Gambling on Supply Chains

8–22–16, Lefko

This FFOTD is inspired by Adil’s gambling addiction. Frederick Smith founded FedEx in 1971 with a $4million inheritance and $80 million from loans/equity investments.

He started out with 8 planes that traveled to 35 cities and planned to expand regularly. The rising price of fuel, however, disrupted the company plans. They began going to desperate measures to fill the planes as the company slowly crept into debt — pilots would purchase jet fuel with their private credit cards, and paychecks would bounce regularly (gotta admire the devotion of the employees here…), all attempting to keep the company afloat until they could turn a profit. This was to no avail. With only $5,000 in funds remaining, Smith decided to fuck it, and flew to Vegas — he figured it wasn’t enough money to fuel the planes anyway, he had to go to desperate measures. Fortunately, Smith was able to turn the $5,000 into $27,000, which wasn’t nearly enough to bring the company back to life, but it kept it alive for another week. This was just enough time for him to raise some more funding, eventually getting ~$11 million. By 1976 the company made its first profit of $3.6million and has been growing ever since.

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