Within just a few years of starting FedEx, Fred Smith faced a critical moment that would determine the future of his company. What began as a bold idea written in a college term paper had quickly grown into a real business, but by the mid-1970s, FedEx was on the brink of collapse. Smith made a gutsy decision to save his company, which involved a gamble.
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Smith founded Federal Express in 1971, inspired by his idea in 1965 while studying at Yale. In his term paper, he proposed that companies could significantly speed up delivery times by changing their shipping strategies. However, Smith's professor didn't see the potential and only gave him a "C" for the paper. But Smith wasn't discouraged. After serving two tours of duty in Vietnam as a Marine, he returned to civilian life with renewed determination.
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In 1971, Smith bought a controlling interest in Arkansas Aviation Sales. Here, he truly understood the challenges of shipping goods quickly and realized that his Yale term paper idea could be the solution. By 1973, FedEx was operational, providing overnight delivery services across the United States. The company grew rapidly, but as fuel costs soared, FedEx drowned in debt.
By 1974, the situation was dire. FedEx had just $5,000 left in its bank account, and Smith's efforts to secure more funding were repeatedly rejected. Bankruptcy seemed almost inevitable. However, Smith wasn't ready to give up. On a fateful trip back from a failed pitch to General Dynamics, Smith made an impulsive decision that would change everything. He detoured to Las Vegas and took the last $5,000 of the company's funds to the blackjack tables. Smith won $27,000 – enough to keep FedEx afloat for a little longer.
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“The $27,000 wasn't decisive, but it was an omen that things would get better,” Smith later said about the gamble. This unexpected win gave him enough breathing room to raise another $11 million in funding. With this new capital, FedEx weathered the storm, and by 1976, the company's revenue had climbed to $75 million. Two years later, FedEx went public, solidifying its place as a major player in the shipping industry.
By 1983, FedEx had hit $1 billion in revenue. Today, it's a global logistics powerhouse, generating nearly $70 billion annually. Reflecting on his journey, Smith once wrote in a Forbes essay, “No business school graduate would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career.”
Smith's willingness to take calculated risks, combined with his deep commitment to his employees and vision, turned FedEx into one of the world's most successful companies.
Sometimes, when the odds are stacked against you, a bold move can make all the difference. So whether you’re thinking about your own business or just looking for some inspiration, remember that a little bit of "crazy" might just be what you need to succeed.
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