In 1973 FedEx was 24 hours away from bankruptcy... Their founder...
Maxwell Finn@maxwellfinn
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Apr 22, 2025
~2 min read
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In 1973 FedEx was 24 hours away from bankruptcy...
Their founder Fred Smith had $5,000 in company funds left but needed $24,000 for fuel to keep planes flying the next day.
What he did next is the definition of "bet the company" and changed business history forever. 🧵
Their founder Fred Smith had $5,000 in company funds left but needed $24,000 for fuel to keep planes flying the next day.
What he did next is the definition of "bet the company" and changed business history forever. 🧵
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Smith founded Federal Express in 1971 with $4M of his own cash.
His big idea?
Overnight delivery guaranteed by the next day.
This had NEVER been done before on a national scale and investors were skeptical.
His big idea?
Overnight delivery guaranteed by the next day.
This had NEVER been done before on a national scale and investors were skeptical.
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The early days were BRUTAL.
FedEx was burning $1M a month and their innovative hub and spoke model (where all packages went through Memphis) was failing to generate enough customers.
By 1973 investors refused to put in more money.
FedEx was burning $1M a month and their innovative hub and spoke model (where all packages went through Memphis) was failing to generate enough customers.
By 1973 investors refused to put in more money.
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On a Friday in 1973 Fred got the devastating news: the company had just $5,000 left in its account but needed $24,000 for fuel by Monday.
No bank would loan them money. Investors had given up.
The company was literally on the brink of collapse.
No bank would loan them money. Investors had given up.
The company was literally on the brink of collapse.
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Fred made a decision that would be considered INSANE by modern corporate governance standards...
He took the company's last $5,000 cash and flew to Las Vegas.
His genius plan?
Hit the blackjack tables and try to win enough money to keep FedEx planes flying.
He took the company's last $5,000 cash and flew to Las Vegas.
His genius plan?
Hit the blackjack tables and try to win enough money to keep FedEx planes flying.
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Fred later explained: "I was very committed to the people that had signed on with me and if we were going to go down we were going to go down with a fight."
He stayed at the blackjack tables all weekend... slowly building his stack of chips higher.
He stayed at the blackjack tables all weekend... slowly building his stack of chips higher.
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By Monday morning Fred had turned FedEx's last $5,000 into $27,000... enough to cover the $24,000 fuel bill and keep the planes flying for another week.
He wired the money back to Memphis and didn't tell anyone where the funds came from until years later.
He wired the money back to Memphis and didn't tell anyone where the funds came from until years later.
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That single week of continued operations proved crucial for the company's survival.
During that extra week FedEx was able to finally demonstrate the viability of their business model.
This small win helped Fred raise an additional $11M in funding shortly after.
During that extra week FedEx was able to finally demonstrate the viability of their business model.
This small win helped Fred raise an additional $11M in funding shortly after.
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The company that was 24 hours from bankruptcy eventually went public in 1978 with a valuation of $65M.
Today FedEx is worth over $49 BILLION.
Most entrepreneurs fail because they quit right before the breakthrough.
Today FedEx is worth over $49 BILLION.
Most entrepreneurs fail because they quit right before the breakthrough.
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Years later Smith reflected on this gamble saying: "No business school graduate would recommend gambling as a financial strategy but sometimes it pays to be a little crazy early in your career."
Sometimes building a business requires truly wild risks.
Sometimes building a business requires truly wild risks.
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So what's the lesson for entrepreneurs here?
Sometimes you have to:
🛑 Ignore conventional wisdom
🛑 Take risks others think are crazy
🛑 Bet on yourself when everyone else has given up
What's the craziest risk you've taken in your business that paid off? 👇
Sometimes you have to:
🛑 Ignore conventional wisdom
🛑 Take risks others think are crazy
🛑 Bet on yourself when everyone else has given up
What's the craziest risk you've taken in your business that paid off? 👇