For those in a hurry
- FedEx was founded by Fred Smith in 1971 based on an idea he had in college.
- The company faced financial difficulties in 1974 due to rising fuel costs and low revenues.
- Smith took the company’s last $5,000 to Las Vegas and won $27,000 playing blackjack.
- FedEx founder gambled and they survive for another week and raise more funds later.
- Today, FedEx is one of the world’s largest shipping companies with over $26 billion in revenue.
FedEx founder gambled his last money in Las Vegas
FedEx is a global leader in express delivery services, but it wasn’t always so successful. In fact, the company almost went bankrupt in its early years.
The story of FedEx begins with Fred Smith, who wrote a term paper in 1965 while he was an undergraduate student at Yale. In his paper, he proposed a new way of delivering items faster by using a network of airplanes and trucks. His professor gave him a C, saying that his idea was not feasible.
Smith didn’t give up on his vision. After graduating from Yale and serving in the Vietnam War, he bought a controlling stake in an aviation company in 1971. He renamed it Federal Express and launched his new delivery service in 1973.
However, Smith soon faced many challenges. The fuel prices were rising, the regulations were strict, and the customers were scarce. By 1974, FedEx was losing millions of dollars every month and had only $5,000 left in its bank account.
Smith tried to get more funding from investors and banks, but he was turned down. He even approached General Dynamics, a major defense contractor, but they refused to help him.
Desperate to save his company, Smith decided to take a risk. He flew to Las Vegas with the last $5,000 and played blackjack at a casino. He hoped to win enough money to pay for the fuel bills for his planes.
To his surprise, Smith won $27,000 at the blackjack table. He wired the money back to FedEx and returned to Memphis. The gamble paid off. It gave FedEx enough cash to operate for another week and buy some time to secure more funding.
How the gamble changed FedEx’s fate
The $27,000 that Smith won in Las Vegas was not enough to solve all of FedEx’s problems, but it was a sign of hope. Smith said later that it was “an omen that things would get better”.
And they did. Smith managed to raise another $11 million from investors by showing them his business plan and his determination. He also made some changes to his operations, such as reducing the number of planes and increasing the number of packages per flight.
By 1976, FedEx had reached $75 million in revenue and became profitable for the first time. Two years later, it went public and raised more capital. By 1983, it had reached $1 billion in revenue and became the first U.S. company to do so within 10 years of its founding.
Today, FedEx is one of the world’s largest shipping companies, with over 146,000 employees and over $26 billion in revenue. It operates in more than 220 countries and territories and delivers millions of packages every day.
Smith is still the CEO and chairman of FedEx, as well as a part owner of the Washington Redskins football team. He is widely regarded as one of the most innovative and visionary entrepreneurs of our time.
Conclusion
The story of how FedEx founder gambled his way out of bankruptcy is an inspiring example of how one can overcome adversity with courage and creativity. Smith’s gamble was not only a bold move, but also a smart one. He knew that he had nothing to lose and everything to gain by taking a chance on his idea.
Smith’s gamble also shows that sometimes success depends on luck as well as skill. He could have easily lost all his money in Las Vegas, but he was fortunate enough to win enough to keep his company alive. He also recognized that luck alone was not enough to sustain his business. He worked hard to improve his service and attract more customers.
The lesson we can learn from Smith’s gamble is that we should never give up on our dreams, even when they seem impossible. We should be willing to take risks, but also be prepared to work hard and adapt to changing circumstances. We should also be grateful for any opportunities that come our way and make the most of them.
