How Blackjack Funded Fred Smith’s Overnight FedEx (FDX) Empire

By Douglas A. McIntyre Published Jul 4, 10:49AM EDT

Key Points

Fred Smith, founder of FedEx (NYSE: FDX), passed away at 80, leaving behind a transformative legacy as the pioneer of the modern express logistics sector.
Smith famously risked his last $5,000 at a Las Vegas blackjack table to keep FedEx afloat in its early days, demonstrating the bold decision-making that characterized his leadership.
Unlike many founders, Smith not only launched FedEx but successfully scaled it into a global giant, directly challenging and disrupting government-run postal services.

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How Blackjack Funded Fred Smith’s Overnight FedEx (FDX) Empire — © 24/7 Wall St

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Transcript:

[00:00:04] Doug McIntyre: Lee Fred Smith, who founded, FedEx, died at 80 last week. Yeah. you look back at these guys and you ask yourself, who built these businesses?

[00:00:15] Doug McIntyre: The post office owned a hundred percent of the market of moving stuff around

[00:00:20] Lee Jackson: and UPS maybe, Well,

[00:00:22] Doug McIntyre: yeah, but I mean, here’s a guy. He starts with nothing. I think he was a pilot, but he was, yeah. he loses some money and maybe he is gonna go under and, people ask, well, what’s America about?

[00:00:38] Doug McIntyre: it’s what works in America. And this is a guy who was inventive. He had access to capital, not a lot of capital, enough to just barely make it. He understood the logistics business. He eventually got it to the point where, you know, Castaway, Tom Hanks. Yeah. you notice Tom Hanks in that movie goes to all these cities and he inspects exactly how things work, which was the Fred Smith way.

[00:01:08] Doug McIntyre: And you do have the people from that generation other than Buffet, he’ll live forever. But if you look at these guys who basically started their businesses probably, 40 years ago or something, a lot of these really important businesses, these people are starting to go away. And I just sort of wanna, I knew Smith a little bit and I just want to, in public tip, a cap to the guy because he really didn’t just invent a, company, he invented an entire sector.

[00:01:43] Lee Jackson: Yeah, absolutely he did. He, and one, and I always thought, Wall Street is full of good stories. some of them you can tell, to your viewers, like we do, and some of them you can’t. But one of the greatest stories ever involved, the very, very early on in FedEx, when Fred Smith was outta money, he was outta money.

[00:02:05] Lee Jackson: And he didn’t even have enough to make, the fuel purchases he needed for like his one or two jets. So FedEx, FedEx is based here close to me, here at Memphis. And,I’m not in Memphis, but it’s very close to it about an hour away. And he is the most famous Memphis guy, really even more so than Elvis to a lot of people.

[00:02:24] Lee Jackson: He had $5,000 left. So he went to Vegas and put it all on the table at a blackjack table. He won $27,000 off that five, and this was years ago. So that was a fair amount of dough. It was still a fair amount of dough, but he won $27,000, which was enough to keep FedEx going for a couple of more weeks so they could get a loan.

[00:02:48] Lee Jackson: That was, they were in the process of getting done at that time. And I thought, man, that takes a big set of, of courage to, to, because if he’d lost it all in Vegas, which, they don’t build those big casinos in Vegas ’cause the house loses. He, it could, that could have been the end of it, it could have been the end of the story, and we, he would’ve not have been remembered.

[00:03:10] Doug McIntyre: Well, the other great thing about FedEx is it really was a giant killer. I mean, it’s the, post office has been badly damaged by these publicly traded companies that aren’t, owned by the government and. The guy was just a great inventor. He had, he and he had one idea. This is not like Thomas Edison.

[00:03:32] Doug McIntyre: It’s not like Elon Musk. He had one idea. One, he basically worked and worked and worked and perfected it. I’m sure when he died, he was a billionaire, but more important to that, he not just started the company, but unlike a lot of CEOs, he grew the company. Yeah. He did. A lot of these, a lot of these entrepreneurs, they don’t, they get started, they get kicked out or their companies fold after a year or two because they’re no good.

[00:03:57] Doug McIntyre: They’re not good at running something.

[00:03:59] Lee Jackson: Right. Right.

[00:04:00] Doug McIntyre: Well, anyway, good for him.

[00:04:02] Lee Jackson: R Ip. Yeah. RIP Fred Smith. You were a genius and you had a ton of, courage when a lot of people don’t have anything near that.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.