How a Lucky Run in Vegas Saved FedEX

Fred Smith, the founder of Federal Express, wrote a term paper while attending Yale in 1965. He explained how companies could deliver items faster if their changed their shipping strategies. Although his professor didn’t think the idea was possible and gave Smith’s paper a C, Smith wasn’t deterred. After he graduated from Yale and served in the Marine Corps, he founded Federal Express. He raised $80 million in loans and equity investments by the end of 1972, and FedEx began operations in 1973. While the company quickly grew, rising fuel costs eventually caught up with the young company, putting FedEx millions of dollars in debt. As investors declined to give FedEx more money, bankruptcy became a real possibility. When the company had only $5,000 left, Smith pitched General Dynamics for more funding, but they refused. On his way home, Smith took a detour to Las Vegas and won $27,000 playing blackjack, which he wired back to FedEx. After his lucky win in Las Vegas, Smith was able to raise another $11 million, and by 1976 FedEx’s revenue had reached $75 million. The company went public two years later, and last year the company made $69.7 billion in revenue. Though gambling FedEx’s last $5,000 was a risky choice, Smith said he has never regretted his decision. "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 Smith.