What did founder Fred Smith do to save his company FedEx from going bankrupt in the 1970's?

In 1971, Fred Smith founded the company, FedEx, with $4 million of inheritance and $80 million in loans and equity investments. FedEx started out with eight planes, covering 35 cities, and it had plans to add more each month, but with the rising cost of fuel the company found itself in millions dollars of debt by 1973. Pilots were using their own personal credit cards and uncashed checks to fuel planes.

It was desperate times. With the company facing bankruptcy and no one willing to give the company additional loans or funds, the CEO, Fred Smith, took the company's last $5,000 and flew to Las Vegas and gambled it all on Blackjack. He came back the next week with $27,000 just enough to keep the business in operation for another week and enough time to secure $11 million in funding. Without this brazen move, FedEx would have gone out of business and gone away. It wouldn't have been the success it is today.

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67 Comments

William Laughlin

I worked for FedEx in the late 70s and early 80s and heard this story often. In Yale, he wrote a term paper outlining his idea for the hub system FedEx uses. He received a C from the professor who told him it was an interesting idea, but it would never work. He sure proved that professor wrong!

William Laughlin

d p catalano, Yes, he started with a lot of money, but he used it to build something much bigger and more valuable. He didn't just coast and live off the fortune someone else left him.

Tom Erskine

And Tom Hanks would never have been marooned in the middle of nowhere for all those years!

Haunui Royal

Fedex isn't a big deal where I come from and my family were in the States recently. driving in LA and my 7 year old daughter sitting in the back seat asked me innocently. Have you fed your ex" Not really listening I said whats that honey. Have you fed your ex recently? was the reply Hearing her this time I was a bit taken aback wondering why she was asking about my ex girlfriends. Whats that I asked again. She leaned over and pointed at a large truck just ahead of us with a large Fed Ex sign posted across the side. We all burst into laughter .

Scott Morris

Was told this when I worked for Fedex in the 90's. His annual salary was $50 million by the time I worked there.He proposed the idea for Fedex in a college paper. He got a C.The original hub was in Baton Rouge before he moved operations to Memphis

George Oliver Prince

Learned this from a FedEx driver who delivers at our company

Maureen Whitehouse

Very interesting. Did not know that. Evidently good move.

Playermele fataaikitama

William Laughlin, 😃wish someone would leave me a fortune

Playermele fataaikitama

William Laughlin, greetings from Mele in Feilding town in new Zealand 🙋😄 very interesting talk about taking things to desperate measures... spending all that money to gamble like that.the idea and move was risky Business.but great thinking it work out.