If you’re old enough to remember watching television in the early 1980s, you probably remember the tag line of an unforgettable commercial:
When it absolutely, positively has to be there overnight.
The line embedded itself in pop culture, and Federal Express had made itself synonymous with certainty. Hand us something important tonight, and we guarantee we’ll get it where it needs to go tomorrow.
Only a few years before those ads hit the airwaves in 1981, Federal Express itself had very nearly not made it to tomorrow.
Fred Smith had been interested in moving things quickly since he’d gotten his pilot’s license while still a teen. As a student at Yale, he famously wrote a paper about overnight delivery. His idea was to move time-sensitive packages through a central hub, allowing them to travel quickly between cities that might otherwise have little direct connection. According to legend, the paper got a C. Smith later said he couldn’t remember the actual grade; what he did remember was the idea.
After serving as a Marine officer in Vietnam, he eventually set about building the company he had imagined. On Federal Express’s first night of continuous operation in April 1973, 389 employees and 14 small jets managed to deliver 186 packages to 25 cities.
That sounds impressive, but the problem was simple. Federal Express had, it seemed, scaled up too fast – and promised too much. It lost $29 million in its first 26 months. Rising fuel prices (thanks to the Arab Oil Embargo) made things worse. Investors were getting nervous, and at one point the entire company reportedly had only about $5,000 left in the bank.
So, Smith took the $5,000 and went to Las Vegas, where he played blackjack. He flew back to company headquarters with $27,000 in his pocket, enough to keep the planes flying for a little while longer.
This is an excellent time for us to say that taking your company’s last few thousand dollars to a casino is not generally recommended entrepreneurial practice. And no, blackjack didn’t save Federal Express. He still had to raise more money, and his employees still had to make an extraordinarily complicated system work. And customers still had to be persuaded that overnight delivery was something worth paying for.
But the story tells us something about Smith. He simply refused to let Federal Express die, even if keeping it afloat meant betting its last few thousand dollars at the blackjack table.
There’s a point in almost every entrepreneur’s story where all you have to do is survive another day. You don’t have to solve every problem all at once – but you better get up and solve the problem that will otherwise kill the company today. Then you get some rest and rise tomorrow to solve the next one.
Smith kept finding another tomorrow. By 1976, Federal Express had turned profitable. Two years later it went public. The company became FedEx, a global giant serving more than 220 countries and territories. More and more people decided they did want something “absolutely, positively overnight” – and proved willing to pay for that combination of speed and reliability.
Looking backward, FedEx’s eventual success can seem inevitable. Of course, people wanted overnight delivery. Of course, Smith’s hub-and-spoke system worked. Of course, Federal Express became FedEx.
There was no “of course” when there was $5,000 left in the bank.
Before FedEx could promise that your package would “absolutely, positively” get there tomorrow, Fred Smith had to make “absolutely, positively” certain that his company did too.