How FedEx became $40 Billion shipping company.

Hey friend,

Imagine your entire company is about to go bankrupt. You’ve got $5,000 in the bank and a $24,000 bill due Monday. What do you do?

If you’re Fred Smith, founder of FedEx, you take that $5,000 to Las Vegas and bet it all at the blackjack tables.

And somehow, it works.

Today I’m telling you the absolutely insane story of how FedEx went from a C-grade college paper to a $40 billion empire, with a detour through Sin City that saved everything. This story has more twists than a Hollywood movie, and every single bit of it actually happened.

 The Kid Who Couldn’t Walk

Frederick Wallace Smith was born in 1944, and life hit him hard from the start. His dad died when he was just four years old. Then, as if losing his father wasn’t enough, Fred developed a disease called Perthes that basically destroyed the blood flow to his hips.

For years, this kid was stuck in leg braces and crutches while other children ran around playing. The bullying was brutal. But here’s what’s crazy - while other kids were outside having fun, Fred was inside thinking about airplanes and how things moved from place to place.

By age 10, he’d beaten the disease and could walk normally. By 15, he had his pilot’s license. This kid who couldn’t walk for half his childhood was now flying planes. Talk about a comeback story.

 The C-Grade Idea That Changed Everything

In 1965, Fred was a junior at Yale studying economics. He had to write a term paper about business, so he came up with this wild idea:

What if someone bought a bunch of planes, flew packages around at night when airports weren’t busy, sorted everything at one central hub, then delivered by truck the next day?

Back then, packages went in the cargo holds of passenger planes. If your package needed to go from New York to Los Angeles, it might take a week and three different flights to get there. Fred thought this was stupid.

His professor read the paper and gave him a C. The feedback? “This idea isn’t feasible and wouldn’t work.”

Fred was crushed. But he was also stubborn. He knew his professor was wrong.

 War, Cards, and Logistics

Before Fred could test his idea, the Vietnam War happened. He spent three years in the Marines, including two tours in Vietnam where he nearly died in a Viet Cong ambush.

But two things happened during the war that would change his life:

First, he saw how terrible military logistics were. Supplies took forever to get where they needed to go. Soldiers were dying because the right equipment couldn’t reach them fast enough.

Second, he got really good at blackjack. Fred spent his downtime in the barracks playing cards and developed serious skills at counting cards and reading the odds.

He had no idea that both of these experiences would save his future company.

 Building the Dream

In 1970, Fred came home from Vietnam with a mission. He was “sick of destroying things” and wanted to build something instead.

He started working at his father-in-law’s aviation business, but kept thinking about his package delivery idea. The shipping industry was still a mess, and Fred knew he could fix it.

By 1972, he’d convinced investors to give him $91 million to make it happen. That was massive money back then - like getting $500 million today.

Fred’s plan was brilliant in its simplicity: Use his own planes, fly at night, sort everything in Memphis, deliver everywhere by truck. No more waiting for passenger flights. No more week-long delivery times.

He called the company Federal Express because his first client was supposed to be the Federal Reserve, helping them move checks around the country faster.

Then the Fed backed out of the deal.

Fred was stuck with a fleet of planes, a mountain of debt, and no client. But he kept the name anyway. Sometimes stubbornness pays off.

 Launch Day and Early Success

On April 17, 1973, Federal Express officially launched. Fourteen planes delivered 186 packages to 25 cities on the first night.

Word spread fast. Businesses loved being able to ship something on Monday and have it arrive Tuesday. Fred’s overnight delivery concept was revolutionary.

For a brief moment, everything looked perfect. Fred had proven his Yale professor wrong. The business was growing. The future looked bright.

Then the oil crisis hit, and everything nearly fell apart.\

 When Everything Went Wrong

In late 1973, Middle Eastern countries placed an oil embargo on the United States. Oil prices didn’t just go up - they quadrupled overnight.

This was a disaster for FedEx. Fourteen planes need a lot of fuel, and fuel had just become impossibly expensive. The company started losing $30,000 every single day.

Within 26 months, they’d lost $29 million. Investors stopped returning Fred’s calls. Employees were holding their paychecks without cashing them because there wasn’t enough money in the company account.

Fred stopped paying himself entirely. Pilots were using their personal credit cards to buy fuel and hoping for reimbursements later.

By Friday afternoon in 1974, Federal Express had exactly $5,000 left in the bank and a $24,000 fuel bill due Monday morning.

Fred had one last shot - a meeting with General Dynamics for emergency funding. He put on his best suit, gave the pitch of his life, and…

They said no.

 The Vegas Gamble That Saved Everything

Sitting in a Chicago airport after the worst meeting of his life, Fred felt completely defeated. He was about to fly home to Memphis to tell 389 employees they were all losing their jobs.

His Yale professor was right. The idea was stupid. He was about to become the guy who burned through $91 million and had nothing to show for it.

But then something clicked. Fred had survived childhood disease, Vietnam War, and built this company from nothing. He wasn’t going down without a fight.

Instead of boarding his flight to Memphis, Fred withdrew the company’s last $5,000 and bought a ticket to Las Vegas.

His logic was simple: “If we’re going to go down, we’re going to go down fighting.”

Fred spent the weekend at blackjack tables, using the card-counting skills he’d learned in Vietnam. Up and down his winnings went. At one point he was up to $35,000. Then he lost several hands and started panicking.

But Fred knew when to quit. By Sunday night, he’d turned $5,000 into $27,000.

He deposited the money Monday morning and paid the fuel bill. FedEx lived to fly another week.

 The Comeback Story

That $27,000 bought Fred just enough time to find new investors. Within weeks, he’d secured $11 million in fresh funding. The company that almost died over a fuel bill was back in business.

By 1976, FedEx was finally profitable. But Fred wasn’t done taking risks.

While other shipping companies cut costs during the tough economy, Fred did the opposite. He spent massive amounts on advertising, marketing FedEx as the reliable overnight option.

The strategy worked. While competitors played it safe, FedEx was grabbing market share and building brand recognition.

 Breaking the Government Monopoly

Fred’s next big move was taking on the government itself. Airline regulations gave passenger airlines a monopoly on shipping larger packages. FedEx was limited to tiny planes carrying no more than 7,500 pounds.

Fred knew this rule was killing his growth potential. So he did something smart - he teamed up with his competitors to lobby Congress for change.

In 1978, President Jimmy Carter signed the Airline Deregulation Act. Suddenly, FedEx could buy the biggest planes available and compete with the major airlines.

Fred had just helped rewrite the rules of an entire industry.

 Building the Empire