How FedEx Was Saved By Blackjack

Fred Smith

Fred Smith founded FedEx in 1973 after becoming fascinated with the transportation industry while studying Economics at Yale. He saw a need for a faster and more reliable service, specifically overnight delivery, as computers and information moved data at the speed of light. He wrote about it in a term paper in 1965, and when asked what he received, Smith replied, “I don’t know, probably made my usual C.”

With $84 million to get things started, Smith initially bought 14 planes with his initial $84 million and set up the operations in Memphis, Tennessee. It was an ambitious plan with high operational costs. As the price of fuel increased in the mid ‘70s, FedEx was in debt millions of dollars. One week, they didn’t have enough money to fuel the planes. The company had a mere $5,000 to its name.

After a critical business loan was denied, he took the company’s last $5,000 to Las Vegas and won $27,000 gambling on blackjack to cover the company’s $24,000 fuel bill. It kept FedEx alive for one more week.

Co-Founder Robert Frock describes the episode in the book, Changing How the World Does Business: Fedex’s Incredible Journey to Success – The Inside Story.

“I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000. ’I said, ‘You mean you took our last $5,000— how could you do that?’ He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.”

Smith’s nerves of steel, allowed FedEx to stay in business long enough to secure the additional $11 million to scale the company to a size where its own revenue could sustain its future growth.

Fred Smith FedEx founder & CEOWhat’s notable is that his close friends commented that Fred was no blackjack pro, and was relatively new to the game when he decided to risk it all on that fateful day.

So the next time you see a FedEx truck or plane making a delivery, you’ll know that a battle with the blackjack dealer in the Las Vegas kept FedEx in the black and alive today.

If you enjoyed this article, read How Don Johnson Won $15 Million Dollars playing Blackjack in Las Vegas.