Frederick W. Smith Biography
When you hear the name Frederick W. Smith, what’s the first thought that comes to mind? Some of you may say “FedEx” or “CEO,” while for others, this name wouldn’t sound familiar at all.
Frederick Wallace Smith is the founder, executive chairman, and former CEO of FedEx, the multi-billion-dollar corporation that provides express package delivery services to over 220 countries and territories around the globe. Fred Smith is the brains behind FedEx as we know it today.
Who Is Frederick W. Smith?
Frederick W. Smith founded FedEx as Federal Express Corporation, based on a revolutionary idea he came up with in his junior year at Yale University.
In 1965, Fred Smith wrote a term paper for his economics class outlining his concept for a company that offered express overnight delivery services.
It wasn’t until six years later, in 1971, that he dared to turn his term paper into a reality.
Fred Smith founded FedEx in 1971, and fast-forward 51 years later, his corporation is worth roughly $59 billion in market cap value and delivers more than 10 million packages daily.
Frederick W. Smith was born on August 11, 1944, in Marks, Mississippi. He was named after his father, Frederick C. Smith, a successful entrepreneur and businessman.
Frederick Smith Sr. is credited with the founding of Dixie Greyhound Bus Lines, among other ventures.
Fred Smith Jr. grew up with one brother, two sisters, and their mother, Sally Wallace Smith. His father passed away when he was four years old, leaving a fortune of inheritance for his family.
Fred Smith Sr. had the foresight to leave the money in a trust fund as he didn’t want to risk them squandering it. Smith and his siblings would later receive their dad’s endowment upon their 21st birthday.
In his early life, Fred Smith Jr. suffered a rare condition called Legg-Calve-Perthes disease, childhood arthritis that affects the hips due to a lack of blood supply.
This disease left him on crutches and braces for most of his childhood. Fortunately, his hip joint sockets stabilized, and he outgrew the condition by age 10.
Frederick W. Smith enrolled at Memphis University Prep, where he developed a fascination for the American Civil War. He participated in school athletics and excelled in his studies.
It was also in these years that Smith’s passion for flying grew, so much so that by age 15, he became a skilled amateur pilot. Smith’s interest in business also began in high school, when he founded his first company, the Ardent Record Company, with a group of friends.
In 1962, Smith enrolled at Yale University to study economics and political science. His involvement in campus social activities, however, affected his academic performance.
The highlight of Smith’s time at Yale University came in 1965 when he wrote a term paper outlining his idea for a company that provides overnight delivery services of time-sensitive packages to cities in the United States.
According to Smith, couriers should focus more on speed than cost and find ways to access smaller cities within the US.
His professor, however, was unimpressed and awarded Smith a C for the term paper. Little did Smith or his professor know that that vision would one day turn into a multi-billion-dollar corporation.
Early Career Life
Smith graduated from Yale University in 1966 with a degree in economics. Shortly after, he enrolled in the U.S. Marine Corps, where he rose to the rank of second lieutenant and was deployed in Southeast Asia to fight in the Vietnam War.
Smith also enlisted in flight school and would go on to fly in more than 200 ground support missions. He left the Marines in 1969 with the rank of captain, receiving several honors like the Bronze Star, Silver Star, and Purple Heart.
It was also in this same year that Smith married Linda Black Grisham. Their union only lasted until 1977, when they divorced.
Fred Smith returned to the United States in 1970, eager to try something new. He revisited his term paper idea and decided to launch a company with it.
To get his business off the ground, Smith purchased the majority interest in his father-in-law’s aircraft maintenance company, Ark Aviation Sales. Under Smith’s management, Ark Aviation Sales generated a revenue of $9 million and made its first-ever profit. Despite this success, Smith wanted something more.
Smith’s original plan for FedEx was to conduct shipments for the Federal Reserve System, but it didn’t pan out the way he wanted. They were doubtful he would pull it off, given his business required a tremendous amount of capital.
Smith also needed to show the nation’s banking system how he would link different parts of the United States to ensure deliveries occurred within the pledged 24-hour window. He needed to design an effective transportation system.
After his initial failure with the Federal Reserve System, Smith decided to test his business concept with the public. He ran an intensive campaign to introduce his business and persuade customers to use his company’s overnight delivery service.
With $4 million from his father’s inheritance fund and $91 million from venture capitalists, Smith officially founded Federal Express Corporation. He was 27 years old at the time.
By 1973, Smith’s company had bought 14 jets and a few vans. It served 25 cities in the United States.
However, the business faced losses due to high advertising and fuel costs and federal airline regulations that limited the planes the company could use and the volumes they could carry per flight.
Smith had to endure losses in his first two years in business until 1976 when the company made its first-ever profit.
In 1977, the government passed a bill to denounce federal airline regulation. This allowed Federal Express Corporation to acquire larger aircraft and ship more volumes, thus reducing costs per flight. It enabled Smith’s company to generate a profit of $8 million that year.
1978 was also a good year for Smith. It was when his company went public, raising $258 million from its IPO. Smith used this money to expand into more than 90 cities within the United States.
In 1984, Federal Express became the first company to surpass $1 billion in revenue within 10 years of operations.
Going global wasn’t an easy journey for Smith and his company. However, in the end, he became one of the wealthiest people in the United States.
By 1997, FedEx was delivering, on average, 2.5 million packages per day to 211 territories and countries. The company had 120,000 employees and was generating billions of dollars in revenue.
Smith’s journey through business isn’t void of setbacks. His company suffered severe financial losses in the 1980s, partly due to stiff competition from UPS and challenges entering foreign markets.
However, one failure stood out in the mid-1980s, costing his company more than $300 million.
In 1984, Smith developed ZapMail, an electronic mail system that allowed customers to send documents electronically within two hours anywhere in the United States. Unfortunately, this program was flawed from the start.
ZapMail suffered frequent line disturbances that disrupted mail transmission. It also broke down constantly, thus requiring repairs, and customers found the service rather expensive.
They found it more cost-effective to buy their own fax machines. Eventually, Smith discontinued ZapMail in 1989.
Fred Smith has received several awards and honorary degrees for his work in FedEx and his contribution to the American business community.
Some of them include the Global Leadership Award from the U.S-India Business Council, the Wright Brothers Memory Trophy, and the Atlantic Council’s Distinguishing Business Leadership Award.
In 1997, Smith also received the Peter F. Drucker Strategic Leadership Award. He was also named CEO of the Year in 2004 by the Chief Executive magazine.
Smith is known in the business world for the culture and philosophy he created at FedEx, something he calls people-service-profit (PSP).
The premise behind the PSP philosophy is that by creating a good working environment for your employees, they will provide better service for your customers and the company, which will, in turn, lead to more profit.
This philosophy not only inspires loyalty from FedEx employees but also motivates them to work harder on their roles and reduces employee turnover.
The PSP philosophy is evident in not only FedEx’s company culture but also in Smith’s actions. Smith has always strived to give employees generous salaries with benefits and overtime.
He ensured they had medical coverage, even when the economy was tough. Smith tried to be accessible to his employees, and he acknowledged and appreciated their efforts for the company.
One instance that showed Smith’s devotion to his employees was in the 1990s when UPS workers were on strike.
There was an 800,000 order influx at FedEx, which saw employees working numerous shifts. To thank them for their efforts, Smith gave his staff bonuses and ran a full-page newspaper ad acknowledging them for their work.
Lessons Learned From Frederick W. Smith
Below are a few lessons we can learn from Fred Smith that may interest you.
Fred Smith is, by all accounts, a leader worthy of honor and admiration. Here are a few lessons we can pick up from him:
- Believe in yourself
Trust in your ideas and abilities as Smith believed in his term paper. Smith didn’t let getting a bad grade or the initial failure with the Federal Reserve System, hinder him from starting FedEx.
- Take risks
Smith took a huge risk in starting FedEx. He knew his idea would require a tremendous amount of capital to get off the ground but still was willing to make it happen. Don’t be afraid to take risks or seize opportunities whenever they arise.
- Treat your employees well
Smith created a company culture that put his employees first. He strived to provide for them, even when times were tough and money scarce. In the same breath, treat your staff with compassion and respect. Appreciate them for their hard work and create a work environment that allows them to give their best.
- Be resilient
Running a business won’t be a walk in the park. You may suffer a few failures and setbacks as Smith did. Don’t let these challenges deter you from achieving your business dreams and goals. Most of all, don’t give up when things get rough.
Frederick W. Smith is born in Marks, Mississippi.
Smith’s father passes away, leaving a fortune of inheritance for his family.
Smith enrolls at Yale University to study economics and political science.
Fred Smith writes a term paper highlighting an idea for a company that offers express overnight delivery of time-sensitive packages within the United States. He later turns his term paper into FedEx.
Smith graduates from Yale University with a degree in economics.
Smith marries Linda Black Grisham. He also purchases a controlling interest in his father-in-law’s company, Ark Airlines Sales.
Smith launches FedEx as Federal Express Corporation.
Smith’s company makes its first-ever profit.
Smith and Linda divorced. Deregulation also occurs, allowing Smith to purchase larger aircraft for his company and deliver more volumes per flight.
Smith takes his company public, raising 258 million from the IPO.
Federal Express hits the $1 billion mark in revenue.
Smith receives the Peter F. Drucker Strategic Leadership Award.
Smith receives Chief Executive magazine’s CEO of the Year award.
Smith steps down as CEO of FedEx. He is now the corporation’s executive chairman.
Frederick W. Smith – Quotes
- Fear of failure must never be a reason not to try something.
- A manager is not a person who can do the work better than his men; he is a person who can get his men to do the work better than he can.
- A Yale University management professor in response to student Fred Smith’s paper proposing reliable overnight delivery service: The concept is interesting and well-formed, but in order to earn better than a ‘C’, the idea must be feasible.
- Leadership is simply the ability of an individual to coalesce the efforts of other individuals toward achieving common goals. It boils down to looking after your people and ensuring that, from top to bottom, everyone feels part of the team.
- The biggest part of our business has always been moving things, not paper. With the Internet, people in Mississippi can buy things from Macedonia, without regard to time or place, or quantity.
- The tax rate of 35 percent is impossible to provide an incentive to the large corporations, that have $1.7 trillion offshore, to put their money back in the United States.
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