4 ms·

Frederick W. Smith: No Overnight Success

17 points by niggler 14y ago

deleted 14y ago
[deleted]
kevinconroy 14y ago
Headline is misleading. Only reference related to this in the article is: By 1973, Smith was so desperate for cash that he flew to Las Vegas to play the blackjack tables. He wired the $27,000 he won back to FedEx. Where did you find it was the "last $5000"?
- saintx 14y ago
  Yeah, this is unworthy of HN.
- randall 14y ago
  I can't back it up with another source, but I have heard this / read this assertion somewhere. It's at least founder-culture folklore. Trying to remember which book I read it in... will edit if I can find / remember. Here's a reference to another reference: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjack-fedex_n_1966837.html http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...
- niggler 14y ago
  Page 134 of "Changing How the World Does Business" (search on google books): "by mid-July our funds were so meager that on Friday we were down to about $5,000 in the checking account, while we needed $24,000 for the jet fuel payment." ... "you mean you took our last $5,000 -- how could you do that?" Original headline was factually correct (even though, as you correctly point out, the $5,000 part wasn't mentioned in the article) IMGUR screenshot: http://imgur.com/itzcF3Z http://imgur.com/itzcF3Z
- graycat 14y ago
  Guys, Fred Smith didn't go to Vegas to try winning the $27,000 gambling. Instead he went to Vegas hoping to see Howard Hughes and get an investment in FedEx (then Federal Express), and he won the $27,000 while waiting to see Hughes. Hughes didn't invest, but General Dynamics did, as I recall, $5 million. Check the story with Fred, Roger Frock, Art Bass, Charlie Brandon, Norm Waite, Leon Tyree, Mike Basch, and others.
jayzalowitz 14y ago
This is actually a famous story... dont ever give up on your startup.
- nashequilibrium 14y ago
  You just don't see that type of founder in SV anymore. Everyone watches the latest conference talks from VC's and entrepreneurs that exited, which teaches them a few common things.....fail fast, make sure you grow by x% week on week, you need a co-founder, ask yourself who could you see trying to acquire you? Staying power and testing monetization from day 1 never get mentioned. Oink had a 150 000 users within a quarter i believe but still shutdown, Pinterest were stuck on around 11000 users for a long time before they reached a tipping point. Life happens in spits and spurts, even looking at a stock chart, a companies stock price moves in a contraction expansion pattern. Bottom line we all get taught that the startup lifecycle follows a normal distribution but it is actually fat-tailed so is VC returns coincidentally. I think the last chapter of Emmanuel Dermans's book, 'My life as a quant' can apply to the startup industry as well.
  - graycat 14y ago
    It's simpler than that: Fred knew in fairly good detail just what he was doing. All the early money in FedEx (Federal Express then) was from Fred's family's money, basically Fred's personal checkbook. Also should count Fred's time at his Little Rock Airmotive where he did the engineering on the special cargo door and got the FAA approval. So, FedEx really grew from a going business, Little Rock Airmotive, and was not started with just an idea. By late 1972, White-Weld was supposed to have done a good private placement, but they didn't get it done. Although later one of the guys from White-Weld, Phil Greer, did invest as part of Weis, Peck, and Greer, now Opus. The service went live in early 1973 and was chronically short of money from then for at least some months. The fuel crisis hurt: FedEx was buying jet fuel for 16 cents a gallon in Memphis but 55 cents a gallon in Nashville with the other cities scattered between and with limits on how much must/could buy. Right: Buy fuel where it's cheap and fly it to where it's expensive. Hmm ... The more important questions were: How fast can bring the 33 planned planes online to serve the planned 90 US cities? E.g., had to find and buy the planes, get the special cargo door installed, get the pilots, be sure there is enough maintenance staff and facilities. During this growth period, how fast will the package volume and revenue grow? How much does FedEx need to charge, for over-night and for next-day, and how much will the customers pay? Where should the early marketing efforts be aimed -- law firms sending "time-critical documents", lab animals, manufacturers' representatives sending samples, e.g., decorative bricks, spare parts suppliers, suppliers of inventory for just in time inventory manufacturing that just ran out of a crucial part, clinics sending samples for medical testing, fashion, e.g., loads of dresses for a big sale, movie film, both unexposed and ready for showing, etc. How fast the service would grow was, if you will, an exercise in 'the network effect' because the more cities served, the more opportunities to get shipments from a given city. Further, of course, there was a big 'virality' effect: Each shipment was, in effect, and ad to a good candidate customer. All up, 90 cities, great publicity and reputation, sure, but just 15 cities, no publicity or reputation and the billing sucks? So it was a bit unclear just how fast the service would grow from 15 cities to 90. In broad terms, the need for the service was quite clear. But some of the planning was not good: E.g., the early planning arithmetic said that could fly the planes half full and print money. Then soon the planes were flying packed full, the rates were doubled, and they were still losing money. We're talking some bad arithmetic.
raheemm 14y ago
The timing of this link almost seems karmic. After only 6 months of trying, failing to learn coding, a competitor beating me to launch, less than $1k left in the bank and living a broke ass life for what seems like an eternity, I was thinking of throwing in the towel today. This gives such great perspective. I'll try harder.

17 points by niggler 14y ago

deleted 14y ago

[deleted]

Headline is misleading. Only reference related to this in the article is: By 1973, Smith was so desperate for cash that he flew to Las Vegas to play the blackjack tables. He wired the $27,000 he won back to FedEx. Where did you find it was the "last $5000"?

saintx 14y ago
Yeah, this is unworthy of HN.
randall 14y ago
I can't back it up with another source, but I have heard this / read this assertion somewhere. It's at least founder-culture folklore. Trying to remember which book I read it in... will edit if I can find / remember. Here's a reference to another reference: http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjack-fedex_n_1966837.html http://www.huffingtonpost.com/2012/10/15/fred-smith-blackjac...
niggler 14y ago
Page 134 of "Changing How the World Does Business" (search on google books): "by mid-July our funds were so meager that on Friday we were down to about $5,000 in the checking account, while we needed $24,000 for the jet fuel payment." ... "you mean you took our last $5,000 -- how could you do that?" Original headline was factually correct (even though, as you correctly point out, the $5,000 part wasn't mentioned in the article) IMGUR screenshot: http://imgur.com/itzcF3Z http://imgur.com/itzcF3Z
graycat 14y ago
Guys, Fred Smith didn't go to Vegas to try winning the $27,000 gambling. Instead he went to Vegas hoping to see Howard Hughes and get an investment in FedEx (then Federal Express), and he won the $27,000 while waiting to see Hughes. Hughes didn't invest, but General Dynamics did, as I recall, $5 million. Check the story with Fred, Roger Frock, Art Bass, Charlie Brandon, Norm Waite, Leon Tyree, Mike Basch, and others.

jayzalowitz 14y ago

This is actually a famous story... dont ever give up on your startup.

nashequilibrium 14y ago
You just don't see that type of founder in SV anymore. Everyone watches the latest conference talks from VC's and entrepreneurs that exited, which teaches them a few common things.....fail fast, make sure you grow by x% week on week, you need a co-founder, ask yourself who could you see trying to acquire you? Staying power and testing monetization from day 1 never get mentioned. Oink had a 150 000 users within a quarter i believe but still shutdown, Pinterest were stuck on around 11000 users for a long time before they reached a tipping point. Life happens in spits and spurts, even looking at a stock chart, a companies stock price moves in a contraction expansion pattern. Bottom line we all get taught that the startup lifecycle follows a normal distribution but it is actually fat-tailed so is VC returns coincidentally. I think the last chapter of Emmanuel Dermans's book, 'My life as a quant' can apply to the startup industry as well.
- graycat 14y ago
  It's simpler than that: Fred knew in fairly good detail just what he was doing. All the early money in FedEx (Federal Express then) was from Fred's family's money, basically Fred's personal checkbook. Also should count Fred's time at his Little Rock Airmotive where he did the engineering on the special cargo door and got the FAA approval. So, FedEx really grew from a going business, Little Rock Airmotive, and was not started with just an idea. By late 1972, White-Weld was supposed to have done a good private placement, but they didn't get it done. Although later one of the guys from White-Weld, Phil Greer, did invest as part of Weis, Peck, and Greer, now Opus. The service went live in early 1973 and was chronically short of money from then for at least some months. The fuel crisis hurt: FedEx was buying jet fuel for 16 cents a gallon in Memphis but 55 cents a gallon in Nashville with the other cities scattered between and with limits on how much must/could buy. Right: Buy fuel where it's cheap and fly it to where it's expensive. Hmm ... The more important questions were: How fast can bring the 33 planned planes online to serve the planned 90 US cities? E.g., had to find and buy the planes, get the special cargo door installed, get the pilots, be sure there is enough maintenance staff and facilities. During this growth period, how fast will the package volume and revenue grow? How much does FedEx need to charge, for over-night and for next-day, and how much will the customers pay? Where should the early marketing efforts be aimed -- law firms sending "time-critical documents", lab animals, manufacturers' representatives sending samples, e.g., decorative bricks, spare parts suppliers, suppliers of inventory for just in time inventory manufacturing that just ran out of a crucial part, clinics sending samples for medical testing, fashion, e.g., loads of dresses for a big sale, movie film, both unexposed and ready for showing, etc. How fast the service would grow was, if you will, an exercise in 'the network effect' because the more cities served, the more opportunities to get shipments from a given city. Further, of course, there was a big 'virality' effect: Each shipment was, in effect, and ad to a good candidate customer. All up, 90 cities, great publicity and reputation, sure, but just 15 cities, no publicity or reputation and the billing sucks? So it was a bit unclear just how fast the service would grow from 15 cities to 90. In broad terms, the need for the service was quite clear. But some of the planning was not good: E.g., the early planning arithmetic said that could fly the planes half full and print money. Then soon the planes were flying packed full, the rates were doubled, and they were still losing money. We're talking some bad arithmetic.

raheemm 14y ago

The timing of this link almost seems karmic. After only 6 months of trying, failing to learn coding, a competitor beating me to launch, less than $1k left in the bank and living a broke ass life for what seems like an eternity, I was thinking of throwing in the towel today. This gives such great perspective. I'll try harder.