CRN Interview: D&H's Dan And Michael Schwab On Driving Billion-Dollar Growth And Employees Being Their 'Number-One Asset'


Since D&H Co-Presidents Dan (pictured, far right) and Michael Schwab took over day-to-day operations a decade ago, the distributor has grown from a $1.45 billion company with 850 employees into a $4 billion company with 1,250 employees. During that same time, the value of the Employee Stock Ownership Plan has grown 300 percent.

That growth has come as the two tech-savvy brothers bring their own strengths to the partnership, with Dan as "Mr. Outside" focused on marketing and Michael as "Mr. Inside" focused on operational metrics—and both of them focused on driving sales growth.

CRN spoke to Dan and Michael about the investments D&H Distributing is making as it celebrates its centennial and looks toward the next 100 years.

What are the key traits that the company is leveraging to drive the next 100 years of growth?

Dan Schwab: 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. 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. It is about customer service at all costs. Everything we do is based on our foundation. So when we look at the future, the things that got us here are really our core tenets. That foundation of our business does not change. The technologies change. The products change. The vendors change. But our core characteristics ultimately remain the same.

It has a lot to do with the fact that the decisions we make are driven at all levels of the company. Because we are employee-owned, everyone is involved in the character of the company and the culture. They all have a voice in making sure that what made us successful in the past continues to evolve for the future.

What are the key traits that the company is leveraging to drive the next 100 years of growth?

Michael Schwab: The people at D&H are our No. 1 asset and always will be. I describe them as 'engaged problem solvers.' They are basically engaged with the customers but they are also empowered to solve their problems. People sometime forget that a business is people-to-people. It is relationship-driven. That is how business gets done. People sometimes want to defer and default to the internet and online ordering. But the reality is you have got to develop relationships at every level with the customers and manufacturers we work with. And giving that empowerment to the front-line employees working with customers has and will continue to be a huge differentiator for D&H.

When you think about what we do today for the customer, it is being their advocate. Support of the reseller is part and parcel of everything we do. It is ingrained in our roles and responsibilities. But just as paramount today is our ability to be an educator for our resellers with regard to the technology. The opportunities have become voluminous. The information flow has been ominous. We are helping resellers separate fact from fiction to get the content that is going to be the most impactful for them to grow their business. That rests on our shoulders. So today we do that through seminars, webinars and our events and trade shows. We have become conduits for education, which is one of our foundational tenets that is extremely relevant to our customer base today. Passion is one of the great aspects of our DNA. We hire people that don't look at this as just a job. They are passionate about D&H and they look at this as a career. That is a different way to approach their responsibility.

What are some of the things that make the D&H culture unique?

DS: Regardless of their size, every single customer gets a dedicated sales rep who knows their name, their spouse's name and their business model. Whereas our competitors primarily make these partners buy online, or put them in a pool being served by telemarketers in another geography and every time you call you get a different person.

It is not trying to sell a widget. It is trying to figure out, 'How do I help that reseller become successful?' It is just a complete dichotomy with regard to how we go to market versus other distributors. 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.

What are some of the things that make the D&H culture unique?

MS: One of the things we have done is create a mentoring and on-boarding program for new hires. New employees get a passport where they sit with every department in the company. They visit the warehouse, sit with sales, marketing, warehouse, purchasing, accounting. No matter what department they are hired in, they get experience with all the other departments. We think if they understand the whole business they will know how to go solve customer problems. They build a rapport and relationship with others they will be interacting with.

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. 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.

What is the D&H DNA?

DS: It is all about the people. We sell a lot of products. We do a lot of things. If we hire great people and really put our customers on a pedestal with a customer intimacy business model, that is the formula for success. Everything can change. The one constant is the people. It is basically being a servant leader to our employees, customers and our vendors -- listening to what they want. Don't do what you think is important. Do what your customers, vendors and employees think is important, and that will lead to success.

What was the thinking behind D&H's decision to expand into Canada?

DS: This is our 10th anniversary in Canada. When we entered Canada all of the other distributors complained that Canada didn't need another distributor. It needed a better distributor—someone that was going to focus on the long tail of the channel, the SMB resellers that were being underserved. And guess what? The vendors agreed. So today, companies like Cisco, Lenovo and on and on view us as a strategic partner for their Canadian business. We have hundreds of net-new resellers and we have helped them penetrate a market they weren't able to penetrate before. Next year that will be a $400 million business in Canada. That is all organic growth. We started from scratch. We opened up a warehouse and had zero customers, literally. We put our shingle on the door: 'Open For Business.' There was absolutely a need in the marketplace. There was a void for our level of service.

What will D&H look like in 100 years?

DS: As the world changes with the technology and the business environment moving at a faster pace, I think that feeds into D&H's strength as a nimble company. We are not a public company that has quarterly earnings calls with shareholders. If you are public, you are responding to shareholder equity. That is your top priority. At D&H, our top priorities are taking care of our customers, vendors and employees. If we take care of those three constituents, the shareholders of D&H will do very well. We have the luxury of not having quarters. All the planning we do is for three to five years out.

We invest well ahead of the curve in future business opportunities—well before any other distributor because of the ROI timeline on these technologies. 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.

What will D&H look like in 100 years?

MS: D&H does well by doing good. What does that mean? We do good by our employees by giving them a place to work with fair compensation and an ESOP program that gives them ownership. We do good by our community by giving back to the local hospitals and charities and supporting all the local initiatives. We do good by our customers by giving them downstream credit, educating them on new technologies being brought to market and helping them succeed. We do good by our vendors by supporting their go-to-market initiatives and carrying out marketing and sales plans that help them drive market share.

Doing well for D&H comes from doing good by our employees, our vendors, our customers and our community. I don't see that changing whatsoever. We also need family members that embrace and engage that same philosophy. 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.

We believe it is our responsibility to provide that insight. That truly has been a critical component of our success. No matter which products we sell, no matter which territories we are working in, no matter which manufacturers we are working with, doing well by doing good is our secret sauce.

We are the Rock of Gibraltar. 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.