Why FedEx Bet Their Entire Company

Frederick Wallace Smith, founder of FedEx, did not get off to a good start in life. At the age of four his father passed away, and for the first 10 years of his life, Fred was afflicted with a type of childhood arthritis called Perthes disease that affected his hips, temporarily causing a loss of blood flow and affecting his ability to walk.

Thus, Fred was forced to spend his early years in leg braces and use crutches to get around. And Fred faced bullying as a child because of his condition. However by his 10th birthday Fred had overcome this, and he not only was able to walk, but within a few years began to acquire a love for flying - something that would play a pivotal role in his future success.

But during high school, Fred started his first small business, The Ardent Record Company, which he founded along with some friends. It started as a small recording studio in a garage, but eventually grew into a larger recording company which actually still operates to this day.

However Fred left the company in 1962 to go to Yale University and study economics. In his junior year, Fred wrote a term paper where he proposed a business idea that he said could revolutionize the way goods were transported. Now at the time, packages were shipped throughout the US in the cargo holds of commercial airliners, and thus delivery schedules were at the mercy of the passenger airlines. This meant package delivery times were much slower and less predictable.

So for people who had something to send urgently - for example medical supplies or legal documents, surely there had to be a better and faster way? So Fred’s idea was to buy a fleet of jets, fly in the middle of the night whilst airports weren’t busy with outgoing flights, then sort the packages at one central hub, and deliver the packages from there by truck. Fred believed this idea of carrying small high priority packages at night would mean that companies and individuals could have their packages delivered in just 1 or 2 days, much faster than the current restrictive airline schedule.

Fred was excited about his idea and handed in his college paper - however he ended up only getting a C grade from his economics professor, who told him that the idea wasn’t feasible and wouldn’t work.

This is the story of how Fred Smith built FedEx, and turned it into a billion dollar shipping empire - whilst the FedEx story is undoubtedly a business success story, it's definitely not your typical business story, as it involves 'investing' (gambling) the company's remaining funds at the casino to try and save the business.

Welcome to the crazy company history of FedEx (formerly Federal Express) by MagnatesMedia.