BruxTime, CC BY-SA 4.0, via Wikimedia Commons
This is a story that has been told and re-told so many times that the details have been changed several times to sensationalise the story.
The story itself is true, although the numbers involved and the importance of the winning session of blackjack have often been exaggerated.
Nevertheless, the fact remains that the CEO of one of the biggest companies in the world once gambled the remainder of his money in a last ditch attempt to keep the lights on, and it marked a turning point in his company’s fortunes.
He may not have been a prolific gambler like some of the other names on this list of famous blackjack players, but he is certainly the richest, worth around $14 billion today thanks to the success of FedEx.
Las Vegas is a place that can make or break a gambler in record time, but this ballsy businessman’s luck was definitely in when he visited.
The Story of FedEx and Blackjack
Dylan Ashe, CC BY-SA 2.0, via Wikimedia Commons
Fred Smith, the CEO of the now world famous company FedEx, actually came up with the idea for his business back in college, when he wrote a paper on how companies could ship items faster by changing their shipping strategies.
His teacher didn’t think the idea had much mileage, so Smith only got a C for his work. That was in 1965.
Six years and two tours of duty in Vietnam later, Fred bought a company called Arkansas Aviation Sales with some inheritance money and dug out his old term paper. This was the beginning of FedEx.
Things were going ok to begin with, and he managed to raise $80 million in investments and launched FedEx proper in 1973, but just a few years later with fuel costs spiralling Smith was in danger of his fledgling delivery service becoming insolvent.
Already in millions of dollars’ worth of debt, his company was down to its last $5,000. He had huge fuel bills to pay, could not raise further investment, and had just been denied a further loan.
Heading to Las Vegas
At this point Fred was willing to take a big risk to keep his company alive.
He has since said that his experiences as a marine in Vietnam helped him to rationalise the situation, since he was just dealing with money, and not people’s lives. The highly decorated former soldier was prepared to take what he considered to be a fairly moderate risk given the plight of FedEx.
“I think probably my experience in the service, where — the currency of exchange in FedEx was just money, it wasn’t people’s arms and legs, or lives. I was willing to take a chance, because losing wasn’t the worst thing in the world that could happen to you.
Despite many versions of this story noting that he staked that last $5,000 on the blackjack table, what he actually did was use a few hundred dollars of his own money as well as $1,000 of credit and managed to win $25,000.
The details of the game are not known, as in how long he played for, how much he was betting at a time etc. The point is though, that he did it in the first place.
He wired that money back to FedEx who could then afford to keep the planes topped up with fuel and delivering parcels for another week while additional funds could be found.
His business partner wasn’t too impressed when he heard how Smith had go the money, but like Smith told him, if he hadn’t have taken the risk the planes wouldn’t have been able to fly anyway and the company would have gone under.
It is often said that the gamble literally saved the company and got them out of debt, but this is not true. Smith has himself said that they owed so much that $25,000 was a “drop in the ocean”, but it did symbolically represent a change in fortunes for the company.
By 1976 their turnover was North of $75 million and they were in profit for the first time to the tune of $3.6 million, and in 1978 they listed on the New York Stock Exchange.
These days the company name has become its own common noun, with secretaries world wide being told to “FedEx this to the client by Tuesday” – or words to that effect.