Founders
Episode 151 #151 Frederick Smith (FedEx)
Founders

Episode 151: #151 Frederick Smith (FedEx)

Founders

Episode 151

#151 Frederick Smith (FedEx)

David Senra is the host of Founders, where he studies history's greatest entrepreneurs. This is what he learned from reading Overnight Success: Federal Express and Frederick Smith, Its Renegade Creator by Vance Trimble.

What I learned from reading Overnight Success: Federal Express and Frederick Smith, Its Renegade Creator by Vance Trimble.

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[0:01] At age thirty Frederick Wallace Smith was in deep trouble. His dream of creating Federal Express had become too expensive and was fast fizzling out. He had exhausted his father’s millions. He was in hock for 15 or 20 million more. He appeared in danger of losing his cargo jets and also his wife. His own board of directors had fired him as CEO. Now the FBI accused him of forging papers to get a $2 million bank loan and was trying to send him to prison. He thought of suicide. 

[1:08] At any risk, at any cost, he refused to let his Federal Express dream die

[6:23] I believe that a man who expects to win out in business without self-denial and self-improvement stands about as much chance as a prizefighter would stand if he started a hard ring battle without having gone through intensive training. Natural ability, even when accompanied by the spirit to win, is never sufficient. 

[7:32] It was push and drive he inherited from his father. He had to be doing something all the time

[9:19] Fred is one of those people who never gives up if he wants something and you say no. He just goes on and on and on

[10:50] And one of the greatest qualities that he has, that anybody can have, is he’s a voracious reader. You could talk to Fred Smith about government or literature, a whole range of things kids his age didn’t know much about. 

[11:38] Like Nike, the idea for FEDEX started as a term paper: There is no great mystery to the “hub and spoke” concept. As Smith visualized the plan, the “hub” would be located in a middle America location with “spokes” radiating out to Boston, Los Angeles, Seattle, Miami, and other cities. Fred Smith thought of his system as similar to the telephone network, where all calls are connected through a “central switchboard” routing process. 

[18:40] He wanted to do something that nobody else had done. That was his main objective

[20:18] Smith wasn’t traveling in a straight line himself. He tried first one project and then another. All of them were built around his idea of acquiring and operating a fleet of jets. It [FEDEX] didn’t start out as a package outfit. 

[27:23] Fred Smith was learning not to be disheartened or dismayed by negative reactions

[35:43] Fred was in such deep thought all the time. Constantly thinking. Sheer determination. You could walk in and he’d be thinking about something and literally wouldn’t know you were in the room. That is one sign of a great mind—the ability to concentrate. When I read that section it made me think of this great quote by Edwin Land: “My whole life has been spent trying to teach people that intense concentration for hour after hour can bring out in people resources they didn't know they had.” 

[39:00] A great way to think about how hard FEDEX was to start: If you open a Wal-Mart store, and if that formula succeeds and you do well, you open a thousand of them. But you don’t open a thousand of them to take the first order. Which is what you had to do to start FEDEX. 

[47:10] We were first-grade novices. And I think that really played to our advantage because we were not fully aware of the obstacles we faced or the difficulty in overcoming them. I look back on it now and think, Oh, my God, why in the world would anybody try to do something like this! 

[53:18] Fred Smith himself said, “No man on earth will ever know what I went through in 1973-1974. When I read that I thought of this quote on Charlie Munger: “Life will have terrible blows in it, horrible blows, unfair blows. It doesn’t matter. And some people recover and others don’t. And there I think the attitude of Epictetus is the best. He thought that every missed chance in life was an opportunity to behave well. Every missed chance in life was an opportunity to learn something and that your duty was not to be submerged in self-pity. But instead to utilize the terrible blow in a constructive fashion. That is a very good idea.” 

[1:01:30] Fred Smith: You have to be absolutely brutal in the management of your time.

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#151 Frederick Smith (FedEx)

Introduction

“At age 30, Frederick Wallace Smith, was in deep trouble. His dream of creating Federal Express had become too expensive and was fast fizzling out. He had exhausted his father's millions. He was in hock for $15 million or $20 million more. He appeared in danger of losing his cargo planes and his wife. His own Board of Directors had fired him as CEO, and now, the FBI accused him of forging papers to get a $2 million bank loan and was trying to send him to prison. He thought of suicide. But any talk of suicide was uncharacteristic of Fred Smith. It is ridiculous to think of Fred even contemplating such a thing, jump out of a window. He's more likely to throw somebody out of a window. Fred never talked about this difficult period, perhaps the lowest point of his life. His infant Federal Express became a ravenous money-eating ogre. To keep his planes flying, Fred had to beg, borrow, and steal. At any risk, at any cost, he refused to let Federal Express die. The situation confronting him on this May morning in 1974 was dismal, at a dangerous ebb. Not only was Federal Express teetering on bankruptcy, but its founder, with the FBI and the U.S. district attorney hard on his heels, could possibly go to prison for bank fraud”.

That was an excerpt from the book that I'm going to talk to you about today, which is Overnight Success: Federal Express and Frederick Smith, Its Renegade Creator, and it was written by Vance Trimble. Vance is a guy that wrote the last week's book, the biography of Sam Walton. He actually wrote this book right after he wrote the book on Sam Walton.

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