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Think You Are A Risk Taker? Think Again ! The Story of FedEx !

(Image Credits : about.van.fedex.com)

(Image Credits : about.van.fedex.com)

There are some startup stories that fall into the category of a “must know”.

Often you find startup founders giving references of others’ success stories in their own. The most popular example, getting fired from the company you started calls for a Steve Jobs reference. There is one such story founders refer to when they have to risk everything they’ve got in order to survive.

Today, I’ll be telling you about the story of Federal Express. The famous courier company which revolutionized the logistics industry.

In the 1960s, there was this student with the name Fred Smith in the Yale University, he had an idea. The idea of an overnight delivery service which was reliable. He had everything chalked out, everything planned and thoroughly studied.

His professor graded his submission with a ‘C’.

The professor’s response was as follows when asked about his student, Fred’s paper.

“The concept is interesting and well-formed, but in order to earn better than a ‘C’, the idea must be feasible.”

Fred Smith

Fred Smith, Founder, FedEx (Image Credits: blog.warstory.co)


Little did he know, he just gave FedEx the grade no one liked. Even after that, Fred never stopped believing in his idea. He always knew he could do it and make this not so pragmatic looking idea a success.

Today, his company makes $35 Billion in revenue every year and has 1,40,000 people working for it. Too good for something which got a ‘C’ grade, isn’t it?

In the year 1973, they had $80 million in funding. It was the same year they did their first test run of (with the promise of overnight delivery) SEVEN packages.

So, like any other company would do, to increase their package volume they expanded their operations from 11 to 25 cities. The number went up to 186 packages.

The numbers were discouraging and in the first few years of operation every sane person who knew about them believed they would never get off the ground.

They did. It wasn’t easy.

A former Senior Vice President of FedEx explains the situation as follows.

“With expenses mounting, we were getting into deeper trouble financially. Things got so serious that one of our pilots used a personal credit card to pay for delinquent landing fees that would have prevented his departure from an outlying airport. Then, one of our couriers hocked his watch to buy fuel for his delivery van. Many of the couriers came in on weekends to wash and wax their vehicles.”

Things got worse due the rising fuel costs and constantly less package volumes.

By this time, most people would have raised the white flag. No sign of improvement for the first few years, it’s a red sign, there is not enough demand for your service.

The people at FedEx were just like the guys we’ve been talking about in the previous articles. They refused to give up until there was no other choice.

At one point, due to the factors I mentioned earlier, the situation turned so bad that it became impossible to operate. They only had $5000 in their checking account. They weren’t delivering by bicycles, they were using airplanes, so the amount was next to nothing.

With those $5000 in their bank accounts they had their most demanding oil supplier on their gates asking for a $24,000 payment. That was a difference of $19,000, for those of you who’re not so good at maths.

At every point when things didn’t seem hopeful, Fred never thought of giving up. As he says, he wasn’t willing to go down without a fight.

Fred was so desperate for money to survive he did something no completely sane person would ever do. He gambled with all the money he had.

No, wait! He gambled with all the money his company (and by the transit property, he himself) had. Every single penny.

Fred knew if he doesn’t arrange the money for the fuel they wouldn’t be able to survive. Something had to be done. So, he gambled.

He took all of the $5000 and went to Las Vegas to play Black Jack.

Why would he do that?

Why did he do that?

How can he be sure he’ll win?

Well, doesn’t matter. These were questions that would’ve mattered if he lost. Fortunately, he didn’t.

He left Vegas making $27,000 off those $5000. Call it luck, or probability, he made enough money to survive for another week.

On returning, when asked by one of his senior employees on what made him do that, he responded.

“What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.”

That one more week was all that he needed. He then raised another $11 million for operations in those critical times. And THAT was all he needed. The numbers started to go up and they made their first profit of $3.6 million in the year 1976.

After the bad time passed and they started doing good, Fred was asked why didn’t he quit. He responded.

“I was very committed to the people that had signed on with me, and if we were going to go down, we were going to go down with a fight. It wasn’t going to be because I checked out and didn’t finish.”

As in every Bollywood story, this one too had a happy ending.


The FedEx story just like the others we’ve talked about in the past few weeks, teaches to believe in the vision. The billion dollar business was graded C by a university professor. The business lost all $80 million in funding in the first few years without making any profits. When there was little money left the founder played Black Jack with all of it, and won.

Yes, sometimes you might be called insane for taking the great risks you take. If you were sane, wouldn’t you be sitting in a comfortable air conditioned office just “doing something” instead of hustling every waking hour of your life.

But, then again, aren’t we all a little bit insane?



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