From tariffs to tech transitions, North American distributor D&H tackles it all head-on. In this conversation with MSP Success, D&H Co-President Dan Schwab explains how their people-powered model keeps them agile, aligned, and fiercely committed to partner success. Schwab says the company’s DNA—a focus on service—has helped it stand the test of time.
From its roots as a retreading tire business in 1918, to a distributor of Philco radios in 1929, to a provider of technology solutions to the North American channel with six national distribution centers in the U.S. and Canada, D&H has proven its ability to evolve. Schwab shares how the company’s employee-ownership model and all-in partner mindset help it move fast, solve tough challenges, and power MSP success—even in turbulent times. This interview has been edited for length.
Key Takeaways
- From tariff-driven price hikes to canceled factory-direct orders, MSPs and VARs are experiencing real pain. D&H Co-President Dan Schwab says the distributor has been working to mitigate the impact, from leaning in to inventory to having daily conversations with vendor partners and transparent communications with MSP partners.
- Schwab sees the Windows 11 migration as a major tailwind for the channel that’s helping push business forward despite market uncertainties.
- Don’t expect PE or an IPO in D&H’s future. Schwab believes being a private, employee-owned business is a competitive advantage, enabling both faster decision making and a longer-term vision.
MSP Success: D&H reported that it outpaced general market growth last year. What are the key contributing factors to that success?
Dan Schwab: I think the reason we outpaced the market goes back to the foundation of our business, that we’re a relationship-based company. We’re an employee-owned company, a family-owned business, and we’re private. A public entity or private equity [has] different goals than we have, and we really focus on relationships, both with our partners—manufacturers and customers—and our employee owners. That allows us, especially in a very dynamic market, to execute very quickly. We have very thin layers of management. We could get together on Monday and decide on a course of action, whether it be tariff related, strategy related, upgrade cycle, and then begin executing on Tuesday. So I think our nimbleness has been key and I think our model is standing out in the marketplace. Many of us sell similar products and have similar services. I think where we win out is our service levels.
Our model is predicated on what is our MSPs’ greatest need? What are they trying to solve? What is the urgency? And then how do we marshal our entire organization to run through a wall on behalf of that partner to make sure we meet and exceed their expectations? Our DNA, our focus on service, meshes really well with those partners.
MSP Success: Let’s switch to the uncertainty around tariffs. How are you helping partners prepare for impact?
Schwab: Here’s my take; it is dynamic. We lived through the Great Recession, Y2K, the first round of tariffs. We lived through COVID. I think this is just another macroeconomic event that is causing consternation, confusion, and challenges. At the same time, this is different than previous ones due to the uncertainty. We spend a lot of our time trying to minimize customer impact. Literally every single day we’re talking to our vendor partners around inventory levels, alternative solutions, costing models, so that we make sure that we’re doing our best to try and avoid fear and uncertainty.
We’ve tried to lean in on inventory. We’ve tried to do our best to be as transparent as we can for our partners. … I’m hopeful that we’ll see some positive outcomes soon as it relates to some of the countries with tariffs, but my sense is it’s not going away. That means we have to raise our game even more because the more this persists … clear communication and collaborations [are] even more important. [Ed. Note: This interview was conducted prior to the temporary deal with China that the White House announced on May 12.]
MSP Success: Has D&H experienced any supply chain shortages or price increases yet?
Schwab: Luckily, there has not been sustained supply chain challenges, because many people were expecting it. They took an aggressive stance on trying to increase their inventory that’s within North America, by someone like D&H placing a larger supply of orders to have a buffer inventory.
At the same time, there have been price increases. Some manufacturers passed on price increases right away. Other ones delayed it but then had price increases. Other ones that were able to have price increases when it became say, a 10% tariff, now that certain countries have much larger tariffs, that is much more difficult. So they’re very focused on supply chains, because they know no one could pass through a 40% or 140% price increase. That’s not sustainable, that’s not digestible. Those are mitigated by adjusting supply chains, changing where you do your assembly. Fortunately, many of the manufacturers had put some plans in place. So I think we’re seeing everyone do their best to try and help our partners.
MSP Success: Have you heard from partners that that they’re experiencing pain with this yet?
Schwab: Yes, many of our partners have experienced pain. There’s been factory direct orders that were cancelled. Most manufacturers are very, very sensitive not to having a reseller go back to end users and adjust pricing. But sometimes it’s out of their control. So I think that it has caused consternation for our partners. My sense is it’s going to continue for a while, so that’s why we’re doing everything we can to try and mitigate those circumstances.
MSP Success: D&H is certainly a testament to the ability to evolve. What do you see as the next evolution?
Schwab: What D&H prides itself is evolving every month, every week, every day. We foster this people-centric model of empowering people to challenge a status quo. The good news is people are willing to speak up because they’re owners in the company and they know that you get promoted and you get more responsibility when you challenge the status quo.
We continue to evolve regularly. We bring in new management [with] different experiences. We promote different people internally. We’re investing ahead of the curve. We try and do our best not to have shock to our organization. [D&H makes changes] in a way that we think is digestible to our organization and to our partners and we ask them for feedback throughout the way.
We love the Socratic method. We love getting different vantage points and punching holes in it so that we can evolve quickly. I think a good way of saying it is we do fast evolution. We always say we reserve the right to get smarter.
MSP Success: What does the distribution business look like going forward?
Schwab: Service never goes out of style. We believe that having people to help our partners navigate a complex world, the cybersecurity world, everything that’s going on, is more complicated every day. Hundreds of manufacturers and many of our partners rely on us to funnel that information down to a digestible format … I see that continuing.
I see us doubling down on training. We’ve seen many of our partners move upmarket and evolve their businesses … transacting with larger partners and selling more complex solutions. We love that opportunity. So we train our partners on these new technologies and then try and identify where the puck is going.
We’re helping them build out their managed security practice. If they didn’t sell videoconferencing and collaboration, we’re investing with them to train. We see more and more of our partners selling more and more advanced server technologies. And we embrace that as a way to help our partners win because it makes our partners even stickier with their end users the more involved they are. [The complicated nature of IT, cybersecurity, and compliance] has created a tremendous opportunity for our partners and kind of a rallying cry for D&H to make sure we’re doing everything we can to complement their efforts.
MSP Success: How does your cloud marketplace, which is approaching 2 million users, differ from your competitors?
Schwab: I would say ours, first and foremost, is a purpose-built platform designed with MSP enablement at its core. Our goal is to offer a streamlined experience across procurement, provisioning, billing, and support. This is what’s key: It allows partners to create custom product offerings and operational multivendor solutions.
So in layman’s terms, what does that mean? Each one of our partners is different. We had to build a cloud marketplace that was malleable to meet their needs. So that if they want to add their own services to it, if they want to modify it, it gives them complete control.
MSP Success: Are you seeing demand for AI PCs yet? And how much business do you expect the Windows 11 migration will drive for partners?
Schwab: On the AI PCs, we saw initially more demand in the consumer marketplace. On the commercial side, I think it very much happened at the enterprise. At D&H, we got new AI PCs for all of our employee owners. Why’d we do that? Because we wanted them to be able to evangelize the technology from a practical vantage point. So now we’re actually starting to see dramatic acceleration in the commercial landscape, in the midmarket, in the enterprise, and in SMB, because people are starting to figure out how to unleash the power of them now.
It doesn’t derive from large language models. It’s small language models. It’s using your own data. It just depends on the end user as to how valuable it is. … But we’re sharing best practices and white papers and success stories that the vendors are sharing with us or that we’re seeing elsewhere in the channel … I view this as a kind of [three-year] Rolling Thunder, like when people were migrating to the cloud.
And for Windows 11 migration, that is here to stay. We feel that is starting to hit a crescendo. I think the positive for the channel is, despite some reticence of businesses worrying about price increases or … how the tariffs are going to impact my business, the Windows 11 upgrade is a macroeconomic wave that every company has to do to protect themselves So we are seeing that as the tailwinds pushing everyone forward right now in a really positive fashion.
MSP Success: Private equity and VC have taken a huge interest in the channel, both vendors and MSPs. D&H remains a private, employee-owned company. Do you ever see that changing?
Schwab: I don’t think D&H would ever consider going public or going to private equity anytime. It doesn’t fit our model. Our model is based on servicing our partners. We’ve been in business 108 years. I think it’s our competitive advantage, being private. This ESOP [employee stock ownership plan] business model, where everyone shares in the success and rows in the same direction, is what I get my greatest joy from. Michael [Schwab, co-president], myself, the other leaders, we live comfortable lifestyles. And we love what we do. So that’s not something we see ourselves ever entertaining.
We have the luxury of thinking long term and I do believe it benefits our vendors and our partners. That’s the rudder that keeps moving us forward.
If you missed the last interview in our Executive Series, see Field Effect’s End Game: To Be the Only Tool an MSP Needs
