How FedEx Was Born from a College Paper

The shocking truth behind FedEx's origin
FedEx founder Frederick Smith, came up with the idea for FedEx in a term paper at Yale, but he got a “C” for it . Maybe he should have used FedEx to deliver it faster.


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For those in a hurry:

  • FedEx founder Frederick Smith came up with the idea for the company in a term paper at Yale in 1965.
  • He proposed a hub-and-spoke system for delivering urgent packages more efficiently than passenger airlines.
  • He launched FedEx in 1971 after serving in Vietnam and faced many challenges before becoming profitable.
  • Today, FedEx is one of the largest parcel delivery services in the world, with over 600,000 employees and 200 countries served.

The Term Paper That Changed the World

You might think that FedEx, one of the most successful companies in the world, was born from a brilliant business plan or a visionary strategy. But the truth is, it all started with a college paper.

In 1965, Frederick Smith was an undergraduate student at Yale University, majoring in economics. He had to write a term paper for his professor, Challis A. Hall, on how to improve the efficiency of cargo transportation in the US.

Smith noticed that the existing system of using passenger airlines to ship packages was not very economical or reliable for urgent deliveries. He came up with an idea for a new kind of delivery service that would use a hub-and-spoke model, where packages would be routed through a central sorting facility and then dispatched to their destinations by dedicated planes.

He wrote his paper and submitted it to his professor, expecting to get a good grade. But he was disappointed when he received an average mark. According to Smith, his professor told him that his idea was interesting but not feasible.

The Birth of FedEx

Smith did not give up on his idea, though. After graduating from Yale, he joined the US Marine Corps and served in Vietnam as a platoon leader and a forward air controller. He learned valuable lessons about leadership, logistics and operations in the military.

In 1971, he returned to the US and decided to start his own company based on his term paper idea. He raised $91 million from investors and launched Federal Express Corporation in Memphis, Tennessee. He chose Memphis as the location for his hub because of its central position in the US and its favorable weather conditions.

The company began operations on April 17, 1973, with 389 employees and 14 aircraft. It delivered 186 packages to 25 cities on its first night. However, it was not an easy start for FedEx. The company faced many challenges, such as high fuel costs, regulatory hurdles, cash flow problems and competition from established rivals. It almost went bankrupt several times in its first years.

But Smith persevered and managed to turn things around by introducing innovative services and technologies, such as overnight delivery, online tracking, express freight and air-ground hybrid service. He also created a strong corporate culture based on customer service, quality and teamwork.

The Success of FedEx

Today, FedEx is one of the largest and most admired brands in the world. It has over 600,000 employees and serves more than 200 countries. It handles over 15 million shipments every day and has a fleet of over 650 aircraft and 180,000 vehicles. It has diversified into various segments, such as ground, freight, office and logistics.

FedEx has also been recognized for its social and environmental responsibility. It supports various causes, such as disaster relief, education, health and entrepreneurship. It also strives to reduce its carbon footprint and increase its energy efficiency.

FedEx is a remarkable example of how a simple idea can transform an industry and create value for millions of customers, employees and shareholders. It all started with a college paper that got an average grade.