Fred Smith: The Story of FedEx

Podcast: The Knowledge Project
Host: Shane Parrish
Guest: Fred Smith — founder of FedEx
Duration: 51 minutes
Listen: Apple Podcasts

Fred Smith conceived FedEx in a Yale economics term paper. His professor gave it a C. He built it anyway, turning it into an $88 billion company that changed the world’s relationship with time and distance.

The Origin

Smith spent his childhood in leg braces, told he would never walk normally. Thousands of hours of therapy proved the doctors wrong. He became a varsity athlete. “Fear of failure must never be a reason for not trying something.”

He served two tours in Vietnam as a Marine. From Staff Sergeant Richard Jackson, he learned the first lesson of leadership: take care of your people first.

The Near-Death Moment

At one point, FedEx had $5,000 left in the bank. Enough to fuel the planes for one more day. Smith flew to Las Vegas and turned that $5,000 into $27,000 at blackjack. It bought the company just enough time to raise more money.

The Incentive Lesson

Workers at the sorting facility were paid by the hour. They had no incentive to finish quickly. Smith switched to paying by the shift. Productivity soared. The same people, the same work, a completely different result.

Charlie Munger: “Never, ever think about something else when you should be thinking about the power of incentives.”

People-Service-Profit

Take care of employees first. They deliver superior service. Profit follows. This was not a slogan. When investors tried to fire Smith in 1974, every senior officer threatened to resign.

The Failures

Smith was honest about them. ZapMail failed because fax machines commoditized overnight. The Flying Tigers acquisition damaged the culture. The European expansion lost $629 million before he retreated. Sometimes the smartest move is admitting you were wrong.

The Legacy

Smith read four hours a day. He understood that “the information about the package is as important as the package itself” years before anyone else saw it. He built not a delivery company but a system of trust.

Crepi il lupo! 🐺