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D&H's DNA For Success

As D&H Distributing celebrates its 100th anniversary, Co-Presidents Dan and Michael Schwab and their employee co-owners are setting the stage for the next century of growth.


When Dan and Michael Schwab were growing up, their father, Izzy, taught them the importance of doing the right thing for employees, vendors and reseller customers and always, always planning for the future. Izzy, who recently celebrated his 60th year at the company, says the two "boys" -- like he and his dad before him -- inherently understand the D&H look-to-the-future ethos of knowing the value of a dollar, reinvesting in the business, and always planning for the future. That means building the business not for the next quarter or the next year, but with a steady eye on always changing to deliver a better partner experience.

"There is a rock folk song from the '60s that says, 'The times they are a changin'," said Izzy. "We are all about change. The boys understand that. Keep the same philosophy but change with the times."

It's a lesson the two brothers as co-presidents and third-generation stewards of D&H Distributing of Harrisburg, Pa. -- which is celebrating its centennial this year -- have taken to heart. In fact, since Dan and Michael took over day-to-day operations in 2008, they have made big investments in technical talent, new hires from outside the company, and new breakthrough programs that moved the company deeper into advanced technology solutions for the small- and midsize-business market.

[RELATED: 100 Years Strong -- D&H's DNA For Success]

The big bet to go deeper into complex technology solutions has paid off for the company -- one of the less than 1 percent of employee-owned businesses in the U.S. -- as well as its 1,250 co-owners and its partners.

In the past decade, D&H has grown from a $1.45 billion company with 850 employees into a $4 billion company with 1,250 employees. At the same time, the value of the Employee Stock Ownership Plan (ESOP) has grown by a mind-boggling 300 percent.

Under Dan and Michael's leadership, D&H has taken the number of engineers and technical talent building solutions hand in hand with partners from just two to 26 and significantly increased VAR enablement activities across the board. That includes a stepped-up K-12 education sales division and, most recently, 17 sales reps to support emerging value-added resellers. The company also has put its money where its mouth is in the all-critical SMB VAR credit market, taking the distributor's monthly open net credit from $65 million to $350 million.

The results on partner sales and market reach have been remarkable. D&H has helped 500 VARs grow their business by 20 percent over the last three years, totaling $100 million in growth. In addition, more D&H partners are moving upmarket. Five years ago, 80 percent of D&H partners were providing solutions for businesses with 25 seats or fewer. Today, 60 percent of D&H partners are selling solutions in the 25- to 250-seat market.

Don't look for D&H to stop the big investments aimed at propelling partners into advanced technology solutions areas. In fact, the two brothers say the D&H DNA ensures the company will always be forging ahead with partners' needs in mind.

Dan Schwab, who has been instrumental in leading the charge into new emerging technologies, said the cultural characteristics that have powered the company since its founding in 1918 are driving it into the future into new areas like artificial intelligence and the Internet of Things.

"For D&H the common denominator that has made us successful in the past and will also make us successful going forward is our cultural rudder that is leading us into the future," said Dan. "At D&H we have a culture, our own DNA. It is about collaboration, being driven and looking around the corner for the next opportunity."

That ability to look around the corner has taken D&H from selling retread tires to the first RCA Victor Gramophone and RCA radios and TVs to the PC computing explosion in the '80s and finally to current cutting-edge products like Hewlett Packard Enterprise's Gen10 servers and Cisco Systems' Meraki cloud-managed wireless platform.

"When you think of the dynamics of our industry, we have to be very nimble," said Dan. "We want to continue to evolve every month, every week, every day. We are big believers in challenging the status quo and looking to the future."

Even as the two co-presidents chart the course for future growth with department heads and co-owners, they are forever focused on making sure that what they call the 100-year-old "Rock of Gibraltar" foundation of doing the right thing for employees, vendors and customers does not change.

"The people at D&H are our No. 1 asset and always will be," said Michael Schwab, who started working for the company as a sales rep 29 years ago. "I describe them as 'engaged problem-solvers.' They are engaged with customers, but they are also empowered to solve their problems. People sometimes forget that business is people-to-people. It is relationship-driven. That is how business gets done."

Getting business done means investments in technology solutions for SMB-focused solution providers. Those include a rep for every single D&H customer, free pre- and post-sales engineering support for complex solutions deals, and even deal registration input for partners.

D&H has filled a growing gap in the market, said Dan, taking its SMB partners into complex solutions as competitors grappling with market consolidation have become more focused on the enterprise. While rivals would rather sell 1,000 products to five solution providers, D&H would rather sell five products to 1,000 solution providers, he said.

"We are filling a void on behalf of our vendors to educate, train and empower our resellers to sell more advanced technologies," Dan said. "Our resellers look at us more as their trusted advisers than as just a source of technology products. We are training them in the latest technologies from HPE, Cisco and others. We are giving them technical training and even helping educate their customers on these solutions. It really is a cradle-to-grave mentality to help them deliver these more advanced solutions."

That mentality means listening closely to partners, vendors, customers and employees. Some of the best ideas powering the company into new opportunities have come from employees in the sales, support and warehouse trenches. The co-presidents meet regularly with the company's co-owners to ensure they aren't encountering roadblocks. There are "Pizza with the Presidents" lunch sessions and breakfast meetings aimed at getting candid feedback on what changes co-workers would like to see. And every Friday morning, Dan and Michael, along with Izzy, preside over a two-hour session with the top 12 department heads to get the "good, the bad and the ugly" on what's working, what's not and what new opportunities are on the horizon.

"The best practices for us are coming from ideas that every customer-facing employee shares with us so we can move forward into the future," said Michael. "What we see is a lot of defining moments where a customer has a need and we are able to solve it because we have pushed that responsibility down into the organization."


The D&H Culture: Going Above And Beyond For Partners

Pushing that responsibility down into the organization has created a unique culture. Seventy percent of the company's phone calls are outbound-focused sales calls with partners. D&H now has more than 200 sales reps, including industry specialists with an average tenure of nine years on the job, working the phones to create and drive demand for technology solutions.

Pat Donovan, director of inside sales for D&H who recently celebrated his 30th year with the company, said the sales culture is focused on building one-to-one personal "long-term" relationships and an all-around better partner experience.

"Every one of our accounts -- whether they have bought dollar one or are a multimillion-dollar account, has a dedicated sales rep here," Donovan said. "We are always adding more value. We are entangled in our customers' growth. They look for us to be proactive in bringing them new products, building solutions and servicing their customers."

The D&H DNA of passion for the customer -- built in large part from the ESOP -- is a competitive advantage, said Donovan. It results in each of the company's employees going above and beyond to help customers -- from solution architects working long hours on weekends to help customers activate Chromebooks before the start of the school year to pre- and post-sales solution architects taking hours and hours to spec out complex, custom SMB solutions.

"We are not a public company, we are an employee stock ownership company so we can look at things in ways that allow us to build long-term relationships," said Donovan. "We are not always chasing a number. We don't look at it as a cost. We can spend more time with that VAR that is the long tail of the channel. We are not in it for today's sale. We are in it to help the customer grow. When they grow, we grow. That has always been part of our mantra. We are focused on helping SMB VARs understand the market, put solutions together and grow their business. The D&H DNA has always been if we can keep our customers happy, keep our vendors happy and keep our employees happy, the business itself is going to win."

D&H is investing broadly in the SMB VAR business, said Donovan. The company has more than doubled the technical talent working with partners over the past several years and has added new "hunters" aimed at providing dedicated sales support to help partners close deals. Another significant investment that is attracting a lot of attention from partners recently is a new D&H Device-as-a-Service offering, said Donovan.

"We saw a lot of interest in that at our recent West Coast technology conference," he said. "It is just one more example of adding resources, changing and continuing to move forward and add value. You have to keep investing."

David Allen, director of platform and distribution sales for the Americas at Santa Clara, Calif.-based Intel, has worked with D&H for two decades. He said it is the "personal touch" from the top executives down starting with Dan and Michael that differentiates D&H. "Every vendor and customer has a story about D&H," he said. "It is so unique and special. They listen and try to make a difference in what they do every day."

Intel sees D&H as the go-to SMB distributor that can move fast to power an innovative new technology into the market like Optane or the NUC mini-PC. "What I love about D&H is they know that new technology is their bread and butter," said Allen. "Being first to market gives them a competitive advantage. They are unsurpassed in their ability in the marketplace to have an impact on the long tail of the channel. That is who they are."

Allen credits Dan and Michael for bringing new solutions capabilities to the fore by bringing on former Ingram Micro 25-year veteran Peter DiMarco as vice president of VAR sales three years ago. DiMarco has upped the solutions ante, adding new talent and programs without messing with the unique, individual sales rep that knows your account culture, said Allen.

"It's a model that continues to work for bringing new technologies to market," he said.


Staying Ahead Of The Technology Curve

Solution providers, for their part, say D&H's increasing technology prowess combined with the personal touch is helping them significantly grow their business and break into new solutions territory with key vendors like HPE and Cisco.

Treysta Technology Management, a Gettysburg, Pa., managed service provider, recently won a blockbuster hyper-converged solutions deal with Legacy Athletic, a vintage athletic clothing provider in Hanover, Pa., by teaming with D&H.

Henry Grossman, vice president and chief information officer for Treysta, credits D&H HPE Business Development Manager Chris Rigas -- an HPE tech rock star -- for bringing his company into uncharted hyper-converged solutions territory.

"Chris really stepped up and helped pull this thing together," said Grossman of a solution that packs the same technology punch as enterprise-class offerings at a breakthrough price. "He designed it and helped guide us down the road to make sure it was the right fit for the client. He really came through and worked with our entire team from the top of the org chart down to the implementers. He really went above and beyond."

The cutting-edge solution teamed an HPE DL380 Gen9 fournode server with a Microsoft Storage Spaces Direct cluster and an Aruba backplane. "It's a Ferrari -- no doubt about it," said Grossman. "The customer loves the scalability of the solution. I don't think this deal would have happened or we would have designed it this way without D&H's guidance."

D&H's ability to stay ahead of the technology curve is key to helping Treysta grow the business.

"Leveraging D&H's technology know-how and resources is what is going to allow us to continue to grow," he said. "They see things coming down the pike that may not even be on our radar. They are absolutely a partner."

Julia Stewart, vice president of sales for Southern Computer Warehouse (SCW), a national solution provider based in Marietta, Ga., said over the course of the past decade D&H has become a bigger player in the complex solutions market with the likes of HPE and Cisco. In fact, D&H has helped SCW

significantly grow its Meraki business in large part due to the caliber of the distributor's "engineering smarts and talent," said Stewart. "In my opinion, they really hold their own against the Ingrams, Tech Datas and Synnexes of the world."

Another big advantage for D&H versus the competition is its ability to build long-term relationships in the field, said Stewart. "In this industry, there is so much turnover, products are constantly changing, technology is constantly evolving, and distributors get bigger, which usually means your sales reps are in flux a lot of the time," she said.

Not with D&H. "In the 11 years I have been here, the entire time I have had one inside sales rep -- Brandon Reeder," said Stewart. Reeder, in fact, has become a "celebrity" at SCW because of his passion and commitment to helping SCW grow the business. When Reeder visited SCW several years ago for the company's annual July 4 employee appreciation celebration, he received a standing ovation from SCW employees.

"Our entire team was super excited," said Stewart of the Reeder visit. "You would have thought a celebrity was coming. We baked cookies for him and gave him gifts. He turned bright red and was embarrassed, but we wanted him to know how genuinely excited we were to see him. He walked in and it was like the president came to town. It was pretty funny. That speaks to the relationship we have with Brandon."

That relationship has taken the percentage of distribution business being done by SCW through D&H from about 5 percent of its business a decade ago to as much as 30 percent, said Stewart. "They have really done a great job of bringing people on board that have a passion for what they do," she said.


Looking Forward To The Next 100 Years

As D&H looks toward the next big technology shifts, Dan Schwab said the distributor's status as a privately held, employee-owned company bodes well for partners. "As the world changes with the technology and business environment moving at a faster pace, I think that feeds into D&H's strengths," he said. "If you are a public company with quarterly earnings calls, your top priority is responding to shareholder equity. At D&H our top priorities are taking care of our customers, vendors and employees."

That long-term focus gives D&H a markedly different investment horizon in the business than distribution competitors.

"We invest well ahead of the curve in future business opportunities -- –well before any other distributor because of the ROI timeline on these technologies," said Dan. "We think the ROI is positioning ourselves for the future, which you can't measure. Looking ahead another 100 years is a long time, but when we look out 10 to 20 and 30 years we know the products we sell will be vastly different. But what won't change is the way we do business with thousands of resellers that are automating small and medium businesses across North America -- leveraging technology to make those businesses more productive, cost-efficient or more desirable to their customers."

Michael said D&H has and always will succeed by doing good for all its constituencies -- from employees with ownership in the company to technology vendors with strong programs that drive share gains to partners by helping them embrace new technologies and even the community with D&H Cares, its philanthropic arm.

"We are the Rock of Gibraltar," he said. "There are going to be small waves and big waves, the climate is going to change, the economy is going to change. But we are going to be here to support our vendors, customers and employees along the way."

Michael, whose son Brandon joined the company in 2017 as a PC gaming and higher-education specialist, said the continuum is the D&H DNA passed from one generation to the next. "We had it in the first generation, Izzy had it, Dan and I have it, and we are making sure that culture is passed on to the fourth and fifth generations and beyond."

Izzy, who led the charge into the commercial technology market in the 1980s, said he couldn't be prouder of Michael and Dan and the contributions they have made to ensure that D&H continues to move forward into the future -- always with an eye toward improving the partner experience. "I don't know of a bigger word than 'proud,'" he said. "They fit in from day one and they have taken this company to a new level well past anything I would have imagined or that I could have done."

Michael and Dan say they are just emulating what Izzy and his father had done before them. "We feel a tremendous sense of responsibility," said Dan. "We are stewards for the company and the company's employees."

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