The FedEx company was saved from bankruptcy at the blackjack tables
FedEx Corporation is an American courier and logistics company known worldwide. The company was founded in 1998 as FDX Corporation, after which it was renamed FedEx Corporation in January 2000.
But company history begins in 1971, with the establishment of Federal Express. And the course of this company was one with many ups and downs, with critical moments and, as if by miracle, today we speak of FedEx as a successful logistics operator.
FedEx's rocky start
Today, FedEx delivers billions of packages every year globally to more than 220 countries, autonomous regions and independent territories. But the road to success was strewn with many problems. Shortly after its founding, FedEx was on the verge of bankruptcy, and founder Frederick Smith managed to save the company by playing blackjack in Las Vegas – details below.
While majoring in economics at Yale University in 1962, Smith wrote a paper on the automation of society and the transportation of goods. At the time, shippers transported large packages by truck or passenger plane, but Smith thought it would be more efficient to transport small, essential items by cargo plane.
His work would become the backbone of FedEx, which was founded in 1971. Smith founded the company with $4 million from an inheritance and $80 million in loans. FedEx started with eight planes covering 35 cities in the United States and planned to add more each month.
The oil crisis affected FedEx
But the period chosen for the launch of this company was not a favorable one, there being a economic crisis and fuel. About 2 years after its founding, the company found itself with millions of dollars in debt and on the verge of bankruptcy due to the accelerated increase in the price of kerosene. The critical moment was when the available budget was only $5.000, and Smith realized that he had no money to fuel the planes. At the same time, it was a period of crisis when the employees stopped receiving their salaries, and the pilots had to feed on their own money.
Last $5000, play blackjack
Looking for a miraculous solution, Frederick Smith took the last $5.000 from the firm and went to Las Vegas, where he played the tables of live blackjack. The goddess Fortune was with him, so he managed to collect 27.000 dollars at the famous casino game, enough money to keep his company on the market for another week.
Roger Frock, a former vice president of operations at FedEx, chastised Smith for siphoning the last of the company's money and, even more so, for gambling in Las Vegas. Instead, Smith shrugged and told him, "Without the fuel funds we wouldn't have been able to fly anyway."
The amount earned did not solve all the company's problems, but Smith knew how to speculate on the moment and was confident that things would evolve in a positive direction. As proof, he managed to raise in a very short time a financing of 11 million dollars.
FedEx's first profit was reported in 1979
After financial stabilization, Smith helped launch a mail advertising campaign to increase the company's visibility. By 1976, FedEx also had its first substantial profit, amounting to 3,6 million USD, and things evolved favorably, as evidenced by the fact that today FedEx is one of the biggest airlines of cargo transportation in the world.
This is a case, let's say happy, but not an example. It is good to act cautiously in crisis situations. Be prudent in your actions and don't risk making hasty decisions that later turn out to be wrong. Gambling is not a solution to such problems, and such stories are extremely rare.
Smith was assumed when he did this, knowing that there was a risk that the $5000 would be lost. There was nothing left for him to do anyway, bearing in mind that the amount was too small to fund his business, but at the same time he was willing to lose them in an act of hope that he would be able to raise enough money to continue his dream.