The FedEx gambling story involving Fred Smith, the company’s founder and former CEO, is often recounted as one of the most unusual and high-stakes moments in corporate history. Here’s a recap and insights into the key aspects of this fascinating story:

The Situation in 1973

In 1973, Federal Express (FedEx) was a fledgling company that had secured around $80 million in loans and equity. However, the company was faced with a severe cash flow crisis, primarily due to a combination of high operating costs and the oil price shock caused by the 1973 oil embargo. This crisis led to an immediate threat of bankruptcy as FedEx struggled to secure enough fuel to continue operations.

With the company on the brink of collapse and only $5,000 left in the coffers, Fred Smith took a drastic step to try to save the business: he traveled to Las Vegas and gambled the money, specifically on blackjack.

The Blackjack Gamble

Smith took his last $5,000 and used it as a gamble in the hope of making enough money to buy the necessary fuel to keep FedEx operational for at least another week. Against the odds, Smith won $27,000 in blackjack, which he promptly wired back to the company, allowing them to purchase fuel and stay afloat for the time being.

After the Gamble: Securing Funding

While the $27,000 was not a decisive sum, it bought Smith some time. He used that week to raise another $11 million, securing additional capital for FedEx. This allowed the company to survive the immediate crisis and continue operating. Smith’s gamble, though risky, was a pivotal moment in saving FedEx from bankruptcy.

Fred Smith’s Legacy

Fred Smith’s gamble is often viewed as a symbol of his commitment and entrepreneurial spirit. Despite the seemingly reckless nature of the decision, it was his vision, determination, and willingness to take a last-ditch chance that ultimately allowed FedEx to become the global logistics giant it is today.

Smith’s boldness extended to other parts of his career. Despite having received a C for his college paper on the concept of overnight shipping (which would become the foundation for FedEx), he went on to create one of the most successful companies in the world.

Smith’s Reflection on the Gamble

Fred Smith himself never glorified the gambling aspect of his story. He viewed the blackjack win as a last resort—a way to keep fighting and find a temporary solution. Smith made it clear that gambling was not a strategy, but his decision to take action when all other options had failed is what ultimately saved the company.

The Bigger Picture

While the gamble played a crucial role in keeping FedEx alive in the short term, Smith’s broader vision and business acumen are the primary reasons why the company continues to thrive. FedEx’s success lies in its innovative business model, its determination to improve logistics and delivery systems, and the willingness to take calculated risks—though gambling on blackjack was not a regular part of his strategy!

FedEx Gambling Story FAQs

• Why are people talking about FedEx and gambling?

  • The story is famous because Fred Smith, the founder of FedEx, used the last $5,000 in the company’s coffers to gamble in Las Vegas, winning $27,000. This helped keep the business alive long enough for him to secure more funding, which ultimately saved the company from bankruptcy.

• Did Fred Smith continue gambling after that?

  • No. Smith only gambled once to try and save FedEx during a crisis. He did not make gambling a regular part of his business strategy