How AI Can Help Electrical Distributors Save Time and Money

The following is a transcript from an interview Canals co-founder and CEO, Michael Delgado, gave to Electrical Wholesaling's Editor-in-Chief, Jim Lucy, in June 2026.  Follow Electrical Wholesaling for more expert market analysis of the electrical wholesaling industry.

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Electrical Wholesaling Podcast Transcript

Jim Lucy: Today, we'll be talking with Michael Delgado, the CEO of Canals, which provides AI-powered tools to help distributors eliminate manual processes in their billing, purchasing, and other operational tasks. Michael wrote an interesting article for EW back in April, and over the past few years he has become a very familiar face of electrical marketing events as he meets with a growing roster of well-known electrical distributors who want to learn more about how to incorporate Canal's AI tools into their daily operational systems. Michael, welcome to the podcast.

Michael Delgado: Thank you for having me. Great to be here.

Jim: How and why did you pivot into AI? What interested you about the AI field?

Michael: I wouldn't describe it as a pivot. I feel like there's been a theme. So let me start on the academic side. I feel like growing up you hear older successful people, for example in commencement speeches, saying, "Do things that you're passionate about and that you're really interested in, and the rest will work out." And I was bold enough, or naive enough, to say, "You know, I'm gonna do that. That sounds really nice. So I'm actually going to try that."

In college I studied neuroscience, which I think was the beginning of my intense fascination with intelligence and the brain and learning—and obviously AI is artificial intelligence. So the story kind of starts there, where I was like, this is just really interesting, I want to know how learning works and how the brain works, and I'm just going to do that and the rest will, I hope, work out.

Anyway, I studied that in college, and then yes, I did go to law school, and then I practiced law for a little while in a corporate context. I wasn't doing litigation, I was doing corporate law. And there again it was, I just want to understand how this stuff works. At the end of the day society moves on commerce, and commerce runs on contracts, and society also works on law—we have a constitution. How does all this really work? What does it look like? So I was always following curiosity and wanting to do interesting things.

I was at a big law firm, and when you're at a big law firm you get to see a lot of cool stuff at a young age. You're not necessarily playing a big role in it, but I was the young associate in the background watching business deals happen, and I was inspired by the business principles, by the people who were there on behalf of the companies they had founded. I was like, that is really energizing and interesting—that someone goes out into the world and says, "I'm going to solve problems and build something."

So that was the start. Once I started to feel like I wanted to do that in my career, I had the opportunity to join a startup that was fresh out of the Silicon Valley incubator Y Combinator, and that startup was building essentially TurboTax for estate planning—a website where the average person can make an estate plan. Estate plans are legal documents, and they needed a lawyer, so I joined this legal tech company as the lawyer. Because it was so early, it was a few people in an apartmen, as happens in early-stage startups, I got to do more than what my title suggested. I started doing product management, growth and marketing, operations, lots of stuff. That's where I cut my teeth as a founder, if you will. I wasn't technically a founder of that business, but I played a key role in building the products there, and I was passionate about it. I thought this is a blast.

Fast-forward to summer of 2022, I was in a place where I felt like, okay, I think I could actually build something and solve problems, where I could start the business, where I could be the founder. And my wife is a wholesale distributor. She started a small distribution business with her dad. That's grown quite a bit—not so big that you'd read about them in the industry press, but two decent-sized warehouses. Seeing her operations, and more importantly being in the part of the city that every city has—that part that's just warehouses that go on forever—that's what got me interested in wholesale distribution specifically. What's going on in this part of the economy?

It's funny—someone like you, and now me, when you're in this industry you think it's at the center of everything, because it kind of is. But when you don't know about it—and most people don't know about it—you just don't know about it. So it was very eye-opening. I just started talking to a lot of wholesale distributors, doing cold LinkedIn outreach. Maybe you or some of your listeners have a message from me from the summer of 2022—"Hey, I'm an entrepreneur, interested in learning and solving problems." Some people responded—very few, maybe a one percent response rate. But I started talking to folks and hearing about their problems.

At the same time I was keeping up with advancements in AI, and the stars aligned. I thought, I think I could do something about these problems folks are raising, in particular around tasks that require a lot of rote data entry. And this came up the most in the beginning around sales order entry. So that's the evolution from my academic background into now running an AI company.

Jim: What was it about the electrical business? Why electrical? Is there anything about the processes, or just context, that made sense for you?

Michael: I talked to folks across a lot of different verticals in the beginning, and electrical seemed the most ready to act on the need. A lot of folks talk—and still talk—about the need, but the folks I met in electrical in particular... I've shared the story publicly about how our first customer ever was United Electric Supply. I met George Vorwick at the NAED conference and said, "Here's what I'm starting to work on—is this interesting?" And he said, "It's definitely interesting, there's a need here." He and a few others were the most ready to actually act on that interest.

I think it's funny, because folks in electrical will tell you every vertical feels this way—"oh, we're behind, we're tech laggards"—but electrical I found was actually the most advanced technologically, in the sense that there had been efforts over time to try to solve problems with technology, to have better data and better integrations across parties. Nobody would say it's all perfect, but there was that effort.

The other thing is, in electrical—and this is true in the other trade verticals too—especially when it comes to sales and our sales order entry product, a lot of electrical distributors work with a lot of contractors. When contractors ask for stuff, they're often sending that request to a few distributors, and the winner of the business isn't necessarily the best price—sometimes it will be, but it's often whoever gets back to them the fastest and most accurately. So our tool was especially helpful in that context, for electrical distributors who work with a lot of contractors.

Jim: And that's what I was wondering about with the processes—going back to some of the earlier days of IDEA, where they were looking at the number of fields for a product. Is there such a thing as a typical number of SKUs a distributor has, and the contractor process itself when you get into quotes, billing, and estimating? I didn't know if there was anything there that was ripe for improvement, based on your knowledge of AI.

Michael: No. It was just that those efforts existed that signaled a willingness to take action and try things.

Jim: As you got going—and I remember meeting you early on, I mentioned this when we chatted a couple months ago—I was so impressed because I could see you having to work the room, and I thought, that's got to be hard, dealing with... not knowing the business. And I do see electrical as tech-forward, understanding the efforts in IDEA and other things. But I still think, that's got to be hard—here's someone coming in fresh. I didn't know you had the whole background with your wife's company already researched. But I remember watching you work the room and thinking, that guy's got a little spunk, he's got the spark, he knows what he has to do to get known in the business. Doing the right things right, I guess.

Michael: Yeah, I appreciate you saying that. It's funny, I vividly remember that time and those early conferences, because I was filled with self-doubt—asking myself, what are you doing here, you don't know people. And my internal dialogue was, yeah, but you're here to meet people, and this is such an interesting problem to solve, and market.

It's funny you ask about my legal background—around that time I was starting to go to NAED and other trade shows, my friends and peers from law school were getting their big jobs in law, and there I am working the room. I think we could do this, I think there's something here. It was fun, but also terrifying at the same time.

Jim: Was there a moment when you said, "Hey, this is going to work?" You got over some initial hump where you thought, I think I've got this, this company is interested, this is going to work with other customers in this business?

Michael: It's funny, when you ask that my initial reaction is to say it always feels like day zero here—never satisfied. But not to overstate it, I think in the beginning, when we first started working with United Electric and they started telling their friends, and their friends started reaching out, and we started having good conversations with those folks and getting that organic word-of-mouth growth—that's the ultimate signal that you're actually creating value in what you're doing, where people are coming to you, raising their hand and saying, "I'd like to try this because this is a real need we have."

Those were some of the most exciting days in the beginning, because at that point my co-founder and I were a year into the business and not making any money—we hadn't raised any capital. Just working at it, and you never know—it could have all not worked out. We still feel that way. We're more established now, obviously, operating from a good place, but I'd be lying if I said otherwise.

Jim: Well, that was a great contact to make—I mean, just having known Electric Supply over the years, they've always been very willing to try new technology. I think it's the culture there, honestly. I know George recently retired, but I've known some of the other folks who were in his seat before, and they always had that willingness—they were tech-savvy, willing to try different things.

Michael: Yeah, they're very bold in that way. But it's funny you say that, because on the one hand that was very helpful for us getting started—on the other hand, you didn't know how much significance to assign, because if they have the reputation of trying all kinds of things, you wonder, is this just a trial, an experiment? How much can you read into this actually starting to work? So there was still that question. But now we know it worked out, and they're one of the... they're extremely impressive as an operation and forward-thinking, so they've been a great partner.

Jim: When you're out talking with distributors—senior executives, IT folks, or a combination—are there similar "aha" moments where the light bulb goes on and they get what you're trying to say? Is it early on, the same points in the conversation?

Michael: In many cases our challenge is explaining that this isn't too good to be true—it is true. It's not that the distributors we talk to haven't wanted, for a while, a world where technology can help them automate this routine data entry work to free up their people for higher-value work. They've been after that for a long time, and they view themselves as being on a journey, always looking for opportunities for technology to help them continuously improve.

In particular, around the workflows we operate on—sales and customer service, sales order entry, finance, accounts payable, accounts receivable, purchasing and receiving—they've often already tried, or thought about, or looked at tools to solve those problems, and those tools just didn't quite meet the mark. So it's not like we're saying, "imagine if this were possible"—they've already imagined it's possible, and we're saying, "we actually do it. We know you've been burned before, but we actually do it—you can ask your peers."

But to answer your question more directly—the magic moment is when they actually use it. We'll just spin people up and say, "Just try it." Especially in electrical, a lot of folks are on Eclipse, or Prophet 21, or Infor SX, or CSD, or M3, whatever—we're so fast at integrating with it, we say just try it, do a risk-free pilot. And the magic moment happens fast, within days—they hear from real sales reps, real AP clerks, "This thing just saved me ninety percent of the time on this task." That's the magic moment.

Jim: When you say run a pilot, do you do it by product group, customer group? What kind of pilot works for people giving Canals a shot?

Michael: Most folks will pick a group of people—a handful of users, often from the same region or branch—and say, "You guys..." It's a mix of some folks who are more tech-forward and very productive, but also a mix of people who are very productive but maybe not so tech-forward, because they want to see, is this really going to land with different people across the board. So it tends to be a sampling, definitely skewed toward tech-friendly, but a sampling of people where it's, "You few, take this thing for a spin"—for a few days or weeks. And that usually goes quite well for the partnership, because we deliver.

Jim: Smart. If you use a baseball analogy with AI and what you see in the industry now—you're covering a lot of the key processes that could be optimized. Where do you think you're at? Is there a lot more that could be done once you get deeper within these processes?

Michael: I think so. To use a baseball analogy, I think we're in the first inning—but it kind of depends, because AI is a fundamental technology. It's almost like being in the year 2000 and asking what inning you're in with software. It's such a big thing, and some of what it can do you can't even imagine yet. So not to dodge the question, but the answer has to be first inning, because it's such a fundamental technology, and it's just going to continue to be able to do more and more.

We're very early. Our breadth today is pretty wide—we cover a lot of the key workflows—but I think there's a lot more depth to go. And I also think the world is going to change in ways we can't imagine, in how distributors interact with their suppliers upstream and their customers downstream. So yeah, it's early days.

Jim: I've always thought there's been so much focus in the electrical wholesaling industry—a lot of it thanks to volunteer efforts—on what IDEA has done with data synchronization, good clean data. But a lot of that's been distributor-to-manufacturer. I always wonder if the next frontier is distributor-to-customer—estimate systems, quote systems, things that haven't been done in as much depth. I know Trade Service made some attempts, others have too, but that seems like a very open area for the kind of things you're talking about.

Michael: Totally. Those organizations are doing important and valuable work, and their customers find it important to get clean product data for all kinds of reasons. But one of the key things about AI is that it can work with really bad data—that's one of the big unlocks. We find when we're talking to new prospective customers, sometimes they have this idea, because they've been hearing it for decades, that you have to clean up your data to get the full benefits of these technologies. One of the key points about AI is that's not actually the case anymore—AI can overcome that. Sometimes you write "BLK" for Black, other times you spell the word out, other times you just say it—that doesn't matter, an AI model can be smart enough to work with that.

Jim: That's something that really trips up existing systems, exactly the scenario you described.

Michael: Exactly. That's one of the key things about AI as opposed to traditional software—you're not writing rules for every scenario anymore, where you need either a bunch of rules or really good data to have fewer rules. The exercise now is having models that can reason through situations the way a human does.

Jim: You mentioned distributors talking amongst themselves about Canals and recommendations—do you have a formal users group, or could that work for Canals in the future?

Michael: Definitely. We don't have one yet, but we're going to. I'd bet that by this time next year we have one. It's come up with customers, and we're excited to do it—we just want to make sure we have the capacity and resources to do it well. Everything we do is in collaboration with our customers. Every new product we build—we're not in the lab thinking we have all the answers. We're in the warehouse, responding to actual needs, things we discover while we're out there. Responding to things our customers bring to us—"can you help with this, can you help with that"—that's our favorite thing to do, and that's how this business was built: responding to customers' actual needs. Sometimes we're the ones who come up with the solution, but the problems are real problems—we're not a solution looking for a problem.

Jim: It reminds me of a very different application of that thinking—Milwaukee Tool does something where they come out with new products, and a lot of how they come up with them isn't from thinking things up at the product development level. They send kids just out of college out to job sites to watch processes, talk with contractors—"what can we do better, if we put a reverse button on the left or right side, is that easier for you?" That little thing—because they're out there talking with people and letting them do the inventing, in a sense. It sounds like you're doing very much the same, but with AI-powered software.

Michael: A hundred percent. That's absolutely our MO, and I wouldn't have it any other way.

Jim: As the company matures over the next year or so, maybe six months, do you see yourself expanding into other distribution niches, or other areas within electrical—the website, processes for manufacturers or contractors? Where are you headed, what are you looking at in the short term?

Michael: All of the above, really. Everything we do is in collaboration with our customers, and historically our customers are distributors. They come to us with new problems that are deeper into things we already do, but more complex scenarios—six months or a year from now we'll be solving more of those. They also come to us with problems or opportunities for how they can transact better with their counterparts—suppliers, manufacturers, reps, or contractors. In many cases they've started introducing us to those other folks and said, "Can you help us do this or that better together?" Help the manufacturer do statement reconciliation better, help us keep track of ship dates with contractors. Order entry automation is great, but what if we were just transacting in data in the first place—can you help us integrate with our contractor's tool, or provide them with a tool? All of the above.

I should say, on the AI front, five years ago, if we were still in a purely software, non-AI world, we'd look like we're trying to do too much. We not only provide AI tools to our customers, but we use the latest and greatest AI that comes out and incorporate that into the way we work, and that's a key part of how we're able to do so much.

Jim: You mentioned you recently got funding from Base10 Partners—thirty-five million. How are you going to apply it to Canals? Where do you think it'll help most?

Michael: All the things I just said, honestly. My co-founder [Erez Arnon] and I started the business completely ourselves, with our own money, and we took it to a pretty far place—way further than most companies get without outside funding. We're very proud of that, because we wanted to keep ourselves honest—not that taking funding means there's something dishonest, but we wanted to say, are we actually solving customers' problems enough that they value what we're doing and will pay us, and that that will sustain a business. And we did that.

Some companies, especially young Silicon Valley-type startups, measure all their milestones in funding rounds—you raise your seed round, then your Series A, and obsess over that. We are not like that. The capital we've raised—Base10 is a great partner, they really understood this space, they understood the importance to us of being so focused on our customers. If they didn't, that would've been disqualifying, but they did, and they've shown to be great partners since then.

So I'm proud of that, and the capital's going to be a great tool to continue solving customers' problems. Literally every single day customers come to us and say, "Can you help with this, can you help with that, can you add this functionality, can you add this whole new product, can you help us with this workflow?" And we wish we could say yes to everything—we say yes to as many things as we can. This capital's going to help us say yes to more things and do more, faster. It'll go toward hiring more engineers, being more aggressive with how we use AI tools to increase our productivity to solve these problems. It's good to have capital—it's a tool in business—but it's back to work on solving problems.

Jim: I know you're so involved in day-to-day problems, distributors coming to you with things to invent, but if you could look further down the road—a year, two years, three years—how might Canals be different if we sat down again?

Michael: I think, like I said earlier, in the workflows we already work on today we'll be handling many more situations, and I think we'll be handling many more workflows in the first place—both breadth and depth. If you go twenty-four months out, there are a lot of people whose whole job is to think about the future of technology in general, and smart minds disagree on that, so it gets harder to see. But at the end of the day, we're a team of over a hundred people now, and about three-quarters of that is engineers. We're using the latest and greatest technology all the time to continue solving these problems, and that will continue to be true. It's hard to see with much granularity past eighteen to twenty-four months from now, given how fast the technology is changing.

Jim: You bet, I can totally see that. Enjoyed spending time with you, Michael—best of luck.

Michael: This was fun. I really appreciate the opportunity to come speak with you. Thank you.