Profile of a Great Entrepreneur: Fred Smith of Federal Express

Posted by Chuck Kocher
On November 13, 2012

Sometimes it takes more than a great idea to create a great company. It usually takes someone with great entrepreneurial spirit and drive to turn an idea into business success. And with annual sales of more than $39 billion, 255,573 employees, and a market value of $30 billion, Federal Express would probably qualify as a successful business by most peoples’ standards.

The entrepreneurial spark for FedEx came from CEO Fred Smith, whose vision and drive were a combination of nature and nurture.

Many people know the story about Smith’s seminal ideas for Federal Express coming out of a term paper written for a class while at Yale University (a paper, which allegedly earned him a “C” grade). That, however, is only part of the story. Smith’s nature (he loved aviation and was willing to risk his own fortune for his passion and vision) and his nurture (his Marine training during two tours of duty in Vietnam) played a huge role in making his idea a successful reality.

During his time in Vietnam Smith was able to observe first-hand the remarkably intricate logistical efforts that went into the efficient mobilizing more than half-a-million troops and millions of tons of supplies. That is why discipline, training, and leadership are key to the success of Federal Express today. So how did he translate the lessons from the military to civilian business?

When Smith returned to the United States after Vietnam he was passionate about wanting to do something constructive. His opportunity arose when he received the first installment of his trust inheritance. He liquidated the stock he’d inherited, and teamed up with an old friend to purchase Arkansas Aviation Sales at the Little Rock municipal airport because found aviation both fascinating and satisfying. And while he was successful in that venture, his frustration with one aspect of the business (the inability to rely on the timely shipment of critical spare airplane parts) led to the creation of the business that would ultimately define his larger success.

Once again, Smith put his money where his mouth (or more accurately, where his idea) was. In 1971, Smith announced that he was investing $250,000 of his own money, and asked the board of the family trust for a matching $250,000 to make the trust his partner.

Smith combined his passion for aviation with what he had learned in the Marine Corps to shape the way he built FedEx. “When you come ashore in landing boats, you don’t have any artillery, so the Marine Corps invented close air support, dropping ordnance close to you,” explained Smith. “So I made Federal Express an integrated air-ground system. It had its own pickup and delivery operations on the ground that were integral to the hub-and-spoke air operation.”

That combination of nature (a passion for aviation and a willingness to take calculated risk) and nurture (disciplined military training in logistics), coupled with a great idea to meet a significant business need (fast, reliable delivery of critical goods) revolutionized the business world. It’s hard to imagine businesses operating today without the kind of delivery that Federal Express pioneered.

What’s your passion? What business frustration or need do you see that’s really an opportunity in disguise? What discipline can you bring to bear on your passion and that opportunity to turn an idea into something that can revolutionize the business world?