Did You Know? Fred Smith Bet it All in Vegas to Keep FedEx Alive. -

Did You Know? Fred Smith Bet it All in Vegas to Keep FedEx Alive.

“If you dare nothing, you will gain nothing when the day is over.” These wise words rang true in the mind of Fred Smith during the early days of his company, FedEx. Fred Smith, the founder and current CEO of FedEx, made a bold decision to save the company by gambling its last $5,000 and luckily turning it into $27,000. This was after he was denied a crucial business loan forcing him to go to great lengths to keep the company afloat. The money was essential to covering the company’s fuel bill, which would help FedEx stay alive for just one more week.

In 1971, Fred got the idea to start Federal Express, or FedEx, after realizing how difficult it was to send and receive airfreight in one or two days. While attending Yale University, he wrote a paper that laid out the logistical challenges that pioneering companies in the IT world face. He sought to create a shipment company that would focus on urgent shipments, thus changing the industry forever. He received a “C” on his paper from his business professor. Undaunted Fred decided to pursue his business idea.

Fred raised around $94 million to start the company, $4 million of which was his own money. Federal Express started on a decent run, but things began getting shaky three years down the line. The fast-rising fuel cost caused high operational costs, and the company was on the expressway towards bankruptcy. They had incurred an estimated loss of about $1 million in a month. The major challenge was that no one was willing to lend Federal Express additional loans.

The company only had a total of $5,000, which wasn’t nearly sufficient to keep things running. The planes needed fuel, and this amount could not cover it. Fred approached General Dynamics for a loan, but the loan was declined. This left the company at its lowest point, threatening to paralyze its operations completely.

That’s when Fred made a bold decision. Instead of flying home, dejected and almost out of business, he headed to a Las Vegas casino. Fred took the remaining $5,000 and gambled on blackjack, winning $24,000. FedEx now had enough to cover the fuel costs and keep the planes flying for a few more days. When questioned about what was going through his mind all that time, he responded by stating, “What difference does it make? Without the funds for fuel companies, we could not have flown anyway.”

This marked the beginning of a new era in the company’s history. As it turned out, FedEx only needed a few days to get things back in control. Fred was quickly able to raise a total of $11 million, which was sufficient to keep FedEx afloat.

In 1976, the company made $3.6 million, which was their first-ever profit. By 1981, FedEx profits went up to an estimated $40 million. Federal Express was renamed FedEx in 1994.

Today, FedEx is a multi-billion corporation that has revolutionized business practices globally with speed and reliability. Its net worth is estimated to be $25 to $35 billion. This is first-hand proof that success does come to those who dare to act.

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