it, go ahead. Well, I just think it's an interesting point, just to stay on it for a second, because it's very

normal for you to have that discussion. But for the new schoolers out there, you know, this was not about the idea. This was about. the fact that you already had the people and you'd already paid your dues. Because you can be sitting around, you know, with no experience to say, I've got an idea. We're going to start a barcode distribution company, right? But you don't know anything about barcoding or distribution or sales or raising money or, you know, contacts in the industry. All the stuff you all had is not going to work.

So, you know, learning what you're doing in whatever field you choose, that's probably your best, your best bet to be ready when you're. find that niche? I think that's right, John. And I think the other part of it was we identified that there was a need in the market that was being unmet. And so we had to actually go survey and talk to customers before we had anything to sell them. And we said, what are your biggest pain points as a reseller? And they kept telling us over and over the same thing. We work really hard to build a project and sell it to the customer. And then when we're ready to start buying the product and installing it, it's not available.

And then we immediately have to kind of start over or switch vendors. And if we just had a place where we could count on that we could trust them, that they wouldn't compete with us. Because this was us working with their customers together with them and not going around them. So we started the company with basically two main premises. One, we will never compete with you. So you can trust us.

And two, we will get you the product as soon as tomorrow if you need it. because we're going to have inventory. Right. So we actually invested in inventory of product. Nobody was inventory in these products. And so it was always a 30 to 60 day lead time. We turned 30 to 60 days into next day. Right.

And how big is your warehouse? Is Mississippi? Yeah, it's right outside of Memphis, Tennessee. It is across the state line. About 800,000 square feet. Wow. So we'll have about at any one day, $400 million worth of product sitting there ready to go.

And we get about in the U.S. 4,000 orders a day that come in from our sales teams across the country. And they don't come in at 8 o'clock, by the way. They all come in around 2 o'clock right now. And so all those orders are being picked right now, and they all get shipped tonight by around 8 o'clock. So we do all that in about six hours. Wow. That's wild. Well, let's talk about salespeople for a minute.

I mean, you obviously are a natural salesperson, and I think a great curiosity about technology you've always had, you've always had that. I remember you showed me the Palm Pilot thing. Yes. That was a long time again. That was. Yes, I'm one of those gadget guys. I'm an early adopter of technology. Yes. Yes. Yes. I love it. But on the sales side, what have you found on your team, what are you looking for when you're interviewing for salespeople? One of the things that we did learn early was we did not need people who necessarily understood the technology, although that was very helpful. Matter of fact, we've got a salesperson who will be with us 30 years in April. And her name is Phyllis, and she was from our first acquisition. And I was asking,

Phyllis, because we're getting ready for a little company meeting. And I was saying, Phyllis, remind me of your background. And she used to install computer systems at Kmart. Wow. And she came to work for us with that knowledge, but she was an exception. Most everybody else came to us from some other training ground, if not right from college. And the was they had to get comfortable that they could learn the technology. I think many times salespeople, rightly so, they don't want to sell something they're not 100% comfortable or confident with. And we had to find a way to overcome that. And the answer to that was number one, our first two sales reps, Janet Sherry, they knew nothing about barcoding, but they weren't afraid to ask for the order.

Matter of fact, they would call a customer and they would say, hi, I'm Janet. I'm with this company's scan source, can you tell me what you guys are selling in your business? They would say, well, why do you want to know? Well, because we're a distribution company and we'd like to provide you what you're selling, what you're buying. And what is it you buy? Oh, we buy zebra printers. Okay, well, if I had zebra printers for you, would you buy them for me? And they're like, you don't have any? Well, not yet. But if one day we get them, would you buy? So that's how we started the company. We had no customers and not even any suppliers. So we had to first understand what the market need was. And we kept hearing, what we'd love to about.

from somebody who doesn't compete with us, somebody who will give us fair pricing. And it was amazing how those early sales reps just had to be able to ask questions and not get intimidated when they didn't know the answer. Matter of fact, one of my questions for a new sales rep was, what's your response to a customer when you don't know the answer? And if they said anything other than,

I don't know the answer, let me go find out. I would say you're not going to be a successfulist company. Because you're never going to know everything. So you've got to make sure that to build trust, you've got to let people know that you're not going to know everything, but you'll get the answer for them and get right back. John, that was one of the keys we had to learn. There would be a lot to learn in your business. Impossible to know it all. Yeah. But we have a team behind our salespeople or engineers. And they can find the answer pretty quick. And that was the key

was you had to find the answer and then quickly get back to the customer, not tomorrow, not in a week, but fast. And I think that quick response, hey, I don't know the answer. I'll get right back to you. was amazing. Yeah. You're people hustle, man. And are you still doing like a product training every week? Yes. Matter of fact, our suppliers, they compete to get in front of our salespeople. They want to do it. And now, frankly, since all the changes since the pandemic and remote learning and video, we can do so much more training now than ever before because it's easy to do it. Everybody doesn't have to be in a room. We don't have to organize somebody to come on a plane and come So I think training is even easier today.

Yeah. Interesting. I'll just talk about that for a second because you had, you know, how many people did you have on Pelham Road before the pandemic? 700 that would show up every day. Yeah. And now, and now it's mostly work from home? Yeah, 100 might show up on a normal day. Yeah.

And we came up with the idea that we're calling it productivity anywhere. If you're productive, work where you're most productive. Yeah. And we found that to be amazingly successful. Yeah. Yeah, different people work different ways. I know, I mean, I've seen, I've talked to people about this, but, you know, if someone is hyperproductive, if they really, really go after it hard without having to do as many meetings

or commuting or lunch with everyone, all those things, you know, that we used to do in corporate America, you could block your time to like six to ten in the morning as day one. You could probably get as much done as you used to in day one. But then, so you can goof off the rest of the day, California style if you want to, or you can say, you know, 11 to 3 is day 2. You know, 4 to 7 is day 3. Right. You have three days.

Right. Unbelievable. And these days, I think what a lot of them do, I don't know this for sure, is that's when they can go and learn. Because there's so many things available now on YouTube, as we all know, just like this session we're doing. and for a new person to our industry to be able to go out and get educated on demand is amazing. And that's why if we get curious people to come to workforce, they will come up to speed fast. They just have to want it.

Yeah, I agree. Well, it's a very interesting time, for sure, for sure. I think you've handled that well. Productivity anywhere is a smart way to do it. And of course, we have to, at different levels in our company, the management team, they have to define what's productivity. It was the measure. And I think the most challenging part has been for those new people.

So for the Noob School folks, when you join a company today that says productivity anywhere, if you're new and you're not showing up, you're probably making a big mistake. Because it's going to be hard to meet people who might one day help you if you're going to have to set up a call with them, via Teams or Zoom or WebEx. Much easier to walk the halls and say, hey, how are you? I'm Mike. And that's how so many people, especially the new salespeople, that's how you've got to learn the company and learn the culture and kind of learn, I think it'd be hard remote only to learn kind of the cadence of the company. It's how fast does this company expect me to move?

What is the cycle every day that I have to be at? Do I have to show up at six or can I show up at eight? And I think for a new person, especially if this is their first or second job, really hard to understand that cadence. Because I would say we run at very specific cadences, again, based on our customers. When they call or when they email or when they need something, our business is based on we have to be available. Didn't you used to have or you might still have it, but the rule was the four-hour rule from the time that someone got a voicemail or an email, they had to respond within four hours? Absolutely. And yet at the same time, I was one of those guys that was holding back on investing in some instant messaging tools early on.

And I'm like, we don't need that stuff. And I didn't realize how getting them out of email and getting them on instant messaging was going to let them do that. And I was like, okay, now I get it. That's why you guys need instant message because you've got to meet the four-hour rule. And so we were always slow and invested in our own technology. And we were running off of really old systems until 2016. We were, whatever, we were 20 plus years in the business before we put on a, went away from green screens. Because we were always about efficiency and low cost.

Our business is based on if we're the lowest cost provider, we can win any deal we want. And if you're our sales team, if you're working for a company that has the lowest cost, not the lowest price, the lowest cost. You can win anything you want. Then it's a choice. Do we want to win that deal or not? Well, it is kind of hard to believe that you got a $4 billion a year company that's turning over the business every day. You know, like, you know, every day the order is coming in and they're out. You know, it's like, I'm going back into work today, you know, every day.

And part of it is our customers, because they're businesses, they're repeat buyers. Once they find their team within ScanSource to work with, they then get influenced by our sales team on what else should I be selling? And so there's frequent communication. And the idea is if we can reduce the cost to serve for that customer, then he's going to be more successful. And if our customers grow, we grow. Well, switching gears a little bit. You know, you have a lot of transactional activity going on, but like you said, the people have these bigger relationships with the customer

and also with your suppliers. How would you recommend salespeople go from being more of a transactional salesperson to being a trusted partner? You know, one of the things we learned is that you mentioned suppliers, with our business, understanding who the suppliers and their sales teams are helps our sales team win.

And my point is, recruiting others to help you sell is an amazing way to be more successful. So it's not just you. So in our case, some of our suppliers, they have field salespeople who are trying to meet quota,

and they're looking for someone to say, hey, how can I help you close your quota this month? And then you get them helping you, and they'll send you business. So we found that that's the most successful sales mechanism is working with our suppliers. And if they trust you that if we give you a lead and you follow up on the lead, even if you don't close it, by giving them feedback, they're going to send you more. And so I think it's always about getting an ecosystem of people helping you be successful.

And everybody wants to see a successful sales rep do more. Right. And I think once you start having a reputation for you give me the lead, I'll close it or I will bring you back why it didn't. They're going to give you more. And I think that makes it almost easy to be a sales rep. Right. Because people want to help you win.

Right. So your reps, your reps would reach out to the people that they're, like let's say Honeywell or whoever it is and get their field reps to help go out there and close the deal. Right. The field reps all have leads. And the call can be early, hey, do you have any small customer leads that you don't have time for? Right. And the field rep says, yeah, I do you.

do. I got five. Here, do you mind? No, I got them. And I'll give you feedback. Boy, immediately you fill up your funnel. So you're leveraging your suppliers to give yourself a two or three times bigger sales force. Exactly. And it's amazing how effective that is. And it works for everybody. Yeah. It works for the suppliers and it works for our teams too. And actually, that's always been the case with Scancor's, the largest suppliers prefer our sales team and our largest customers prefer our sales team. We found that it's that relationship and it gets back to one thing, John, and that's if you can build trust with your customer, you're golden. You're going to be successful no matter what happens from recession, economy. None of that matters if you've got trust with

your customers. Right. And that comes, I'm guessing, with time and just delivering on promise after promise. It does not come from sitting down the first time with a big dinner at Hall's Chop House and said, I want to be your trusted partner, right? You're exactly right. It's got to be one deal, one opportunity at a time. And it does take time, but it also doesn't take years. It just takes doing something, giving feedback, and then being somebody that, you know, consistent. I think consistency builds a long-term sales relationship in our company.

Consistency. People want to know they can count on you. Right. Not changing every quarter. Yeah. And even if you have a problem. I mean, I'll never forget one of our most successful sales reps, Janet Rollins, one of our first two, I would go visit her customer, say,

now tell me why do you do business with our company and why do you like Janet? And they would say because Janet gives me the truth. If I call her and say, do you have this product? And she says, no, we're out of stock. She tells me where I can go buy it. And people are blown away by that. They never fail to say, we trust you guys. you will never give us an answer just to keep us on the hook.

That's huge. That's awesome. That's awesome. Well, let's talk about positive attitude, which you kind of show us. You have such a great example for the rest of us. You always have a great positive outlook on things. And I know that just like everyone else, it's not always positive, right? There's always challenges and stuff we're working through.

Every quarter is not smooth. But I wondered what kind of advice you give to put things in your brain. to keep you positive and what you want to keep out. What do you want to let in? What do you want to keep out? Well, you know, one of the things I learned early in my management career was about a balanced life. You know, and sometimes I would suffer

and not follow my own thinking on this, but I always would tell my teams that when I struggle, it's when I'm not balanced. And I think of life should be balanced with, what do you need to do for yourself, what do you do for your family, and what do you do for your company? And so it's an equilateral triangle.

And whenever you oversteer in any one of those areas, the rest of your life is not good. You can oversteer for a short period of time, but not for long. And so when things seem bad, you need to kind of look around and make sure that it's not because something else is causing that. And so I've been a big believer in as salespeople, take care of yourself.

Make sure you do, you have a fitness routine. You care about your. your family, you have friends. There's got to be life outside of selling. And if you can balance that correctly, you're going to be so successful, even during tough times. Because again, it's not always easy. You've talked about that a lot. And you're going to have tough years. And some of my best advice these days is coming from my team in Brazil. Because when we look at, for example, being in the U.S., everybody talks about all the problems, the macro things, politics, the economy. That's a country that every year has a problem.

I mean, every year they have recession. Every year they have interest rates high. They had an impeachment of the president two years ago. And those are the most positive people I've ever met. And so I have become more positive over time because I look at how other successful people and cultures do it. And I think the culture of the company, I think it's very important that everyone in the company is positive even when things don't go well. You have to still say, we can do better. We can do better.

it's not always going to be like this. And so I do feel like that tone has to be set by the management team every day. Right. Every day. Well, that's great. That's great feedback because you always show that positive attitude. But I think it's real. I think you're looking at the positive outlook on everything.

And when something unpleasant does happen is to say, well, now what? You know, what are we going to do now? How can we make this work? Right. You know, how do we fix it? You know, whatever. where he's just, it's, and I think also, I tell people and myself that when something does happen like that, you say, well, there it is. You know, I knew it was coming.

Sure. Eventually, you know, we're going to have a flat tire every now and then. Let's just fix it and let's keep going. Right. You know, most of the time, life is great. Well, and that's back to what you said, John, is you can't keep it all internal. You've got to share it, too. Yeah. And people are okay if we make mistakes. One of our core values at scan source is mistakes made for the right reason are okay and should be celebrated because we want people also that are pushing the envelope. We want to encourage risk taking to a point. And that's how you get through these tough times is your company has to say, okay, everyone's going to have this

problem. So now how do we go beat the competitors right now? And this is what noob school folks need to think about is when the going gets tough. Everybody has the same problem. And so how do you do better than the competitor. Right. That's the key. Right. Right. Good advice.

So I know occasionally, I mean, you've had some big deals that you've been involved in in your career, buying some great companies. I'm sure you've been involved in some monster sales and supplier kind of deals. Can you talk about one of those deals and just describe how a big deal gets done? Because most new school people don't understand how could I do a $50 million deal? or a $2 million deal because most of us would start selling something that's like $8,000, you know. So how does a bigger deal work? Well, that's interesting about acquisitions.

I hadn't thought about that in a while, but I'll give you an example of one of those. Scancers did over 30 acquisitions in 30 years. And they, from $4 or $5 million to $250 million. I can tell you about when that was about $100 million. It started out as a company that I met, that I was very much impressed with the management team, their market. And I talked to the owner, saw him at a conference, and just got to know him personally. Just, hey, how are you doing? How's your business?

And then found out that he might be for sale through somebody else. And I said, well, maybe I'll just approach him. So I approached him and said, hey, if one day your business, you're interested. in exiting your business, we would be interested in talking. He said, that's great. And so then like six months later, I'd get the phone call. But first, it was starting with some kind of relationship somewhere, and it ends up being, you've got to then ask. You've got to ask either that person or somebody around them, is it possible there for sale? So first you've got to do a little research. Yeah. But then once you make the first meeting that's about closing the deal,

and in our case, we took about six months and determined it wouldn't have to be. And then, you wouldn't happen because there was an expectation that the seller had, the customer, for here, and we were here. And so there was a gap. And rather than at that point try to negotiate, and the gap was large, too large to where we were going to negotiate the difference, no matter what Bill Garcia says. I mean, this one was a big gap. And what I learned then was it's better to walk away. Walk away with, hey, this is not going to work out. If you guys are still interested in a couple a year so now let's get back together. That happened twice with this particular deal. Wow. And it went from where we were going to offer to pay 60 million, I think, 50 million, the first time we met. And three

years later, we did buy that business for $100 million. They got what they wanted. They kept in touch. I would occasionally just throw in a little phone call or an email and say, hey, I'm going to be in town. Would you want to get together? I met the guy one time for a little ski trip out in California. But staying in contact, making sure, though, that there was no hard feelings. And I also learned that don't throw a low ball offer out there just to either let them know that you're smarter than they are, and that never worked. I always would walk away and not get, if I knew the gap was too big, I'd rather walk away, keep the relationship alive and see if it'll work.

And that worked for me three or four times, Jay. Right. And so that gap was made up by their revenue growing or something. They grew, yeah. But they also knew then what was it we were looking for. What was the measure of profitability going to be? In other words, in this guy's case, he wanted to sell it for $100 million. And he had to know for me what would his business have to look like for us to pay him money.

He figured it out. Good for him. Yeah. Everyone's happy. Yeah. And so that was a wonderful one. But it was back to, but not embarrassing him with a low-ball offer either. I never like people that would do that.

It was never our style. Yeah. Well, those are good, those are good lessons. I mean, you don't want to, if it's going to be, even back to being a trusted partner, you don't want to make them angry or make them look bad or just, you know, politely walk away until it's stay in touch. Yeah.

And let them know why as best you can, again, without insulting them. You don't want to tell somebody their baby's ugly. Right, right, right. Even if it is, John. Yeah. Well, it's interesting. I think for the nobs coolers, for me too, It's just interesting how much of the personal touch comes in on doing $100 million acquisition.

It's not just like, you know, let me just, we'll offer 100, you know. Yeah, right, right, exactly right. People are people. They are people, right? People are people. Yes, and they appreciate it. And I can't tell you how many times we did that very successfully. And rarely, by the way, were we the highest bidder, rarely.

We had to be close. Yeah. We had to be close. But the fact that we were willing to work with them over. time, I don't think we were ever in an auction but one time as a result of that. We identified where we wanted to go, met them early, let them know what our metrics would be, and then just kind of be patient. I mean, being patient's hard for a salesperson like me too.

I bet. But you have to sometimes figure out, all right, this one's worth being patient for if one day we can close it. But it's kind of like having a funnel. You've got to know some of those aren't going to happen right away, but keep working. Right. I like that. I like that. And it's the same with if they were trying to sell big deals or anything else.

I mean, you can't, as much as you'd like to, you know, I tell the noob schoolers, it's not a this month thing. Right. You know, we're talking, look at your career over 10 or 20 or 30 years. What are you arcing towards? Right. You know? Well, let's switch and talk about interviewing, which I know you've done a lot of them. Now you're doing, only, you know, executives and stuff.

But what are some of the things that people have done in interviews on the ground? good side and on the bad side. What do you recommend they do if they want to get a job? And what are the things they do if they're not going to get the job? Well, it's certainly changed from when I was interviewing. I can still remember John interviewing some early salespeople back in the days when you were at Datastream and scan source was a lot smaller. And I was telling someone this recently that my goal was to get someone to stay with us for three years. And I would tell them, if you'll commit to being here three years, and then you then step up and go work for somebody else,

I will have gotten a good return on our investment. And now, of course, we've got, as I was saying earlier, we've got a sales rep that's been with us 30 years. And she could have gone lots of other places. And so having that kind of a mindset that don't make somebody feel guilty if they leave, it also allows me to then say, but I want you to work 110% every day.

You've got to give it all you got. And if that means three years, great. If it means 10, wonder. And some of the things I learned along the way were people trying to use their industry knowledge. And partly it was really my managers, John, where they would want us to hire people that had industry knowledge, meaning they wanted us to hire from competitors. So one of the things I learned was I didn't like to interview people that were working for our direct competitors. I felt like that was almost like on our side too easy because of course we thought we could win them over. I also was wondering

why were they ever working for that company? So if they came to me trying to brag on the fact that look at all of my resume, I was never impressed with that. That was a way to turn me off as oh, I know your business. I'm like, I don't think you do. And so to me, I think you have to be careful about selling your industry knowledge

or experience. I'm not sure that's the best. I think the best interviewers that I had over the years were people who were much more about after a couple of sentences, me asking them, hey, what questions do you have about scan source? I've always wanted to know how much did they really know? Did they do their homework? And so early in the interview, I was like,

what questions can I ask you? Just trying to figure out, are they going to ask me about how much they're going to get paid? Or what's the company's future? So those are very interesting questions and answers is, what questions do you have for me? Yeah, yeah. I remember that too.

I remember if someone said, Well, I was wondering what the insurance plan was like. Yeah, right. Out. Out. Yeah. Or what's the vacation policy, right? Dress code.

I mean, come on. Right. Those were easy, right? Yeah. I mean, we want them to be interested in what we're doing. Yeah, curious. Yeah. And you would hope, again, even with salespeople, that they would want to understand what are the career opportunities ahead?

Yeah. I mean, if I really, you know, do a great job, what's possible? And I love talking about what's possible, not what's guaranteed, but what's possible? What could somebody like me accomplish at your company, Mr. Bauer? That would be a great question for me. Great question, yeah. Yeah. Yeah.

We coach them to have at least three questions ready to go. And one of them, we love the question. You know, if you hire me, Mike, and I'm, you know, a year from now, what would a great job look like? There you go. And so you're telling me what my first year looks like. So in your head, you've already hired me. Right. I'm already been here.

I love it. I love it. That's a great question. I like that question. Yeah, I do too. And again, I like the interview candidates having a couple of questions. I think it's great. I think it's a little bit of the assumptive close, but I love that because that's what you want in a sales question.

I also love at the very end before we go. One more thing, Mike, how do I do? Yeah. Scale of one to 10, what do you think? Yeah, that's a good one. Eight, nine, what are you thinking? That's a good one. I mean, it makes you cringe a little bit, but you're like, I'm hiring a salesperson.

I want him to say that. Right. Right. Yeah. Well, and for me, whether it's a salesperson or an executive, I want them to always believe that they're going to be very successful at our company. I mean, I want them to, we're not just one of seven other ones of interviewing that. And I know it's harder today. But I want somebody who really wants to be here.

I mean, I mean, so that they're going to. to do everything they can to be successful. Can you talk a little bit about the transformation from hardware only to kind of more of a SaaS pricing and bundling that you're doing? Well, I'll tell you, the biggest change in our company was when we in 2016 acquired this recurring revenue company, Intellisysus, and it really had changed our whole mindset about where will our business come from. Instead of today having to start over with hardware, we've got three-year contracts that pay us

monthly for three years. I'm like, whoa, this is cool. Where has this been all of our life? So when we found that opportunity, then it was how do we integrate that in with our company? Because it was so different. And I think it's still a challenge with our channel, with our customers, because we want every one of our customers who sell hardware to also sell some recurring service. It used to be, you know, a long time ago, 20 years ago, was trying to help get into the software business, even though we weren't selling the software, but we knew that for a successful customer of ours to be around a long time, they had to have a predictable source of profitability. It wasn't going to be just hardware. It was some kind of services.

And so when we found this recurring revenue services model, selling cloud services, it has been just phenomenal change for our company because now it gives not only our customers a real opportunity in the future that's massive, but also, our sales teams. Our sales teams now can say, well, you know what, I'm selling a hard where maybe I want to sell some recurring or maybe I want to do both. The idea is to do both. And that's what we're calling a hybrid distribution. If we can do both, then frankly, you're hedging your bets. We believe that every time you sell recurring, there's also some kind of device needed somewhere. And I think that's the part that gets misunderstood is that you should

try to do one without the other. I think you can, but they're better together. And we call that hybrid. Well, I know the example you gave me once was the security, look at the alarm or your house, your alarm system. Yes. Yes. That's hardware and software and telephone. And you get one bill. Right. Right. Exactly. You don't pay for the hardware. That's right. And it reminds me back when I was younger and we had landline phones, which aren't around much anymore. And those were all sold by the month. You never owned it. The phone company owned it. And you paid a monthly bill and you got a phone and you got dial tone. And if you wanted a longer cord, it was another buck 50 a month.

They were ahead of the curve, weren't they? They were. And then, of course, they got so successful, the government blew them up. Right. That's unbelievable. The oldest forever knew. Well, one of the kind of themes or words I like to talk about is head trash, you know, things that we believe are true for whatever reason

because we saw a million ads about it or because our mother told us or whatever an example would be, you know, a mother saying, money doesn't grow on trees, you know, so you hear that your whole life growing up, and you think, well, there's just not enough money around. I can't make any money. And then when you get older, you read that there's about a billion millionaires. You know, there's so many millionaires in the world,

and so many billionaires, it's like, maybe it's more abundant than I thought. So do you have any head trash things that you've kind of discovered in your life? Well, for sure, you know, early in the life of scansores, there were so many people telling us there wasn't, it wasn't a big enough market. I've always heard people say that. You guys are doing a good job, but the end is in sight. I mean, for a year, we went public really early, and there were other public companies that were kind of dabbling in our business, but they were doing a lot more business in the computer industry.

And every time I would go see an investor back in those early days, the investor would say, well, Mike, what's going to happen when these three competitors get in your business? I said, I'm not worried about it. I mean, we'll beat them. We're the best now. Why do you think they're going to beat us? Well, because they're bigger and all this. And so I think people want to try to intimidate you with this idea of competitors,

and you can't let it. I mean, I think that's an easy one to get depressed about. Oh, yeah, right. One day we're going to lose. The business is gone. And I've heard that my whole life. If somebody else is going to beat you guys, Mike, are you ready for it? Of course we're ready.

Yeah. So we had a guy, do you remember Al Reese? Yeah, sure. Yeah. So he came to help us when we were doing $5 billion a year. Yeah. And we were convinced our market was too small. Yeah.

Larry did I convince each other based on our homework. We were just too small. We need to find something else, you know. Right. And this guy came in and he's like, well, I don't know about that. And he goes, you're going 30% a year. Just keep doing that as long as you can. You should be surprised what the market might do.

And now that company that we sold is now doing $300 million a year. There you go. And it's a hell in the market. So, I mean, I think you're right. And also it reminds me when they talk about goal setting. They say, for goodness sakes, don't tell anyone what your goals are because most people don't want you to make it. Right. For whatever reason, they want to pull you, like you and I want each other to do well.

But a lot of people are like, that's not never going to work, Mike. Right, exactly. Not going to work because they don't, you know. Yeah, there are some people that don't understand what it takes to be successful. And so they think it's luck. Yeah. It's luck. Yeah.

And they don't want you to be lucky if they can't be lucky. And they don't realize that it's a lot of work. Yeah. And it's surrounding yourself with a lot of great people. And I think it's back to you have to grow a company. You have to have people that are like you, but that also have the freedom to innovate. But all of them have to have commonalities around core values, John, about trust and integrity. and doing the right thing

and being really good leaders of people. And that's what our company is all about. We keep hiring great people. And the great ones, by the way, one day are going to leave you. And for me, that was always hard. I don't know about you, John. It's when some of your best people got offers that we couldn't match, but it was good for them.

And I think that was one of the hardest parts of the job for me was congratulating somebody on finding something that was bigger and better for their family. And I always say, if that's good for your family, then I understand it. Yeah, yeah. But that was hard. Well, it's a good point. Well, you've got a great team out there now.

You've got a great team out there now. So a couple more questions, Mike. What would be your favorite word? I think aggressiveness. I mean, I've always thought that you've got to take some risk and you've got to be aggressive. And I think it's too easy to be complacent. And just, again, if you have to be careful what you read, and watch and hear.

Because there's so many people, again, that are negative. I'm like, forget that. Forget that. Let's get aggressive. Let's assume that we can win. And I'm a glass half full guy. I always have been. Always.

Three-quarter. There you go. Three-quarters. Even better. That's right. I like that. Yeah. Oh, that's great.

I love that. I love that. Well, is there anything that you want to promote today? I think this idea that we are going to have an amazing run in our company and companies like ours and to new salespeople. Salespeople are not going away. When I think about all of the AI innovation that's coming, we're looking at that like which jobs that Scancers are going to get automated more and more and or by the way near short and offshore because every company looks at that over time, right? It's not sales jobs. I mean, if I was given some

advice to new salespeople, you stay in this lane. You're going to be wonderfully successful if you try. And sales isn't for everybody, but anyone, in my opinion, anyone can learn to be a salesperson. Right. It can be taught. Right. It can be learned. Yes. Now, you have to like pick, pick your place and some businesses are easier than others. You and I used to talk about, scan source was not as much a cold calling, I called it raw meat sales job. because we had repeat customers, whereas you had a lot of new customers. So you need a lot of hunters. We needed farmers.

So if you want to be a farmer sales rep, by the way, it doesn't mean that it's easy. But you can be a very successful farmer for a career. And I think that gets misunderstood. And because our jobs are generally inside sales. And that is not easy. Not easy. But it's a very successful career. So I would just encourage people to come after any company where you can get into sales.

Because from sales, you can move into the company at other levels whenever you're ready. Whenever you're ready. Yeah. There's a, you know, there's tons of CEOs that came out of the sales side. Correct. I mean, maybe half of them. I agree. So I agree.

You don't have to be, and you don't have to be a financial genius to be the CEO. I can tell you. I'm not. And again, I'm a guy that was working retail Radio Shack stores. back in 1981, and I learned how to count money, you know, but I also learned what it took over those years to be curious and to be, and to self-educate and to want to do more. And if you want to do more, people will help you if you ask them. And that was one of the earliest things I heard, too, was make sure you ask people to help you. Just like you, John, I know you

will. If someone wants advice, they'll ask John Sterling if they want advice on sales. They should. So Mike, I forgot to ask you, what's your favorite book? There's a book that I read recently called Lift Off. And I would highly recommend it. Liftoff. Liftoff by Eric Berger. This is nonfiction. This is the history and the story of SpaceX.

And it's a great read. It reads like fiction. It is so unbelievable about how Elon Musk started this company in 2002. And he almost, well, they basically face it. He held four times launching rockets. He bet all of his money, and they finally got it right. But SpaceX, most people know about it today, launching all the time. 2002, they started.

It's not fast to build a rocket company. But he's one of those entrepreneurs, and he's a great salesman, too. And so I would highly recommend you read Lift Off by Eric Berger. I'm going to read it. Thank you. You're welcome. So let's keep going. Do you have any questions for me?

Anything you want to ask? We don't have to. Yeah. Okay. Far away. So these young salespeople, what is their expectation for incentives today? Because I've been trying to work on this one. Back in the day, we used to have all kinds of sales spiffs and trips and all that.

And I don't know. What are you hearing? What do they want outside of a paycheck, outside of a commission check? What else is going to get them excited? Because my kids and your kids, the 20 and 30-year-olds, they seem to have a different view. of what motivates. And I'm trying to get to is what's going to motivate them beyond just the paycheck today.

Well, I'll tell you what I think, based on the talks I've had with them these days. I mean, after pandemic, they want a job or they don't have to go to work. They don't want to go to the office. I mean, just like I've had more than one say, the second they make me come in, I'm moving to companies. So that's the first thing. And then they want, you know, a salary that pretty much pays for, you know, a modest lifestyle.

You know, that they have that covered. And the commissions on top of that, they don't seem to be particularly greedy, unlike previous days. It's like, you know, it's fair, you know. They don't seem to be motivated by trips or that kind of thing. It's just more. And that's a change. It's very much a change. It's very much a change.

I mean, if you're not in the office with people all day, the fact that you're number one on the board and I'm number four, it's like, whatever, I don't even know, Mike. Yeah, right. So I think it's a little different. You'll have that same competition. Yeah. So you remember when they wanted company cars and all that too? Yeah. And all that's changing.

They wanted cars. They wanted trips. They wanted recognition. They wanted lots of recognition. That used to be a really big deal. I think now since it's more remote, that that's not such of a big deal. Yeah, and I wonder if that'll last. Probably not.

Yeah. Because I think it's such a powerful human emotion to get recognized. Yeah, me too. But I'm with you. That's what I'm sensing. Yeah. Is that that that need is not there right now? And I'm just wondering how long that's going to go.

Yeah. Well, maybe the company that goes over the top in that direction will lure some of those people back in. There you go. You know, oh, man, you know, Frank works for skin sort. and they're going to Cabo San Lucas or, you know, be interesting again because I think most companies, you think about the CFOs,

they're like, yeah, we'll be glad to cut Presidents' Club. If they don't want it, we'll cut it, you know. We'll down scarely office and, you know, they like that. Yeah. Kind of a short-term fix. Yeah, I think you're right. We've got to watch out for that. Yeah.

Yeah, I think it's a trap. Because definitely we've saved a lot of money, not traveling, but we had that event back in October in Nashville. Yeah. 2,000 people, and it was amazing. It was awesome. Oh, my gosh. I mean, people seem to like it.

Yeah. They seem to like to get out again and meet people. And so we'll see. Yeah. We'll see. What about just career past for salespeople today? How many of these sales reps want to stay a saleser like Phyllis? Can you believe we got Phyllis for 30 years?

It's crazy. She never wanted to be a manager. Yeah. I mean, I see them going three ways. again, these are some of my old reps. Some of them stay in sales and become high-paid professional salespeople. Right. SAP, Salesforce at Oracle, making big bucks, and they're selling monster deals.

One of my reps just sold a $250 million deal. Wow. I never even heard of that. Wow. It was to a shipping company for all their global employees. It was Salesforce, all the global employees. all the global employees. Wow.

And it was that seven years of SAS. So $2.50 divided by $7. Yeah. What is that? $32 million a year or something like that. Yeah, right. So you just divide up the number of users or whatever. Yeah.

Wow. $250. Wow. Wow. It is amazing, right? Yeah. Yeah. And so that's what I'm wondering too.

So I'm sorry. Some of them do that. Yeah. Some of them go into management and become like VPs of sales. A lot of the people that I coached your VP's sales. sales now and then some of them go into you know starting their own business like Millwood and Osborne and those kind of people right and me and you and you know some people kind of go that that direction and well I you know for me I really think we

need more up-and-coming salespeople man I love what you're doing with the the noob's idea because there's so many again you know in a lot of schools they don't they don't brag on the sales curriculum. Yeah. It's not one to say, hey, what is your school, you know, university? What is your school famous for it? Rarely do you hear somebody say sales. Yeah.

They want to talk about, you know, professions like legal and MD and all the other stuff. And, you know, and then you get into the business school, right? But they don't tend to focus as much as I think they could on sales. It's one of the, I think it's one of our challenges. They too. I mean, guys, think of the percent of people coming out of the schools that are going into sales. Right.

But it wasn't their major. No, there's not even a course on it. Right. Right. I remember the Citadel there. I was like, I think I'm going to go into sales. What should I major in? Like, probably business, I guess.

So the people go. Because if you think about it, John, maybe what they need to be doing is maybe the people that are better salespeople need to be taking classes in psychology. Yes. Right? And understanding behaviors. Yeah. And a little bit of finance, of course.

but, you know, I think that's what we're missing. That would be good. Yeah, accounting and sales would be good. Yeah, why not? Yeah, that's good. I mean, accounting and psychology. Right, why not? Yeah, that would be good.

So we'll see, but I think that's what we're missing is we don't have enough push on, we need more sales people. Yeah. Well, good. I've got it as a backlog project to try to find, try to connect with more of the schools that do have sales majors and help them somehow. I think it'd be great. I do some with Citadel now, but I need to do more. I think it would be great. Yeah.

Well, good. That's all I got for you, man. Well, thank you, man.