The Crisis at FedEx
In 1973, FedEx was teetering on the edge of bankruptcy. The company, founded by Frederick W. Smith just two years earlier, was losing over $1 million every month, largely due to rising fuel costs from the global oil crisis. Smith had envisioned a revolutionary overnight delivery service that could change the logistics industry, but FedEx was rapidly burning through cash, and repeated efforts to secure additional funding had failed.
Frederick W. Smith’s Bold Gamble
With only $5,000 left in the company’s account, FedEx couldn’t even cover its fuel expenses. Smith was stuck in a dire situation: he needed immediate funds to keep the business running, but no investors were willing to back him. In a bold move, rather than accepting defeat, Smith flew to Las Vegas to take an unconventional risk.
At the blackjack tables, Smith drew on his card-counting skills from his time as a Marine pilot. Using the Hi-Lo system, which tracks the ratio of high to low cards, he placed FedEx’s last $5,000 on the line. Thanks to a mix of skill and luck, he managed to turn that $5,000 into $27,000—just enough to cover the company’s fuel bill.
Turning the Tables: A Risk Worth Taking
This gamble didn’t save the company outright, but it bought FedEx another week of survival. During that time, Smith secured an additional $11 million in financing, which allowed the company to recover. FedEx turned its first profit by 1976, and by the early 1980s, its annual revenues had soared to nearly half a billion dollars.
The Aftermath and Recovery
Smith’s gamble is a prime example of risk management under extreme pressure. It wasn’t a random bet, but a calculated risk driven by his deep understanding of blackjack and his company’s immediate need for liquidity. For entrepreneurs, this story emphasizes the importance of resilience, creativity, and taking risks when traditional financing options dry up. However, it’s also a reminder that high-stakes decisions can be dangerous, and success is never guaranteed.
FedEx Today: From Survival to Success
Smith’s unwavering belief in FedEx’s potential pushed him to take extraordinary steps. His risk-taking became part of the company’s DNA, and FedEx grew by prioritizing innovation and speed. Its famous slogan, “When it absolutely, positively has to be there overnight,” became a reflection of that philosophy. Today, FedEx is a global powerhouse, with over 500,000 employees worldwide—a company that owes its survival, in part, to one fateful gamble in Las Vegas.
Key Takeaways for Entrepreneurs
Smith’s story highlights the balance between risk and reward in the business world. For entrepreneurs today, it’s a powerful reminder that sometimes success comes not from meticulous planning but from bold, unconventional decisions. Knowing when to take a calculated risk can be the difference between failure and lasting success.
