How FedEx was saved from bankruptcy at the Blackjack table

FedEx is currently one of the biggest delivery services company in the world. It has a history of almost 50 years, and started in April 1971 as Federal Express Corporation. The name was changed 20 years ago, and it is a syllabic abbreviation of the original air division (Federal Express).

 

The history is well known: Frederick “Fred” Smith, a graduate of Yale Business School, drew the company’s concept in a term paper at Yale, but didn’t get too much credit from the professors. His idea was simple – to create a system designed for urgent deliveries. And he began formal operations in 1973, two years after founding the company. At that moment, Smith had managed to raise $80 million in loans and equity investments to buy the jets.

 

And although today the company has now an annual revenue of around $70 billion and 400,000 employees, the first years were very tough. Smith had to keep the company afloat because of the rising fuel costs which the company needed for its delivery planes.

 

Back in the days, FedEx had great debts and on the brink of bankruptcy, losing more than $1 million by mid-1974. To make it even worse, Smith’s vital business loan was denied by General Dynamics. So what he did was taking his luck to the casino and try to make the most of it.

 

At that point, FedEx was down to just about $5,000 when it needed $24,000 for a jet fuel payment to the most demanding oil suppliers. That was when Fred Smith desperately tried his best, and flew to Las Vegas, where he won $27,000 at the blackjack table. While waiting for his plane, he suddenly took a flight to Nevada from Chicago, instead of going to Memphis, where the company’s headquarter is.

 

That was back in the mid-70s. Nowadays, you don’t have to fly way over to Vegas or any other casino city for that matter, as you can play blackjack online from virtually everywhere. One option is Live Casino Canada from Unibet, which apart from blackjack offers a wide range of games.

 

So, gambling did help Fred Smith and FedEx pay the debt and keep afloat for one more week. “The $27,000 wasn’t decisive, but it was an omen that things would get better”, said Smith. After that moment, he returned to looking for funds and eventually raised another $11 million. From that moment on, the company flourished. In 1976, its profit was $3.6 million, out of revenues of $75 million.

 

Smith later on explained what drove him the most: “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.” And this came after the company lost nearly $13.4 million in its first two years.

 

The company continued its rise. In 1978, FedEx went public, and two years later the reported profits were almost $40 million. That is just over five years after Fred Smith took Vegas with a handful of dollars at the blackjack table. In 1983, its revenue was $1 billion, so merely a decade after it started operations.

 

By 1999, the company became world’s No.1 overnight shipper, with more than 15 to 20 million packages delivered every week, in more than 200 countries.

 

Back to present day, FedEx delivers more than 1.2 billion packages every year all over the world, and it is a living proof that gambling can save businesses in their early years, despite not advised by anyone: “No business school graduate would recommend gambling as a financial strategy, but sometimes it pays to be a little crazy early in your career”, said Fred Smith.