“The crazy inspirational story of a Billion Dollar giant company”

 

“The crazy inspirational story of a Billion Dollar giant company”

The founder of this company, who we will refer to as “Fred” was a student at Yale University (back in the 1960’s) when he first came up with the idea of this company. But his plan wasn’t to actually start a company. This was simply a University assignment he had to submit! 

The paper was for his economics class where he had to explain how things could be made more efficient in a particular industry. 

Fred decided to focus on the goods transportation industry.

At the time transportation industry was disorganized. There were various companies that had to coordinate together to get goods or packages delivered. That led to higher expenses as well as time in delivery and also made mishandling more likely because of various handlers involved. 

So he decided to submit a paper where he would propose a solution to this. 

In the paper he submitted, he proposed that a single company could be created that would take care of pick up from the point of sending to the destination. It would operate its own flights, posting stations, have its own delivery vans etc. 

Even though Fred thought he would greatly be appreciated for his innovative suggestion to improve the industry, to his surprise, his professor gave him a C Grade for his paper! He said that the concept was interesting but in order to earn a grade better than a C, the idea should be feasible. 

Even though Fred was disappointed, somewhere the idea stuck with him. 

It was in 1971 that Fred finally decided to experiment with this concept practically. 

He raised some money from investors and started the company.  Services started with a test run of delivering 7 packages, one of which belonged to Fred himself!

After this, they immediately expanded operations to 25 cities but delivered a  total of a mere 186 packages!

Yet, Fred wasn’t discouraged, and persevered. But his perseverance seemed questionable as the more the company continued operations, the more money it lost. It was quickly burning through millions of dollars of funding! 

The numbers were not looking good and it looked like the company would fail. Problems were getting so serious that pilots had to end up using their personal credit cards to pay for outstanding landing fees at the airport!

Many other employees were also funding various expenses from their own pockets. Things got even worse because airplane fuel costs were rising and because the volumes of packages were not increasing. 

But Fred refused to give up until there was no choice. Most people around him, including the investors were now feeling that this was a doomed venture and refused to fund further. 

Eventually they lost so much money that they were left with only $5000 in their checking account! Only $5000! For a company transporting packages using airplanes, this amount is virtually nothing!

If money was not raised now, the company would shut down, period. There was no money left to run the company anymore. 

But there was a crucial large order to fulfil within a span of time, which if done successfully could perhaps give it a small lease of life through a recurring contract.

The only problem was the company was left with no money to even meet the expenses involved in fulfilling the order!

No one was willing to loan them money or invest further.

Fred decided that he still wasn’t going to give up. He took a risk that was probably unprecedented in business history. 

He took the $5000, went to Las Vegas and decided to play Blackjack with it!

For any other person, this was pure gambling and probably the stupidest decision ever with their last $5000

But Fred was an experienced Blackjack player and that game is not only a game of chance but also one of skill. For Fred it was a calculated risk he had to take in order to give one last shot to save his company. 

That calculated risk paid of!. He ended up making $27000 from that $5000. That gave him money to fulfil that order and run the company for one more week. He got the recurring contract as a result and when that happened, investors decided to infuse some more money into the company!

That was all he needed! After that, the numbers of the company started to improve and they made their first profit by the time it was 1976! 

Fred was later asked why he took that risk with his last $5000. He said that he didn’t have an option anyway. No one was willing to loan him money or invest anymore. $5000 wasn’t enough to fulfil the order and if he just sat on it, it would anyway disappear in a matter of days. 

It was better for him to take a calculated risk with a decent chance of success (As a skilled Blackjack player, for him it was NOT gambling) rather than do nothing and ensure a 100 percent chance of failure.

He said he was committed to the people who had teamed up with him and he didn’t want to give up without a fight. He didn’t want to fail knowing that he didn’t do everything humanly possible to save the company. 

Well the company didn’t fail, in fact it became a massive success and one of the largest logistics and transportation companies in the world!

What Company is it, you may ask?

Well, the name of this company is FedEx and the founder’s name is Fred Smith!

Today, FedEx has became a huge multinational Conglomerate that has revenues of over 180 Billion dollars and its name is synonymous with package transportation across the whole world!

There are two major lessons we can learn from this story. 

The first is that Others’ opinions are not necessarily a predictor of your success.

It is hard to imagine that a that a multi- billion dollar successful business concept was rated C by a professor from the university. 

The professor thought it was not feasible. What if Fred Smith had accepted his opinion as fact? We would have never heard of FedEX ever! 

Thankfully, Fred Smith went with his gut instinct about what he believed was possible instead of relying only on his professor’s opinions. Today, not only is the company generating huge revenues, it also employs over 140000 people!

The second thing to remember is that No great thing was achieved without calculated risks

Despite starting the company, for years, nothing worked out. Employees were paying bills out of their own pocket. It went to the point that investors stopped backing the company any further too.

But Smith was committed to making it work. In fact, he was so committed that when he was left with no choice, he took the huge (but calculated risk) of playing Blackjack just to be able to save the company. 

That risk was the last-ditch effort to make sure the company didn’t crash land and miraculously it paid off.

Even though this was not a foolish risk as it was done with deliberation, and because there was no other option involved, in the eyes of many, it was an insane thing to do!

Maybe Fred Smith was insane. But then again, remember, most so called sane people never change the world! Only the “crazy” ones do.