LegalFix

FRED SMITH: AN AMERICAN LIFE. By me, for @arenamag Fred Smith died on Saturday, June 21. He was the founder of Federal Express, which became FedEx, one of the largest logistics companies on Earth. Smith was an entrepreneur in the truest sense of the word, and an American patriot. He bent reality and created something entirely new. And he ran toward an extremely difficult problem. The fruits of Fred’s work are as follows: if you give a box or document to FedEx by 6:00 p.m., you can have it delivered  almost anywhere in the U.S. or Canada by 8:00 a.m. the next morning. If you give FedEx a package on a Monday, it can be in Paris by Wednesday morning, or in Shanghai by Thursday (for a few hundred dollars). Most of us take overnight delivery for granted. But take a step back, and the fact that we can essentially air-drop physical packages anywhere in the world is mind-boggling. Smith’s death is a reminder not to take the miracles of modern life for granted; they were built by people like Fred Smith. These are a few words about the man himself, and the dazzling system that is FedEx. *** Frederick Wallace Smith was born in 1944 in Mississippi. Fred’s grandfather,  James Buchanan Smith, captained Mississippi River steamboats. Fred’s father, James Frederick Smith, was the founder of the Smith Motor Coach Company, which would go on to become Dixie Greyhound Lines after an acquisition in 1931. From steamboats to buses to jumbojets in three generations, the family stayed on the cutting edge of motorized transportation. In 1925, the elder Smith, seeking to create a transportation line out of Memphis, converted a truck into a small bus and drove it himself. Within a few years, James Smith had dozens of coaches; by the time he died suddenly in 1948, he commanded over two-hundred. According to James Smith’s obituary, those two-hundred coaches each came to a halt during their regularly scheduled routes for one minute when the funeral began. The young Fred was just four years old when his father died. In 1962, the young Smith enrolled at Yale University, where he was fraternity brothers with the future President George W. Bush (Bush asked Smith to serve as secretary of defense twice, and Smith declined twice). He was a member of the infamous Cloak and Dagger secret society. It was at Yale that he first wrote a paper about his concept for using airplanes to deliver packages with a hub and spoke system — i.e. that instead of point-to-point package transport, everything would be brought to a single hub by air and then redistributed, by air. Repeat that cycle every night while turning a profit and you have a viable system for overnight delivery. The paper is said to have earned an average grade. In 1966, Smith graduated from Yale, and volunteered to receive a commission in the Marine Corps. He served two tours in Vietnam. For his service in Vietnam, President Nixon decorated Smith with a Silver Star and a Bronze Star. The Silver Star citation read, in part: “Unhesitatingly rushing through the intense hostile fire to the position of heaviest contact, Lieutenant Smith fearlessly removed several casualties from the hazardous area and, shouting words of encouragement to his men, directed their fire upon the advancing enemy soldiers, successfully repulsing the hostile attack. Moving boldly across the fire-swept terrain to an elevated area, he calmly disregarded repeated North Vietnamese attempts to direct upon him as he skillfully adjusted artillery fire and air strikes upon the hostile positions to within fifty meters of his own location and continued to direct the movement of his unit.” In 1973, at twenty-nine years old, Smith launched Federal Express in Memphis. Smith had studied military procurement and been working on the idea for nearly ten years after writing the Yale paper. The company launched with a fleet of fourteen French Dassault jets, which delivered a few hundred packages on their first day of service.  According to FedEx lore, Smith named his new service “Federal Express” because he hoped to attract the attention of the Federal Reserve Bank, a prospective customer. The system that Smith had conceived at Yale worked. It really worked. And nothing like it existed. The USPS existed principally to deliver letter-mail, and didn’t have aircraft. UPS was a giant of ground delivery throughout the US. Federal Express, though, would specialize in rapid air delivery. Just five years after the first Federal Express flights, the company was listed on the New York Stock Exchange. Today, the FedEx fleet consists of nearly 700 aircraft and about 200,000 vehicles, and FedEx employs 500,000 workers around the world. Every night at the Fedex “Superhub” at Memphis International Airport, hundreds of jets land at the airport, bringing packages to its many sorting machines. A few hours later, the jets take back off to every corner of the United States and the world. At their destinations, the other half of the fleet awaits: feeder aircraft to take packages to smaller airports and the FedEx Express trucks that take packages to their final destinations. Not only is the system that Fred Smith built incredibly impressible, but “FedEx” is practically synonymous with reliability. FedEx is so reliable that our culture has  now reached a point where anything other than 2-day delivery can be dismissed as  “slow.” In the rare instance that FedEx misses its own delivery goals, people feel that they can justifiably be upset. It is the true mark of a brilliant entrepreneur that in addition to creating new realities, Fred Smith and FedEx created new expectations. Overnight? No problem. Global delivery? No problem. As long as you’re willing to pay. And pay they do! Revenues are nearly $100 billion annually. Today, FedEx’s market capitalization sits around $55 billion. And in addition to creating wealth for his family and employees, Smith created new possibilities for the hundreds of thousands of businesses that couldn’t exist without reliable overnight delivery. As is the case with most great enterprises, the value of that is much greater than any money FedEx itself made. That is not an unusual story; it’s the whole story of American capitalism. *** Smith retired from FedEx in 2022, after almost 50 years leading the company. He is survived by nine of his ten children, and his wife, Diane. His daughter Windland Smith-Rice died in 2005 of a terminal cardiac condition. One has to think that his father Mr. Smith, who died with 200 vehicles to his name, would be impressed that his son died with 200,000 vehicles to his name, and a fleet of jets to match.