1 00:00:01,914 --> 00:00:04,091 Today, Americans ship over 21.6 billion 2 00:00:04,091 --> 00:00:05,092 parcels a year. 3 00:00:06,354 --> 00:00:08,747 We take for granted our ability 4 00:00:08,834 --> 00:00:12,273 to get anything from anywhere when we want it. 5 00:00:13,578 --> 00:00:16,059 And spend over $188 billion 6 00:00:16,059 --> 00:00:19,367 to ship goods to their doorstep overnight. 7 00:00:19,454 --> 00:00:20,933 If I wanna order Sriracha, 8 00:00:20,933 --> 00:00:22,109 I want it the very next day 9 00:00:22,109 --> 00:00:23,284 because what am I gonna do? 10 00:00:23,284 --> 00:00:24,763 Eat my foods without it? 11 00:00:24,763 --> 00:00:26,635 The industry is a modern marvel 12 00:00:26,635 --> 00:00:27,853 that wouldn't be possible 13 00:00:27,853 --> 00:00:29,986 without bold innovators. 14 00:00:29,986 --> 00:00:33,990 We could be delivering packages literally overnight. 15 00:00:34,077 --> 00:00:36,862 This guy goes all in to fuel 16 00:00:36,862 --> 00:00:39,387 what he thinks is gonna be the future. 17 00:00:39,387 --> 00:00:40,388 UPS will just have to take on 18 00:00:40,388 --> 00:00:41,519 the United States Post Office. 19 00:00:41,519 --> 00:00:43,391 This is a huge gamble. 20 00:00:43,391 --> 00:00:45,393 I give you Federal Express. 21 00:00:45,393 --> 00:00:47,656 They fought these battles state by state, 22 00:00:47,743 --> 00:00:49,353 city by city. 23 00:00:49,353 --> 00:00:52,661 You would think $80 million in capital raised 24 00:00:52,661 --> 00:00:54,141 couldn't possibly fail. 25 00:00:54,141 --> 00:00:56,578 You'd be very, very, very wrong. 26 00:00:56,665 --> 00:00:58,145 They come from nothing... 27 00:00:58,145 --> 00:01:00,886 They literally created the packaging industry 28 00:01:00,886 --> 00:01:01,800 out of thin air. 29 00:01:01,800 --> 00:01:03,411 and risk everything. 30 00:01:03,411 --> 00:01:06,240 I think the term is financial fraud. 31 00:01:06,240 --> 00:01:07,589 To connect the world. 32 00:01:07,589 --> 00:01:09,808 Without FedEx, without UPS, 33 00:01:09,808 --> 00:01:11,593 the world would come grinding to a halt. 34 00:01:12,681 --> 00:01:14,509 What do you think? 35 00:01:14,509 --> 00:01:19,383 He's now created one of the most enduring brand identities 36 00:01:19,383 --> 00:01:22,212 in all of American business. 37 00:01:45,235 --> 00:01:46,758 Today, consumers can click 38 00:01:46,758 --> 00:01:49,021 a button and have any item they want 39 00:01:49,021 --> 00:01:51,807 delivered right to their door overnight. 40 00:01:51,807 --> 00:01:55,245 But at the turn of the 20th century delivery as we know it, 41 00:01:55,332 --> 00:01:56,855 doesn't exist. 42 00:01:56,855 --> 00:01:58,683 Prior to the Industrial Revolution, 43 00:01:58,683 --> 00:02:01,208 there wasn't much like purchasing from afar. 44 00:02:01,295 --> 00:02:03,297 People would go to their local merchants 45 00:02:03,297 --> 00:02:05,168 and often just take home what they bought. 46 00:02:05,255 --> 00:02:06,430 The only thing Americans 47 00:02:06,430 --> 00:02:08,954 are sending door to door is letters 48 00:02:09,041 --> 00:02:12,610 through what is then called the US Post Office Department. 49 00:02:12,697 --> 00:02:13,959 So for the first 50, 50 00:02:13,959 --> 00:02:15,700 60 years of the American Republic 51 00:02:15,787 --> 00:02:17,615 from the days of the Constitution up 52 00:02:17,615 --> 00:02:19,965 to the Civil War, the United States Post Office 53 00:02:19,965 --> 00:02:22,403 is the most important government agency. 54 00:02:22,490 --> 00:02:24,318 It's the one that has the most employees. 55 00:02:24,318 --> 00:02:28,148 It's also spread all across the spreading United States. 56 00:02:28,148 --> 00:02:30,367 Everywhere you go, there are post offices. 57 00:02:30,454 --> 00:02:31,890 Before the telephone, 58 00:02:32,021 --> 00:02:34,763 letters are the way to get information across the country. 59 00:02:34,763 --> 00:02:36,286 In the mid 19th century 60 00:02:36,373 --> 00:02:38,070 when California becomes part of the the union, 61 00:02:38,158 --> 00:02:41,248 there's a real desire to connect the east to the west. 62 00:02:41,335 --> 00:02:44,599 There's tremendous emphasis on information 63 00:02:44,599 --> 00:02:47,602 and trying to move information as quickly as possible. 64 00:02:47,732 --> 00:02:49,081 And parcel delivery 65 00:02:49,081 --> 00:02:50,692 was especially primitive. 66 00:02:50,779 --> 00:02:52,128 During westward expansion, 67 00:02:52,128 --> 00:02:53,912 there becomes a need to transport 68 00:02:53,999 --> 00:02:56,306 valuable items like gold bullion. 69 00:02:56,306 --> 00:02:58,961 So you have this newish bank, Wells Fargo, 70 00:02:58,961 --> 00:03:00,615 which is literally transporting 71 00:03:00,702 --> 00:03:04,227 this gold by stage coach with a shotgun. 72 00:03:04,227 --> 00:03:06,577 This is where we get the term riding shotgun. 73 00:03:06,664 --> 00:03:08,144 But the new territories 74 00:03:08,144 --> 00:03:10,799 are difficult to get to by stagecoach or carriage. 75 00:03:14,368 --> 00:03:15,978 So in 1860, 76 00:03:15,978 --> 00:03:19,155 a company enterprise and company creates the Pony Express, 77 00:03:19,242 --> 00:03:21,462 which is gonna send mail via pony relay 78 00:03:21,462 --> 00:03:22,941 from St. Joseph, Missouri, 79 00:03:23,028 --> 00:03:25,074 all the way to Sacramento, California. 80 00:03:25,161 --> 00:03:28,382 With the Pony Express, mail would be picked up at certain 81 00:03:28,382 --> 00:03:31,080 points along the way by a rider 82 00:03:31,080 --> 00:03:33,343 and distributed to final destinations. 83 00:03:33,343 --> 00:03:35,171 Pony Express is a business failure. 84 00:03:35,171 --> 00:03:37,304 It runs for about 18 months, 85 00:03:37,304 --> 00:03:40,698 from April of 1860 to October of 1861. 86 00:03:40,785 --> 00:03:43,745 It loses money every single day of that operation 87 00:03:43,832 --> 00:03:46,051 and it is quickly surpassed 88 00:03:46,051 --> 00:03:48,053 by the Transcontinental Telegraph system. 89 00:03:48,053 --> 00:03:49,794 Samuel Morris develops 90 00:03:49,794 --> 00:03:52,797 a truly revolutionary technology, the telegraph. 91 00:03:52,797 --> 00:03:55,800 And so through morse code, dots and dashes, 92 00:03:55,800 --> 00:03:58,020 people can communicate written messages 93 00:03:58,107 --> 00:04:00,109 to each other in far away places. 94 00:04:00,196 --> 00:04:01,328 Of course, it's important to remember 95 00:04:01,328 --> 00:04:02,807 that telephones were just 96 00:04:02,807 --> 00:04:04,896 becoming available at this period too. 97 00:04:04,983 --> 00:04:07,986 But relatively few people had access to electricity, 98 00:04:07,986 --> 00:04:10,685 much less a fancy accessory like a telephone. 99 00:04:10,685 --> 00:04:13,122 So that was still out of reach for most Americans. 100 00:04:13,122 --> 00:04:15,211 But even telegrams need to be hand 101 00:04:15,211 --> 00:04:18,214 delivered to their final destinations. 102 00:04:18,214 --> 00:04:20,738 Now, most people didn't have telegraphs in their home. 103 00:04:20,738 --> 00:04:23,959 So the telegraph solved one set of communication issues, 104 00:04:23,959 --> 00:04:26,570 but created a need for another innovation, 105 00:04:26,657 --> 00:04:29,138 which was a messenger service to actually deliver 106 00:04:29,138 --> 00:04:31,227 that telegram and bring it to the person 107 00:04:31,314 --> 00:04:32,881 who was supposed to receive it. 108 00:04:32,881 --> 00:04:34,535 And in 1913, 109 00:04:34,622 --> 00:04:36,493 one of the people offering such a messenger 110 00:04:36,493 --> 00:04:39,975 service is Seattle-based businessman Jim Casey. 111 00:04:39,975 --> 00:04:43,761 We have got 22 telegrams going out so far. 112 00:04:43,761 --> 00:04:45,328 Last one came in at 2:00 AM. 113 00:04:45,328 --> 00:04:48,810 Jim Casey was the son of Irish immigrants. 114 00:04:48,940 --> 00:04:50,551 He dropped outta school when he was 11 115 00:04:50,551 --> 00:04:52,292 to help support his family. 116 00:04:54,076 --> 00:04:56,644 He was very pragmatic, always impeccably dressed, 117 00:04:56,644 --> 00:04:59,429 always very keenly aware about the way he presented himself. 118 00:04:59,429 --> 00:05:01,823 When was 19 years old, 119 00:05:01,910 --> 00:05:04,042 he started his own company. 120 00:05:04,042 --> 00:05:06,306 Jim Casey borrowed a hundred dollars 121 00:05:06,306 --> 00:05:07,916 to start a messenger service. 122 00:05:07,916 --> 00:05:09,831 It was called American Messenger Service 123 00:05:09,831 --> 00:05:11,180 and he and his brother George, 124 00:05:11,180 --> 00:05:13,704 bought two bicycles and they hired six kids 125 00:05:13,791 --> 00:05:14,966 and they would deliver a telegram 126 00:05:14,966 --> 00:05:16,577 to whoever's supposed to have it. 127 00:05:16,664 --> 00:05:18,579 But then they also ran errands for people. 128 00:05:18,579 --> 00:05:20,015 And when they started it, 129 00:05:20,015 --> 00:05:22,409 there were nine other companies in Seattle 130 00:05:22,409 --> 00:05:24,149 doing the same thing, 131 00:05:24,236 --> 00:05:26,543 running all these errands all over town for people. 132 00:05:26,543 --> 00:05:30,330 Errand wise, we have babysitting six hours 133 00:05:30,330 --> 00:05:31,505 and the college needs someone 134 00:05:31,505 --> 00:05:34,377 to pose for an art class, two hours. 135 00:05:34,377 --> 00:05:37,511 The errands aspect was a little strange, 136 00:05:37,511 --> 00:05:41,210 but basically the errands could be anything from dog walking 137 00:05:42,820 --> 00:05:44,605 to following an unfaithful spouse. 138 00:05:44,692 --> 00:05:48,260 They delivered opium to people and it was 24/7 service. 139 00:05:48,260 --> 00:05:50,219 So they slept in the office 140 00:05:50,219 --> 00:05:52,830 like on an old luncheonette counter. 141 00:05:52,830 --> 00:05:54,136 American Messenger Company 142 00:05:54,266 --> 00:05:55,964 will one day pave the way 143 00:05:55,964 --> 00:05:57,705 for shipping as we know it, 144 00:05:57,705 --> 00:06:00,185 becoming the biggest courier in the world, 145 00:06:00,185 --> 00:06:04,015 shipping over 24.3 million packages a day 146 00:06:04,015 --> 00:06:08,324 in over 220 countries earning over $100 billion a year. 147 00:06:09,891 --> 00:06:13,373 But for now, the brothers are in over their heads. 148 00:06:13,373 --> 00:06:14,722 And then there's Mrs. Alcott. 149 00:06:14,722 --> 00:06:16,985 She needs an escort to her brother's wake. 150 00:06:17,072 --> 00:06:17,812 So what's that? 151 00:06:17,899 --> 00:06:19,814 Four hours I guess. 152 00:06:19,901 --> 00:06:22,686 Ultimately the business began to plateau. 153 00:06:22,686 --> 00:06:24,906 There were too many errands 154 00:06:24,906 --> 00:06:27,299 and the errands take so very long. 155 00:06:27,299 --> 00:06:29,301 It's not like dropping off a telegram. 156 00:06:29,301 --> 00:06:31,434 So if an errand takes a long period of time, 157 00:06:31,521 --> 00:06:33,828 you lose that employee for that period of time. 158 00:06:37,962 --> 00:06:39,529 What's all this. 159 00:06:39,529 --> 00:06:40,748 Mayweather's department store? 160 00:06:40,748 --> 00:06:42,532 Wants these delivered to their customers. 161 00:06:42,532 --> 00:06:44,186 By the early 1900's, 162 00:06:44,273 --> 00:06:47,232 department store popularity is on the rise. 163 00:06:47,319 --> 00:06:49,234 The department stores had everything under one roof. 164 00:06:49,234 --> 00:06:51,411 They sold clothing, they sold furniture, 165 00:06:51,411 --> 00:06:53,413 and when appliances came along, 166 00:06:53,413 --> 00:06:54,718 they sold that, they sold everything. 167 00:06:54,718 --> 00:06:56,416 With the Industrial revolution, 168 00:06:56,416 --> 00:06:58,548 more people are buying more things. 169 00:06:58,548 --> 00:07:00,724 People have more disposable income, 170 00:07:00,811 --> 00:07:01,899 there are more merchants 171 00:07:01,986 --> 00:07:03,727 which are offering more products 172 00:07:03,727 --> 00:07:06,034 to fill consumer appetites. 173 00:07:06,034 --> 00:07:08,471 And somehow those products need 174 00:07:08,602 --> 00:07:11,735 to get from store or warehouse to the consumer. 175 00:07:11,822 --> 00:07:13,345 It's hard to believe 176 00:07:13,345 --> 00:07:15,783 that having a store deliver your goods 177 00:07:15,870 --> 00:07:19,787 to your house was considered novel or even a luxury. 178 00:07:19,787 --> 00:07:21,789 But the truth of the matter is, 179 00:07:21,789 --> 00:07:24,574 if you went to a department store in the earliest parts 180 00:07:24,661 --> 00:07:27,925 of the 20th century, you had to take things home. 181 00:07:29,579 --> 00:07:31,146 And in a time when not a lot of people had automobiles, 182 00:07:31,233 --> 00:07:32,843 that was quite an endeavor. 183 00:07:32,843 --> 00:07:35,193 Department stores begin hiring messenger 184 00:07:35,280 --> 00:07:38,327 services to handle home deliveries. 185 00:07:38,327 --> 00:07:40,111 When do they have to be delivered? 186 00:07:40,111 --> 00:07:41,069 Today. 187 00:07:41,069 --> 00:07:42,810 Not possible. 188 00:07:42,810 --> 00:07:44,594 I'm supposed to follow that guy's wife later today. 189 00:07:44,594 --> 00:07:47,292 They would run these errands and it was very difficult 190 00:07:47,292 --> 00:07:48,642 to manage that 'cause you never knew 191 00:07:48,729 --> 00:07:51,340 how long you'd be out doing that task. 192 00:07:51,340 --> 00:07:52,515 The Casey's realized 193 00:07:52,602 --> 00:07:54,038 that the need for department store 194 00:07:54,038 --> 00:07:56,301 deliveries are increasing by the day. 195 00:07:56,301 --> 00:07:59,609 Jim Casey ever this sort of silent, watchful, 196 00:07:59,696 --> 00:08:02,394 yet knowledgeable observer, sees an opening. 197 00:08:02,394 --> 00:08:04,135 They make an unprecedented deal 198 00:08:04,222 --> 00:08:05,876 with a Seattle department store 199 00:08:05,876 --> 00:08:08,444 to become their exclusive delivery service. 200 00:08:09,924 --> 00:08:13,014 What he does is he offers the services 201 00:08:13,101 --> 00:08:16,365 of his company as the delivery entity 202 00:08:16,365 --> 00:08:18,498 that the department stores could rely on. 203 00:08:18,498 --> 00:08:21,936 So they didn't have to worry about staffing their own fleet. 204 00:08:22,023 --> 00:08:26,767 Let him deliver all of the packages for them 205 00:08:28,333 --> 00:08:29,857 and then they can just concentrate on merchandising. 206 00:08:29,857 --> 00:08:31,380 That had never been done before. 207 00:08:31,467 --> 00:08:32,686 Talk about a risk taker. 208 00:08:32,773 --> 00:08:35,558 This guy goes all in to fuel 209 00:08:35,558 --> 00:08:37,865 what he thinks is gonna be the future. 210 00:08:37,865 --> 00:08:40,128 In 1913, delivering a package 211 00:08:40,128 --> 00:08:42,522 at all is a novel concept. 212 00:08:42,609 --> 00:08:45,350 Even the post office department is only just beginning 213 00:08:45,437 --> 00:08:46,961 to offer parcel delivery. 214 00:08:46,961 --> 00:08:48,963 When the postal service begins 215 00:08:48,963 --> 00:08:51,400 to deliver more than letters, 216 00:08:51,400 --> 00:08:53,184 this is hugely exciting for people. 217 00:08:53,271 --> 00:08:54,838 They begin to think about all the things that they 218 00:08:54,969 --> 00:08:57,537 potentially could ship and they do. 219 00:08:57,537 --> 00:09:00,017 So you have the postal service handling everything 220 00:09:00,104 --> 00:09:02,629 from pitchforks to eggs 221 00:09:02,629 --> 00:09:06,850 to snakes in some cases, and even children. 222 00:09:06,850 --> 00:09:08,939 There are seven documented cases. 223 00:09:08,939 --> 00:09:11,159 There might have been more of children actually being 224 00:09:11,159 --> 00:09:14,205 shipped through the mail 'cause it could be cheaper 225 00:09:14,205 --> 00:09:16,686 to actually send a child through the mail 226 00:09:16,773 --> 00:09:18,296 than it could be to buy a ticket 227 00:09:18,427 --> 00:09:21,038 for that child and to take them yourself or to go along. 228 00:09:21,038 --> 00:09:23,127 The Casey's new business model, 229 00:09:23,127 --> 00:09:25,173 only delivering from department stores 230 00:09:25,260 --> 00:09:28,002 to consumers is a hit. 231 00:09:28,132 --> 00:09:30,178 Casey always prided himself 232 00:09:30,265 --> 00:09:32,484 and his whole organization on being on time. 233 00:09:32,572 --> 00:09:34,095 If they say they're gonna be there at 3:00 PM, 234 00:09:34,182 --> 00:09:35,313 they're gonna be there at 3:00 PM 235 00:09:35,400 --> 00:09:37,185 and it was incredibly successful. 236 00:09:37,185 --> 00:09:39,491 Ended up with contracts with four of the Seattle stores. 237 00:09:39,491 --> 00:09:40,797 And the thing about this, 238 00:09:40,928 --> 00:09:42,059 as it's true of so many great entrepreneurs, 239 00:09:42,146 --> 00:09:44,496 is nobody else saw it, right? 240 00:09:44,496 --> 00:09:46,063 I mean there were all these other delivering messengers. 241 00:09:46,063 --> 00:09:47,369 There are still courier companies 242 00:09:47,369 --> 00:09:48,370 all over the United States, 243 00:09:48,370 --> 00:09:49,806 but nobody turned and looked. 244 00:09:49,893 --> 00:09:51,939 Well, what about these big stores. 245 00:09:51,939 --> 00:09:53,375 And the Casey's roll, 246 00:09:53,375 --> 00:09:56,596 their growing profit into staying a step ahead. 247 00:09:56,683 --> 00:09:59,860 Every great entrepreneur takes as much advantage 248 00:09:59,860 --> 00:10:02,123 of technology as possible. 249 00:10:02,123 --> 00:10:04,952 You're always looking to watch the new thing, 250 00:10:04,952 --> 00:10:06,344 whatever it takes to improve their service. 251 00:10:06,344 --> 00:10:07,650 So faster is better. 252 00:10:07,650 --> 00:10:09,783 So you move from bicycles to motorcycles. 253 00:10:11,175 --> 00:10:12,350 Motorcycles have been around 254 00:10:12,437 --> 00:10:14,135 for nearly 30 years, 255 00:10:14,135 --> 00:10:17,921 but weren't widely used in America until 1899. 256 00:10:18,008 --> 00:10:20,010 Even the US Post Office department 257 00:10:20,097 --> 00:10:23,144 only started using motorcycles in 1907. 258 00:10:23,231 --> 00:10:25,276 Casey's brilliance is in recognizing 259 00:10:25,363 --> 00:10:27,931 this new technology and being willing to invest in it 260 00:10:27,931 --> 00:10:29,280 as a way to grow his business. 261 00:10:29,280 --> 00:10:32,240 So motorcycles are faster than bicycles. 262 00:10:32,240 --> 00:10:33,763 That's the next innovation. 263 00:10:33,763 --> 00:10:35,765 Cars carry more than motorbikes, 264 00:10:35,852 --> 00:10:37,549 then car's your next innovation. 265 00:10:37,549 --> 00:10:41,771 In 1915, they're able to add a Model T van for just $600. 266 00:10:41,771 --> 00:10:44,992 Jim Casey also decides to evolve their name. 267 00:10:44,992 --> 00:10:47,037 They call it Merchant's Parcel Services, 268 00:10:47,037 --> 00:10:49,649 which is an indication he's not a messenger company anymore. 269 00:10:49,649 --> 00:10:50,780 Soon enough, they were the biggest 270 00:10:50,780 --> 00:10:52,782 delivery service in Seattle. 271 00:10:52,782 --> 00:10:54,479 The Casey's soon realized 272 00:10:54,566 --> 00:10:58,309 their business could be replicated in any major city. 273 00:10:58,309 --> 00:10:59,876 The department stores were huge 274 00:10:59,876 --> 00:11:02,879 and most cities had five, six, seven, eight, 10. 275 00:11:02,879 --> 00:11:06,622 New York probably had 30 or 40 and everybody shopped there. 276 00:11:06,622 --> 00:11:10,757 So they begin buying up smaller messenger companies 277 00:11:10,757 --> 00:11:14,499 and smaller delivery companies, truly building an empire. 278 00:11:14,630 --> 00:11:16,676 But when Jim Casey tried to expand it 279 00:11:16,763 --> 00:11:19,809 to the San Francisco market, he hits a bit of an obstacle. 280 00:11:19,896 --> 00:11:22,899 There's already a company called the Merchant's Parcel. 281 00:11:22,899 --> 00:11:24,684 In order to set themselves apart, 282 00:11:24,771 --> 00:11:27,512 they need to rethink their name again. 283 00:11:28,818 --> 00:11:30,733 George is the one who saw United Fruit, 284 00:11:30,733 --> 00:11:32,387 which was a giant company and he said, 285 00:11:32,474 --> 00:11:34,215 "I like the word United." 286 00:11:34,215 --> 00:11:37,044 Jim says, "We gotta have parcel in the name 287 00:11:37,044 --> 00:11:39,176 and then we gotta put service in the name 288 00:11:39,263 --> 00:11:42,049 'cause were a service company." 289 00:11:42,179 --> 00:11:46,531 Merchant's Parcel is now United Parcel Service. 290 00:11:46,531 --> 00:11:47,315 UPS. 291 00:11:48,751 --> 00:11:49,621 But the journey to become 292 00:11:49,621 --> 00:11:52,624 a worldwide shipping powerhouse 293 00:11:52,624 --> 00:11:55,715 will take a battle of almost 50 years. 294 00:12:00,284 --> 00:12:01,982 By the mid 1920s, 295 00:12:01,982 --> 00:12:03,723 the United Parcel Service is now running successful 296 00:12:03,723 --> 00:12:05,855 department store delivery operations 297 00:12:05,855 --> 00:12:08,336 in major cities along the west coast. 298 00:12:08,336 --> 00:12:11,731 One of the things about UPS is it really grew largely 299 00:12:11,731 --> 00:12:15,560 through acquiring existing delivery companies in cities. 300 00:12:15,560 --> 00:12:18,259 They're really what we call a self-financed enterprise. 301 00:12:18,259 --> 00:12:20,000 They grew from their own profit. 302 00:12:20,087 --> 00:12:22,611 So then they decide to work on the branding. 303 00:12:25,527 --> 00:12:26,441 What do you think? 304 00:12:27,703 --> 00:12:29,270 It's... it's kind of ugly. 305 00:12:30,358 --> 00:12:31,881 I figured something like white. 306 00:12:31,881 --> 00:12:32,969 Do you know how dirty that'll get? 307 00:12:32,969 --> 00:12:33,927 So will yellow. 308 00:12:36,103 --> 00:12:38,758 So what color won't look dirty? 309 00:12:41,412 --> 00:12:43,501 At the time, the railroad was really seen 310 00:12:43,632 --> 00:12:46,287 as the vanguard of sophistication, 311 00:12:46,287 --> 00:12:49,681 luxury, travel, modern engineering, 312 00:12:49,681 --> 00:12:51,771 especially the Pullman cars. 313 00:12:51,771 --> 00:12:54,251 Pullman cars were extremely popular, 314 00:12:54,338 --> 00:12:57,689 elegant railroad sleeper cars and they were always 315 00:12:57,689 --> 00:13:01,041 associated with their signature color, brown. 316 00:13:01,128 --> 00:13:03,913 So based on the Pullman cars and the prestige 317 00:13:04,000 --> 00:13:07,264 that they carry, he chooses the color brown 318 00:13:07,264 --> 00:13:08,483 for his fleet of trucks. 319 00:13:10,137 --> 00:13:11,791 More the than that he said, 320 00:13:11,791 --> 00:13:14,358 "We should have brown like the Pullman." 321 00:13:14,358 --> 00:13:17,927 They don't show dirt and that's why they went with brown. 322 00:13:17,927 --> 00:13:19,581 Throughout the 1920s, 323 00:13:19,581 --> 00:13:22,236 the Caseys focus on setting up their department store 324 00:13:22,323 --> 00:13:25,717 delivery services within other major US cities 325 00:13:25,717 --> 00:13:27,545 with military-like precision. 326 00:13:27,545 --> 00:13:29,809 You have this giant logistics machine. 327 00:13:29,809 --> 00:13:32,855 I mean, they aren't supposed to make left turns, 328 00:13:32,942 --> 00:13:34,857 they're never supposed to back up. 329 00:13:34,857 --> 00:13:37,077 They carry the vehicle keys in their right hand 330 00:13:37,077 --> 00:13:38,774 so it's easier to start. 331 00:13:38,861 --> 00:13:40,994 The routes are all figured out. 332 00:13:41,081 --> 00:13:43,170 They're technically not supposed to walk to your door. 333 00:13:43,170 --> 00:13:44,736 They're supposed to run. 334 00:13:44,824 --> 00:13:47,304 UPS has to be one of the most efficient 335 00:13:47,304 --> 00:13:48,610 corporations on earth. 336 00:13:48,740 --> 00:13:51,961 By 1930, they have 400 employees 337 00:13:51,961 --> 00:13:53,267 and they've relocated their 338 00:13:53,267 --> 00:13:55,486 headquarters to New York City. 339 00:13:55,573 --> 00:13:58,663 Not only have they created this very efficient ground 340 00:13:58,663 --> 00:14:00,535 transportation entity, 341 00:14:01,623 --> 00:14:03,277 but on top of this, 342 00:14:03,364 --> 00:14:08,021 they've created one of the most enduring brand identities 343 00:14:08,021 --> 00:14:12,721 maybe in all of American business. 344 00:14:12,721 --> 00:14:14,810 And over the next two decades, 345 00:14:14,810 --> 00:14:18,596 UPS employment balloons to 3000 workers. 346 00:14:18,596 --> 00:14:20,381 By the late 1940s, 347 00:14:20,381 --> 00:14:23,645 it's operating in 17 of the nation's biggest cities 348 00:14:23,645 --> 00:14:25,125 and on its way to becoming one 349 00:14:25,125 --> 00:14:29,390 of the largest employee-owned companies in America. 350 00:14:29,390 --> 00:14:32,741 But as suburbanization is overtaking the United States, 351 00:14:32,741 --> 00:14:35,222 people's shopping habits change as well. 352 00:14:35,222 --> 00:14:36,571 With the booming of the economy, 353 00:14:36,658 --> 00:14:38,703 we can now enjoy the great, 354 00:14:38,790 --> 00:14:41,837 fruits of American prosperity and American capitalism 355 00:14:41,837 --> 00:14:44,666 and it's kind of symbolized by moving to the suburbs, 356 00:14:44,666 --> 00:14:46,233 driving your Chevrolet. 357 00:14:46,320 --> 00:14:47,538 People have these big cars 358 00:14:47,538 --> 00:14:49,192 to take all their shopping home in. 359 00:14:49,192 --> 00:14:50,802 Now that Americans 360 00:14:50,802 --> 00:14:54,023 have the ability to transport their own goods home, 361 00:14:54,023 --> 00:14:57,374 the need for a department store delivery service wanes. 362 00:15:00,334 --> 00:15:01,552 We're finished. 363 00:15:01,552 --> 00:15:03,728 To survive, UPS needs to adopt 364 00:15:03,728 --> 00:15:06,514 the model of an industry giant. 365 00:15:06,514 --> 00:15:07,428 UPS will just have to take on 366 00:15:07,428 --> 00:15:08,908 the United States Post Office. 367 00:15:12,172 --> 00:15:14,261 It was a one horse race. 368 00:15:14,261 --> 00:15:19,048 It was just the postal service and it was one entity 369 00:15:19,048 --> 00:15:23,009 handling all mail and all packages for an entire nation. 370 00:15:23,009 --> 00:15:25,054 Unlike the post office department, 371 00:15:25,141 --> 00:15:27,013 UPS is restricted from operating 372 00:15:27,013 --> 00:15:28,666 in many parts of the country. 373 00:15:28,666 --> 00:15:31,147 Each state and sometimes even individual 374 00:15:31,234 --> 00:15:33,671 cities have their own regulations, 375 00:15:33,671 --> 00:15:37,806 which prevents UPS from operating freely nationwide. 376 00:15:37,893 --> 00:15:41,549 Jim Casey and UPS from the outset 377 00:15:41,549 --> 00:15:43,681 were battling regulations. 378 00:15:43,681 --> 00:15:45,466 The regulators, they set all the rules. 379 00:15:45,466 --> 00:15:46,684 They told you where you could go. 380 00:15:46,771 --> 00:15:48,599 They told you how much you could charge. 381 00:15:48,599 --> 00:15:50,123 You had to have a special license 382 00:15:50,253 --> 00:15:53,517 if you were gonna deliver all over a county or a city, 383 00:15:53,517 --> 00:15:55,606 and then to deliver from one state to the next, 384 00:15:55,693 --> 00:15:57,130 you had to have another license 385 00:15:57,130 --> 00:15:58,740 that could take years to give. 386 00:15:58,827 --> 00:16:01,264 This sparks the first of many court battles 387 00:16:01,264 --> 00:16:03,266 to systematically gain the rights 388 00:16:03,266 --> 00:16:06,574 needed to operate in all 50 states. 389 00:16:06,661 --> 00:16:08,880 And they fought these battles state by state, 390 00:16:08,880 --> 00:16:10,273 city by city. 391 00:16:14,060 --> 00:16:15,975 Meanwhile, in New Jersey, 392 00:16:15,975 --> 00:16:18,412 two struggling engineers have no idea 393 00:16:18,412 --> 00:16:21,981 that they are about to stumble upon a revolutionary product. 394 00:16:23,286 --> 00:16:25,723 Al Fielding was born in 1917, 395 00:16:25,810 --> 00:16:27,421 grew up during the Great Depression 396 00:16:27,421 --> 00:16:29,031 in Hackensack, New Jersey. 397 00:16:29,031 --> 00:16:31,425 He was interested in how machine shops work 398 00:16:31,425 --> 00:16:33,775 and how you put things together. 399 00:16:33,862 --> 00:16:36,125 Marc Chavannes studied chemistry and physics. 400 00:16:36,125 --> 00:16:37,648 He was from Switzerland, 401 00:16:37,735 --> 00:16:42,697 a family of authors and scientists and clergy men 402 00:16:42,697 --> 00:16:46,222 and very accomplished aristocratic family. 403 00:16:46,222 --> 00:16:47,484 The inventors have been tinkering 404 00:16:47,484 --> 00:16:49,617 with thin sheets of plastic. 405 00:16:51,706 --> 00:16:52,968 Mark had an idea that he was going 406 00:16:53,055 --> 00:16:55,144 to make waterproof fiber 407 00:16:55,231 --> 00:16:58,321 that was breathable so he could make raincoats. 408 00:16:58,321 --> 00:17:01,324 The problem with raincoats at the time was that you could 409 00:17:01,324 --> 00:17:06,286 use oil skin, which puts a coating on a canvas like cloth, 410 00:17:06,373 --> 00:17:09,724 or you could use gabardine to make trench coats. 411 00:17:09,724 --> 00:17:11,856 But they both were heavy and sweaty, 412 00:17:11,943 --> 00:17:14,685 so he wanted to find something that would keep the rain off 413 00:17:14,685 --> 00:17:16,383 and let the material breathe. 414 00:17:16,383 --> 00:17:18,689 While plastics had been around for decades, 415 00:17:18,776 --> 00:17:22,476 they didn't find common applications until World War II. 416 00:17:22,476 --> 00:17:24,608 It was really important for the war effort to be able 417 00:17:24,608 --> 00:17:27,785 to ship large amounts of supplies to the troops 418 00:17:27,785 --> 00:17:29,222 that didn't weigh so much. 419 00:17:29,222 --> 00:17:31,485 So imagine something even like a metal comb. 420 00:17:31,572 --> 00:17:34,096 You ship thousands of those, that's very heavy. 421 00:17:34,096 --> 00:17:36,620 If you can do that in a kind of light molded plastic, 422 00:17:36,620 --> 00:17:38,274 that's gonna be much easier to ship. 423 00:17:38,274 --> 00:17:40,537 Plastics even proved essential 424 00:17:40,537 --> 00:17:41,930 to the building of the atomic bomb. 425 00:17:43,758 --> 00:17:45,064 The Manhattan project scientists 426 00:17:45,151 --> 00:17:47,066 even used a form of plastic, 427 00:17:47,153 --> 00:17:51,505 Teflon, to protect the most volatile parts of the atom bomb. 428 00:17:51,505 --> 00:17:54,073 From the beginning of World War II to its conclusion, 429 00:17:54,160 --> 00:17:56,988 plastic production in the United States quadrupled 430 00:17:57,119 --> 00:17:59,730 from 200 million pounds to 800 million. 431 00:17:59,817 --> 00:18:02,255 And Chavannes and Fielding want to be 432 00:18:02,255 --> 00:18:05,301 on the leading edge of plastic innovation. 433 00:18:05,301 --> 00:18:07,738 So they come up with a technique for raincoats. 434 00:18:07,825 --> 00:18:11,264 When you laminate two plastic sheets and texture it, 435 00:18:11,264 --> 00:18:14,397 you get a material that was breathable, 436 00:18:14,397 --> 00:18:16,443 but not penetrable by water. 437 00:18:16,443 --> 00:18:18,967 That's when an interior designer asks them, 438 00:18:18,967 --> 00:18:21,404 "Can you make textured wallpaper?" 439 00:18:21,404 --> 00:18:24,059 Al said, "Sure, of course we can make textured wallpaper." 440 00:18:32,937 --> 00:18:35,288 Well, not exactly what we expected. 441 00:18:39,161 --> 00:18:41,772 The problem was air got trapped inside. 442 00:18:41,859 --> 00:18:44,384 When they showed the bubble to the interior designer, 443 00:18:44,384 --> 00:18:45,646 he didn't want bubbles. 444 00:18:45,646 --> 00:18:47,909 Why would anybody want bubbly wallpaper? 445 00:18:47,909 --> 00:18:48,953 Wouldn't people just pop it? 446 00:18:48,953 --> 00:18:50,607 Well, no they didn't. 447 00:18:50,738 --> 00:18:53,349 He wasn't looking for a bubble, but that's what they got. 448 00:18:53,436 --> 00:18:55,046 One day, their attempt 449 00:18:55,046 --> 00:18:59,703 at textured wallpaper will become a 10.7 billion a year 450 00:18:59,703 --> 00:19:02,880 product used by consumers worldwide 451 00:19:02,880 --> 00:19:07,189 and revolutionize what can be sent and how it's shipped. 452 00:19:07,276 --> 00:19:09,191 But for now, without a clear use, 453 00:19:09,191 --> 00:19:11,237 Chavannes and Fielding will have to keep 454 00:19:11,237 --> 00:19:13,413 their dreams under wraps. 455 00:19:14,849 --> 00:19:17,678 Meanwhile, in nearby Connecticut, 456 00:19:17,765 --> 00:19:21,464 a 21 year old undergraduate at Yale University is presenting 457 00:19:21,464 --> 00:19:24,380 a term paper to his economics professor. 458 00:19:24,380 --> 00:19:28,906 Frederick Smith came from Memphis and was born 459 00:19:28,906 --> 00:19:31,344 into privilege to a significant degree. 460 00:19:31,344 --> 00:19:34,869 His father owned the Greyhound franchise 461 00:19:34,869 --> 00:19:38,177 in the southeast, back when intercity bus service was big. 462 00:19:38,264 --> 00:19:40,179 So Fred came from wealth. 463 00:19:41,484 --> 00:19:42,877 He was driven, 464 00:19:42,877 --> 00:19:45,967 very, very bright, an overachiever and always 465 00:19:46,054 --> 00:19:48,665 had sort of big ideas and had the charisma 466 00:19:48,665 --> 00:19:52,626 to get others to cotton to his ideas. 467 00:19:52,626 --> 00:19:56,020 What we need to be doing is making sure that every package 468 00:19:56,107 --> 00:20:00,242 from every city flies into a hub, a central location, 469 00:20:00,242 --> 00:20:01,983 a sorting facility. 470 00:20:02,070 --> 00:20:06,205 He felt that there was a very clear problem 471 00:20:06,205 --> 00:20:08,119 in the existing shipping model. 472 00:20:08,119 --> 00:20:09,556 The post office department 473 00:20:09,556 --> 00:20:12,385 and UPS don't have their own airplanes, 474 00:20:12,472 --> 00:20:14,561 so they rely on commercial airlines 475 00:20:14,648 --> 00:20:16,563 for air freight services. 476 00:20:16,650 --> 00:20:19,870 Back then, the airlines would carry a package for you, 477 00:20:19,870 --> 00:20:22,090 but it was a secondary business form. 478 00:20:22,090 --> 00:20:25,572 And if all the passenger's luggage used up the belly 479 00:20:25,572 --> 00:20:27,922 of the airplane, they weren't gonna carry 480 00:20:27,922 --> 00:20:30,185 your package and it was outrageously expensive 481 00:20:30,185 --> 00:20:31,839 and they weren't always reliable. 482 00:20:31,839 --> 00:20:34,885 But Fred Smith wants to change that. 483 00:20:34,972 --> 00:20:39,150 We could be delivering packages literally overnight. 484 00:20:39,150 --> 00:20:40,761 For his school assignment, 485 00:20:40,761 --> 00:20:43,067 he had come up with a business plan, 486 00:20:43,198 --> 00:20:47,115 essentially a means of overnight shipping where you could 487 00:20:47,115 --> 00:20:50,597 get anything to anywhere in the country overnight. 488 00:20:50,597 --> 00:20:52,294 Everyone thought it was ridiculous 489 00:20:52,294 --> 00:20:55,515 because it just seemed too expensive and impossible. 490 00:20:55,515 --> 00:20:57,517 Like most great business breakthrough ideas, 491 00:20:57,604 --> 00:21:00,041 in retrospect, it looks like it was a no-brainer. 492 00:21:00,128 --> 00:21:01,434 Why didn't everybody think that? 493 00:21:01,521 --> 00:21:03,479 99% of the good ideas are laughed out 494 00:21:03,610 --> 00:21:05,351 of the room the first time they come up. 495 00:21:05,351 --> 00:21:07,091 But one day, 496 00:21:07,091 --> 00:21:09,877 Smith's visionary business plan will create one of the most 497 00:21:09,877 --> 00:21:12,009 important companies in the world 498 00:21:12,096 --> 00:21:14,708 with an annual revenue of $93 billion. 499 00:21:18,581 --> 00:21:21,628 But the irony was his teacher didn't see the genius, 500 00:21:21,628 --> 00:21:23,630 didn't see the vision, and gave him a C. 501 00:21:29,897 --> 00:21:31,681 It's 1960 and Fielding and Chavannes 502 00:21:31,681 --> 00:21:35,598 have filed a patent for their unusual bubbly plastic. 503 00:21:35,598 --> 00:21:36,860 After they got the patent, 504 00:21:36,947 --> 00:21:38,471 they formed Sealed Air Corporation 505 00:21:38,471 --> 00:21:40,342 and began to book for a market. 506 00:21:40,342 --> 00:21:44,564 They actually come up with 200 possible uses. 507 00:21:44,564 --> 00:21:47,958 They tried greenhouse insulation, window insulation, 508 00:21:48,045 --> 00:21:51,353 wrapping water tanks with it to avoid condensation. 509 00:21:51,353 --> 00:21:53,877 But so far, no one is interested. 510 00:21:53,877 --> 00:21:56,750 They know that this sheet of plastic 511 00:21:56,750 --> 00:22:00,710 with bubbles in it has to have a place 512 00:22:00,710 --> 00:22:04,279 somewhere in the realm of American industry. 513 00:22:04,366 --> 00:22:05,846 And one industry 514 00:22:05,976 --> 00:22:08,762 that is quickly gaining momentum is computer technology. 515 00:22:08,762 --> 00:22:12,940 This is well before desktop computers and it was big thing 516 00:22:13,027 --> 00:22:15,116 for small businesses because they were able 517 00:22:15,203 --> 00:22:17,771 to do their inventories, personnel management, 518 00:22:17,771 --> 00:22:19,512 anything like that. 519 00:22:19,512 --> 00:22:22,776 In 1960, IBM is the number one tech company in America. 520 00:22:22,863 --> 00:22:24,691 They have a hundred thousand employees. 521 00:22:26,345 --> 00:22:28,129 They are the giant in the tech industry in that moment. 522 00:22:28,129 --> 00:22:29,522 In 1960, 523 00:22:29,522 --> 00:22:33,177 IBM releases their new 1401 computer, 524 00:22:33,700 --> 00:22:36,398 which consists of several fragile components 525 00:22:36,398 --> 00:22:40,184 and boasts a hefty $370,000 price tag, 526 00:22:40,184 --> 00:22:43,753 over $2.2 million in today's money. 527 00:22:43,753 --> 00:22:46,060 The computers had to be delivered 528 00:22:46,147 --> 00:22:48,454 in good shape and they had to work. 529 00:22:48,454 --> 00:22:50,456 If they couldn't do that, 530 00:22:50,456 --> 00:22:53,154 IBM would lose its reputation. 531 00:22:53,241 --> 00:22:54,851 How do you send those small, 532 00:22:54,938 --> 00:22:56,592 delicate parts necessary 533 00:22:56,592 --> 00:22:59,073 to make these big mainframe computers work? 534 00:23:00,727 --> 00:23:03,077 All of the packing materials that were out there, 535 00:23:03,077 --> 00:23:05,993 newspaper, sawdust, 536 00:23:06,080 --> 00:23:09,692 that would all generate dust and computers at that time, 537 00:23:09,779 --> 00:23:14,044 had very delicate chips subject to damaged by dust, 538 00:23:14,044 --> 00:23:16,482 dirt and damaged by jarring. 539 00:23:16,482 --> 00:23:19,310 You don't want something like that shipped in paper. 540 00:23:19,398 --> 00:23:21,182 That would be not enough protection. 541 00:23:29,930 --> 00:23:32,715 Suddenly they realized that they had a material that could 542 00:23:32,715 --> 00:23:36,719 be the perfect material for the IBM 1401. 543 00:23:36,719 --> 00:23:40,593 It's lightweight, it's clean, and it's kind of cool. 544 00:23:42,116 --> 00:23:43,900 So, if you're rolling out a new computer, 545 00:23:43,987 --> 00:23:47,382 how about rolling out in this brand new bubbly stuff? 546 00:23:47,382 --> 00:23:49,819 The inventors wrap up a computer chip 547 00:23:49,819 --> 00:23:52,692 in their plastic and set up a meeting with IBM. 548 00:24:09,796 --> 00:24:12,625 This is a make or break moment for Sealed Air Corporation 549 00:24:12,625 --> 00:24:15,628 and for IBM, because IBM's reputation 550 00:24:15,628 --> 00:24:17,456 is on the line and Sealed Air, 551 00:24:17,456 --> 00:24:21,242 if they could land this big contract, 552 00:24:21,329 --> 00:24:23,070 then they would be able to have insights 553 00:24:23,070 --> 00:24:24,158 into other contracts. 554 00:24:24,158 --> 00:24:25,246 It was a moment of truth. 555 00:24:31,818 --> 00:24:35,517 In 1963, IBM agrees to ship their 1401 556 00:24:35,517 --> 00:24:38,564 computer using Chavannes and Fielding's invention, 557 00:24:38,651 --> 00:24:43,090 which soon becomes known as bubble wrap. 558 00:24:43,090 --> 00:24:44,004 It was a big deal. 559 00:24:44,004 --> 00:24:45,745 They were hot income, 560 00:24:45,745 --> 00:24:48,051 they had a regular customer, they had other customers, 561 00:24:48,051 --> 00:24:49,923 but they were basically a one-trick pony 562 00:24:49,923 --> 00:24:53,187 selling to the tech industry. 563 00:24:53,187 --> 00:24:54,493 So the inventors looked 564 00:24:54,493 --> 00:24:56,538 to expand their reach in shipping. 565 00:24:56,538 --> 00:24:58,975 They began diversifying their operations 566 00:24:59,062 --> 00:25:02,239 and they made what is called mail light envelope. 567 00:25:02,239 --> 00:25:03,893 They're envelopes of paper 568 00:25:03,893 --> 00:25:06,026 on the outside and bubble wrap on the inside. 569 00:25:06,026 --> 00:25:07,854 They sold it through the post office. 570 00:25:07,941 --> 00:25:10,770 They were also selling bubble wrap direct to consumers 571 00:25:10,857 --> 00:25:13,120 at that point, and that's when it took off. 572 00:25:13,120 --> 00:25:15,426 The new slogan of Sealed Air at that point 573 00:25:15,426 --> 00:25:18,038 was "Our products protect your products", 574 00:25:20,257 --> 00:25:21,302 and that's what they do. 575 00:25:21,389 --> 00:25:23,652 Today with revenue 576 00:25:23,652 --> 00:25:25,785 surpassing 10 billion a year, 577 00:25:25,785 --> 00:25:27,047 bubble wrap makes a global 578 00:25:27,047 --> 00:25:30,790 shipping industry worth 14 trillion, possible. 579 00:25:37,361 --> 00:25:40,147 In 1971, Fred Smith purchases 580 00:25:40,234 --> 00:25:42,976 his stepfather's failing aviation business. 581 00:25:43,063 --> 00:25:47,937 He was blessed to have a $4 million inheritance 582 00:25:48,024 --> 00:25:50,984 from his dad who had founded Greyhound, 583 00:25:51,071 --> 00:25:53,160 and he sinks all of that into the company. 584 00:25:53,160 --> 00:25:56,380 Fred Smith has done Yale and he'd studied business 585 00:25:56,380 --> 00:25:58,208 and all that and he's been a Marine. 586 00:25:58,208 --> 00:25:59,775 He understands aviation. 587 00:25:59,862 --> 00:26:01,342 And makes a move to pivot 588 00:26:01,342 --> 00:26:04,824 the company to cater to an emerging luxury market. 589 00:26:06,565 --> 00:26:09,219 He saw that the corporate jet business was skyrocketing. 590 00:26:09,219 --> 00:26:10,569 It was kind of the beginning, 591 00:26:10,569 --> 00:26:12,005 the first time that you would even think 592 00:26:12,135 --> 00:26:13,267 to have a private jet. 593 00:26:14,703 --> 00:26:17,967 Private jets in the mid to late 1960s, 594 00:26:17,967 --> 00:26:21,014 they provide efficiency of movement for corporations. 595 00:26:21,101 --> 00:26:23,669 They are a status symbol among corporations. 596 00:26:23,669 --> 00:26:25,192 And Smith wants to carve out 597 00:26:25,279 --> 00:26:29,152 his own share of this new private jet industry. 598 00:26:29,239 --> 00:26:30,937 Fred Smith saw that refurbishing 599 00:26:30,937 --> 00:26:32,678 parts for a private jets 600 00:26:32,765 --> 00:26:35,115 and then reselling planes could be a really good way to make 601 00:26:35,115 --> 00:26:36,290 money because there weren't a lot 602 00:26:36,290 --> 00:26:37,987 of specialists in that space. 603 00:26:37,987 --> 00:26:40,076 And so he'd buy a plane, fix it up, 604 00:26:40,076 --> 00:26:41,730 put in new engines if you had to. 605 00:26:41,817 --> 00:26:43,558 He knew all the parts companies and he said, 606 00:26:43,645 --> 00:26:45,168 "Oh, that guy in Seattle 607 00:26:45,168 --> 00:26:46,779 makes the best propellers or this guy 608 00:26:46,779 --> 00:26:48,650 in Connecticut makes this or that." 609 00:26:48,737 --> 00:26:50,565 And when he sells an airplane, he says, 610 00:26:50,652 --> 00:26:52,480 "If you need a part, call me." 611 00:26:52,480 --> 00:26:54,874 Soon, his company's sales pick up 612 00:26:54,874 --> 00:26:59,618 growing by 1500% to $9 million, 613 00:26:59,618 --> 00:27:03,012 but a shipping crisis stalls his success 614 00:27:03,012 --> 00:27:06,146 and his $4 million investment won't be enough 615 00:27:06,146 --> 00:27:12,065 to keep the family business alive. 616 00:27:12,065 --> 00:27:15,677 Fred Smith has sunk his $4 million inheritance 617 00:27:15,677 --> 00:27:18,767 into an overhaul of his stepfather's business. 618 00:27:18,767 --> 00:27:21,640 Hey, where is that delivery of Conrad ball bearings? 619 00:27:21,640 --> 00:27:23,337 But now shipping issues 620 00:27:23,337 --> 00:27:25,992 are grinding his operations to a halt. 621 00:27:25,992 --> 00:27:28,908 When you've got a plane that's grounded and needs a part, 622 00:27:28,995 --> 00:27:30,736 it's really annoying when you don't know 623 00:27:30,736 --> 00:27:32,346 when that part is gonna arrive. 624 00:27:32,346 --> 00:27:33,739 If we don't get those parts in by tomorrow, 625 00:27:33,826 --> 00:27:35,305 we'll never fix that beachcraft in time. 626 00:27:35,305 --> 00:27:37,046 We'll lose the client. 627 00:27:37,046 --> 00:27:38,961 And if Smith loses any clients, 628 00:27:39,048 --> 00:27:43,444 he also loses any hope of earning back his inheritance. 629 00:27:43,444 --> 00:27:46,577 So he needs parts and then he finds out, well, 630 00:27:46,665 --> 00:27:48,362 if you're in New York or Los Angeles 631 00:27:48,362 --> 00:27:49,450 and you order a part for an airplane, 632 00:27:49,537 --> 00:27:51,321 you get it the next day. 633 00:27:51,321 --> 00:27:54,020 But if you're in Albuquerque or if you're in Little Rock, 634 00:27:54,020 --> 00:27:56,022 or if you're in Charlotte, North Carolina, 635 00:27:56,022 --> 00:27:58,328 it could take four or five days to get a part 636 00:27:58,328 --> 00:27:59,852 because the delivery services 637 00:27:59,852 --> 00:28:02,985 were so unreliable and UPS was still 638 00:28:02,985 --> 00:28:05,031 battling all the regulators for the rights to deliver 639 00:28:05,118 --> 00:28:08,382 packages anywhere in the United States 640 00:28:08,382 --> 00:28:10,079 and the post office, 641 00:28:10,079 --> 00:28:13,300 they've had their ups and downs, plenty of complaints. 642 00:28:13,300 --> 00:28:15,432 Then in 1970, 643 00:28:15,432 --> 00:28:19,262 postal workers in New York City vote to go on strike. 644 00:28:19,262 --> 00:28:21,047 Once they vote to strike in New York, 645 00:28:21,134 --> 00:28:25,834 20,000 postal workers nationwide vote to follow suit. 646 00:28:25,921 --> 00:28:28,663 You've got chaos within the US Postal System. 647 00:28:28,750 --> 00:28:31,405 This is a catastrophe. 648 00:28:31,405 --> 00:28:32,885 President Nixon declares 649 00:28:32,885 --> 00:28:35,104 a national emergency and deploys 650 00:28:35,104 --> 00:28:37,193 National Guard troops to deliver mail 651 00:28:37,193 --> 00:28:38,934 until the strike is settled. 652 00:28:38,934 --> 00:28:41,502 It really was this great big mess. 653 00:28:41,502 --> 00:28:44,679 Smith wants to take matters into his own hands. 654 00:28:44,679 --> 00:28:48,770 Fred Smith decides he is going to put this brainchild 655 00:28:48,770 --> 00:28:51,077 of an overnight shipping entity into practice, 656 00:28:51,077 --> 00:28:54,080 despite the fact that it was greeted 657 00:28:54,167 --> 00:28:56,560 with a C from his professor. 658 00:28:56,560 --> 00:28:57,736 His hub and spoke model, 659 00:28:57,823 --> 00:28:59,781 he knew that this was the way forward. 660 00:28:59,781 --> 00:29:01,870 Smith's hub and spoke idea 661 00:29:01,870 --> 00:29:03,872 is a total re-imagining of the way 662 00:29:03,872 --> 00:29:05,656 goods are shipped in America. 663 00:29:05,744 --> 00:29:08,355 You would pick up packages all over America, 664 00:29:08,355 --> 00:29:11,184 fly 'em to a central location, 665 00:29:11,184 --> 00:29:12,446 and then sort the packages 666 00:29:12,533 --> 00:29:13,534 and then have the airplanes fly 'em 667 00:29:13,621 --> 00:29:15,231 all out in the next destination. 668 00:29:15,231 --> 00:29:17,494 But with his personal inheritance spent, 669 00:29:17,581 --> 00:29:19,453 he'll have to convince his sisters 670 00:29:19,453 --> 00:29:22,717 to allow him to dip into the family trust. 671 00:29:22,717 --> 00:29:24,458 Okay, so you wanna get packages 672 00:29:24,458 --> 00:29:27,069 from Louisville to Phoenix, right? 673 00:29:27,156 --> 00:29:28,070 Well, you can't just put them 674 00:29:28,157 --> 00:29:30,290 on a plane directly to Phoenix. 675 00:29:30,290 --> 00:29:32,553 It's just not a popular enough route. 676 00:29:32,553 --> 00:29:36,426 So how do we achieve overnight shipping for everybody? 677 00:29:36,426 --> 00:29:40,474 It was a tremendous thought concept that, wow, 678 00:29:40,474 --> 00:29:42,476 I could drop something off at three o'clock 679 00:29:42,476 --> 00:29:45,696 and 3000 miles later at 10:30 the next morning, 680 00:29:45,696 --> 00:29:47,655 it's in my cousin's hands. 681 00:29:48,569 --> 00:29:50,223 That's your plan? 682 00:29:50,223 --> 00:29:52,486 You want to become the new post office. 683 00:29:54,793 --> 00:29:56,577 I give you the hub and spoke model. 684 00:29:56,664 --> 00:29:59,406 You see, your packages get on a plane here, 685 00:29:59,406 --> 00:30:01,147 they fly to the hub, 686 00:30:01,147 --> 00:30:04,019 they get sorted out and then they fly back out, 687 00:30:04,019 --> 00:30:07,153 ready to be delivered the very next day. 688 00:30:07,240 --> 00:30:10,591 But Smith's proposal doesn't rely on commercial airplanes 689 00:30:10,591 --> 00:30:13,159 like the postal service and UPS. 690 00:30:13,246 --> 00:30:17,076 If he owns his own planes, he can control the planes, 691 00:30:17,163 --> 00:30:19,730 what's loaded on to them when they take off, 692 00:30:19,730 --> 00:30:21,645 where they go and so on. 693 00:30:21,732 --> 00:30:25,954 He is not subject to the whims of commercial airlines. 694 00:30:25,954 --> 00:30:27,173 And he knows exactly 695 00:30:27,173 --> 00:30:29,218 which planes he wants to buy. 696 00:30:30,045 --> 00:30:31,917 PanAm is selling off some of their fleet, 697 00:30:31,917 --> 00:30:33,266 and in particular, 698 00:30:33,353 --> 00:30:36,747 he's interested in the Dassault Falcon jet. 699 00:30:36,878 --> 00:30:39,098 It's not a jumbo jet, but it's small. 700 00:30:39,185 --> 00:30:40,490 It's fuel efficient 701 00:30:40,490 --> 00:30:43,015 and it can land at a variety of airports. 702 00:30:43,015 --> 00:30:45,931 It's not so prohibitive in terms of landing 703 00:30:45,931 --> 00:30:47,802 because of its sheer size. 704 00:30:47,802 --> 00:30:49,935 The thing is, even though the Dassault Falcon 705 00:30:49,935 --> 00:30:51,850 is a smaller jet, 706 00:30:51,850 --> 00:30:56,767 it costs $1.3 million per airplane. 707 00:30:56,767 --> 00:30:57,899 But his plans won't matter 708 00:30:57,986 --> 00:31:00,293 if he can't tap into his family's trust. 709 00:31:00,293 --> 00:31:01,642 It's too much of a risk. 710 00:31:01,642 --> 00:31:02,643 But Smith believes 711 00:31:02,730 --> 00:31:04,993 he has an ironclad endorsement. 712 00:31:04,993 --> 00:31:07,430 Fred Smith is a patriot and a veteran 713 00:31:07,430 --> 00:31:09,476 and he obviously wants to do something 714 00:31:09,476 --> 00:31:11,260 that's connected to the United States, 715 00:31:11,260 --> 00:31:14,176 but also he wanted it to sound official. 716 00:31:14,176 --> 00:31:16,048 There is no risk. 717 00:31:16,048 --> 00:31:18,398 If your first client is the Federal Reserve. 718 00:31:19,660 --> 00:31:21,140 So the Federal Reserve banks, 719 00:31:21,140 --> 00:31:23,142 like 12 of 'em around the US, 720 00:31:23,142 --> 00:31:26,362 they move all the checks like a billion checks a night. 721 00:31:26,362 --> 00:31:28,451 Well, you deposit your money, 722 00:31:28,538 --> 00:31:29,757 you then done jump into your account 723 00:31:29,757 --> 00:31:31,933 for five days or whatever, right? 724 00:31:31,933 --> 00:31:34,544 'Cause it's gotta be a looked at and you know, 725 00:31:34,544 --> 00:31:36,503 moved trough some sort of system. 726 00:31:36,503 --> 00:31:38,809 He said, "I wanna move those overnight." 727 00:31:38,809 --> 00:31:40,202 That was his light bulb. 728 00:31:40,289 --> 00:31:41,987 He was like, "This is the way." 729 00:31:41,987 --> 00:31:44,076 But since his sisters refused to invest, 730 00:31:44,076 --> 00:31:47,470 Smith needs to raise the capital on his own. 731 00:31:47,470 --> 00:31:50,256 Fred Smith tells potential investors 732 00:31:50,256 --> 00:31:53,215 that the Federal Reserve is ready to go all in. 733 00:31:53,215 --> 00:31:55,000 All he needs is the startup capital 734 00:31:55,000 --> 00:31:56,523 to be able to make this work. 735 00:31:56,610 --> 00:31:58,481 A massive government contract 736 00:31:58,481 --> 00:32:01,789 with the Central Bank of the US proves an easy sell. 737 00:32:01,876 --> 00:32:05,924 Fred Smith manages to raise upwards of $80 million. 738 00:32:07,099 --> 00:32:08,274 Smith quickly pours 739 00:32:08,274 --> 00:32:10,058 nearly half of his startup capital 740 00:32:10,145 --> 00:32:12,060 into his unproven idea 741 00:32:12,147 --> 00:32:15,890 and signs a contract to purchase 23 Falcon Jets 742 00:32:15,890 --> 00:32:19,415 to the tune of $29.1 million. 743 00:32:19,415 --> 00:32:21,417 This is a huge gamble. 744 00:32:21,417 --> 00:32:22,853 And relocates his business 745 00:32:22,853 --> 00:32:24,551 to Memphis, Tennessee. 746 00:32:24,551 --> 00:32:26,596 Memphis is a major hub, 747 00:32:26,596 --> 00:32:29,338 has strong transportation networks. 748 00:32:29,338 --> 00:32:34,213 It's a solid place to have significant transportation 749 00:32:34,213 --> 00:32:36,302 and logistics operations. 750 00:32:38,739 --> 00:32:40,132 I give you Federal Express. 751 00:32:41,437 --> 00:32:43,135 Overnight shipping means that you 752 00:32:43,222 --> 00:32:46,442 can collect interest on deposits days or even weeks earlier. 753 00:32:46,529 --> 00:32:49,489 The only problem is the Federal Reserve 754 00:32:49,576 --> 00:32:51,970 is not actually his client. 755 00:32:51,970 --> 00:32:53,797 Federal Express was intended 756 00:32:55,147 --> 00:32:56,931 to sound associated with the Federal Reserve. 757 00:32:56,931 --> 00:32:59,151 He thought it was a slam dunk. 758 00:32:59,238 --> 00:33:01,849 And Fred thought super duper wrong. 759 00:33:01,849 --> 00:33:03,982 Smith hasn't made the deal yet. 760 00:33:03,982 --> 00:33:07,550 Look, Mr. Smith, I love the name 761 00:33:07,550 --> 00:33:10,510 and the business model would be a game changer, 762 00:33:10,510 --> 00:33:13,295 but regulations won't allow your planes to fly deliveries. 763 00:33:13,295 --> 00:33:15,689 In 1971, the Civil Aeronautics Board 764 00:33:15,776 --> 00:33:17,734 does not allow cargo planes 765 00:33:17,734 --> 00:33:21,434 with a takeoff weight greater than 12,500 pounds 766 00:33:21,434 --> 00:33:23,566 to carry commercial cargo. 767 00:33:23,653 --> 00:33:25,960 Even empty, Smith's Falcons weigh 768 00:33:25,960 --> 00:33:29,181 more than 15,000 pounds. 769 00:33:29,181 --> 00:33:30,573 Well, I have it on good authority 770 00:33:30,704 --> 00:33:32,923 that those regulations are changing soon. 771 00:33:33,011 --> 00:33:34,055 Sir, I assure you... 772 00:33:34,055 --> 00:33:36,927 Again, I'm sorry. 773 00:33:36,927 --> 00:33:39,495 They begin hemorrhaging money almost immediately. 774 00:33:39,495 --> 00:33:40,670 Within a year, 775 00:33:40,757 --> 00:33:44,457 they are $27 million in debt. 776 00:33:51,638 --> 00:33:53,596 As long as cargo 777 00:33:53,683 --> 00:33:54,902 plane weight limits are in effect, 778 00:33:54,902 --> 00:33:57,731 Federal Express and Fred Smith's dream 779 00:33:57,731 --> 00:34:01,213 of overnight shipping is dead on arrival. 780 00:34:01,213 --> 00:34:03,824 He knew that his model worked, 781 00:34:03,911 --> 00:34:07,523 but he knew he needed time to work out the kinks. 782 00:34:07,523 --> 00:34:10,396 While in business, time is money 783 00:34:10,396 --> 00:34:12,528 and he didn't really have a lot of either one 784 00:34:12,659 --> 00:34:14,095 of those things,. 785 00:34:14,095 --> 00:34:16,967 But he was laser focused, he was obsessive, 786 00:34:16,967 --> 00:34:19,709 he was ready to build this thing at all costs 787 00:34:19,709 --> 00:34:21,798 and it cost him a lot. 788 00:34:21,885 --> 00:34:23,365 Hey Karen, 789 00:34:23,365 --> 00:34:24,758 can I have the minutes 790 00:34:24,758 --> 00:34:27,021 from the last family trust meeting please? 791 00:34:27,021 --> 00:34:31,678 Fred Smith needs more money from the family trust fund. 792 00:34:31,678 --> 00:34:35,377 He needs it tomorrow because they're perpetually 793 00:34:35,377 --> 00:34:37,988 on the verge of bankruptcy and death all the time, 794 00:34:37,988 --> 00:34:39,425 like every night. 795 00:34:39,425 --> 00:34:41,035 But with his sister's refusal 796 00:34:41,035 --> 00:34:44,169 to hand over money before the Federal Reserve fiasco, 797 00:34:44,169 --> 00:34:46,171 Smith may be out of luck. 798 00:34:46,171 --> 00:34:47,041 Here you are. 799 00:34:48,173 --> 00:34:49,043 Thank you. 800 00:34:49,130 --> 00:34:51,219 He needs to deliver a paper 801 00:34:51,219 --> 00:34:53,569 to a bank saying that the family 802 00:34:53,569 --> 00:34:55,310 will guarantee a bank loan, 803 00:34:55,397 --> 00:34:57,747 so if Federal Express goes broke and doesn't pay the bank loan, 804 00:34:57,747 --> 00:34:59,749 the family fortune will pay for it. 805 00:34:59,749 --> 00:35:03,666 Fred produces a document from a meeting that took place 806 00:35:03,666 --> 00:35:07,235 between all the board members in which they all voted 807 00:35:07,322 --> 00:35:10,543 aye to fund this business and to keep it going. 808 00:35:10,543 --> 00:35:11,457 One catch though, 809 00:35:14,242 --> 00:35:17,419 that document's a big old fake. 810 00:35:17,419 --> 00:35:20,292 The cool thing about that meeting is that it didn't happen 811 00:35:22,207 --> 00:35:24,687 and him saying that it did and producing the document 812 00:35:24,687 --> 00:35:28,865 that's called, I think the term is financial fraud. 813 00:35:28,952 --> 00:35:31,172 Smith's loan application is approved, 814 00:35:31,172 --> 00:35:34,132 buying him time to keep Federal Express afloat 815 00:35:34,132 --> 00:35:36,308 until federal regulations change. 816 00:35:38,136 --> 00:35:40,703 Then on July 18th, 1972. 817 00:35:40,703 --> 00:35:42,923 The Civil Aeronautics Board changed the rules 818 00:35:42,923 --> 00:35:45,708 so that you could use any aircraft in an air taxi service, 819 00:35:45,708 --> 00:35:47,275 which meant Fred Smith had full license 820 00:35:47,275 --> 00:35:49,625 to use any aircraft he wanted. 821 00:35:49,625 --> 00:35:51,497 It was a total game changer. 822 00:35:51,497 --> 00:35:53,499 Finally, Fred Smith's company 823 00:35:53,499 --> 00:35:56,328 is ready to launch from Memphis, Tennessee. 824 00:35:56,328 --> 00:35:57,807 He got it just in time 825 00:35:59,374 --> 00:36:01,289 and then he could fly his Falcon jets 826 00:36:01,289 --> 00:36:03,639 full of packages around the United States. 827 00:36:03,639 --> 00:36:06,338 On March 12th, 1973, 828 00:36:06,338 --> 00:36:09,776 six Falcon jets take off from the Memphis hub to various 829 00:36:09,776 --> 00:36:13,867 cities loaded with the first deliveries for Federal Express. 830 00:36:15,260 --> 00:36:16,565 How'd it go? 831 00:36:16,652 --> 00:36:18,088 Did the packages arrive as scheduled. 832 00:36:18,088 --> 00:36:19,438 Overnight and on time? 833 00:36:19,438 --> 00:36:20,656 Ah, that's great. 834 00:36:20,656 --> 00:36:21,875 What was our total package count? 835 00:36:22,745 --> 00:36:23,920 Six. 836 00:36:24,007 --> 00:36:25,444 600? 837 00:36:25,444 --> 00:36:26,271 That's great. 838 00:36:26,358 --> 00:36:29,187 No sir, six, six packages. 839 00:36:32,581 --> 00:36:34,627 At first, they flew to four or five cities 840 00:36:34,627 --> 00:36:36,324 and there just wasn't enough business. 841 00:36:36,411 --> 00:36:40,720 He doesn't anticipate the high cost of fuel in the 1970s. 842 00:36:40,720 --> 00:36:42,678 They're launching at a moment where fuel costs 843 00:36:42,765 --> 00:36:44,114 are at an all time high. 844 00:36:44,114 --> 00:36:45,986 They've gotta run these jets all the time, 845 00:36:46,116 --> 00:36:47,640 but then they have to pay their fuel bills. 846 00:36:47,640 --> 00:36:51,861 It's massive overhead to maintain a fleet of Falcon jets 847 00:36:51,992 --> 00:36:55,125 and they're not even moving a hundred packages a day. 848 00:36:55,125 --> 00:36:56,562 Clearly, they're gonna run 849 00:36:56,562 --> 00:36:58,564 into financial difficulty very quickly. 850 00:36:58,694 --> 00:37:00,305 Keeps telling investors, look, look, 851 00:37:00,305 --> 00:37:03,090 we're growing and growing, but it was losing money. 852 00:37:03,090 --> 00:37:06,180 Federal express is for sure gonna go broke. 853 00:37:06,267 --> 00:37:07,703 It isn't gonna make it. 854 00:37:07,703 --> 00:37:09,531 They don't have name recognition, 855 00:37:09,531 --> 00:37:12,099 they don't have legibility in the market. 856 00:37:12,099 --> 00:37:14,275 And so he's fighting against all that. 857 00:37:14,275 --> 00:37:17,322 Federal Express becomes so cash poor 858 00:37:17,322 --> 00:37:19,324 that at one point Fred Smith 859 00:37:19,324 --> 00:37:22,544 finds himself in a position 860 00:37:22,544 --> 00:37:25,243 where they only have $5,000 in cash. 861 00:37:26,853 --> 00:37:29,464 That's all FedEx has left. 862 00:37:29,464 --> 00:37:31,118 With his back against the wall, 863 00:37:31,118 --> 00:37:33,860 Fred Smith has no way to meet his payroll 864 00:37:33,860 --> 00:37:35,775 obligations for his staff. 865 00:37:37,516 --> 00:37:40,519 But don't forget, we're talking about a Yale graduate. 866 00:37:40,519 --> 00:37:43,739 Don't forget we're talking about a marine lieutenant. 867 00:37:43,739 --> 00:37:46,002 Don't forget we're talking about the son 868 00:37:46,002 --> 00:37:48,048 of a captain of industry. 869 00:37:48,135 --> 00:37:50,659 So naturally he makes 870 00:37:50,659 --> 00:37:53,619 a brilliant fiscal and financial choice, 871 00:37:55,490 --> 00:38:01,017 goes to Las Vegas and gambles it. 872 00:38:01,017 --> 00:38:03,237 By the summer of 1973, 873 00:38:03,237 --> 00:38:05,152 Fred Smith's Federal Express is millions of dollars in debt 874 00:38:05,239 --> 00:38:08,590 and down to its last $5,000 in cash. 875 00:38:08,590 --> 00:38:10,592 What does he decide to do? 876 00:38:10,592 --> 00:38:13,595 He decides to take that five grand and go to Vegas 877 00:38:13,595 --> 00:38:15,641 and gamble to try to make payroll. 878 00:38:15,641 --> 00:38:16,729 The story should end there. 879 00:38:16,729 --> 00:38:17,773 Fred Smith goes to Vegas, 880 00:38:17,860 --> 00:38:19,862 gambles away five grand. 881 00:38:19,949 --> 00:38:21,342 And now Fred Smith, 882 00:38:21,342 --> 00:38:23,039 ironically works for the post office, but no, 883 00:38:23,039 --> 00:38:27,087 Fred Smith turns out to be a very savvy gambler 884 00:38:27,087 --> 00:38:28,523 and a very lucky man. 885 00:38:28,654 --> 00:38:31,657 Comes back with $27,000, makes payroll, 886 00:38:31,657 --> 00:38:33,180 actually gets himself an extra month 887 00:38:33,180 --> 00:38:36,226 of payroll and keeps the business rolling. 888 00:38:36,226 --> 00:38:38,751 But Smith's reprieve is short-lived. 889 00:38:38,751 --> 00:38:39,578 Mr. Smith. 890 00:38:43,843 --> 00:38:45,714 What is this all about? 891 00:38:45,714 --> 00:38:48,674 So his sisters filed a suit against him saying 892 00:38:48,674 --> 00:38:51,024 that he forged documents 893 00:38:51,111 --> 00:38:53,418 and forged their signature on documents 894 00:38:53,505 --> 00:38:56,856 in an effort to obtain a $2 million loan. 895 00:38:56,856 --> 00:38:59,075 Gentlemen, this is just a misunderstanding. 896 00:38:59,075 --> 00:39:01,034 My sisters are angry. 897 00:39:01,034 --> 00:39:01,904 You'll see. 898 00:39:01,904 --> 00:39:03,558 If you arrest me, 899 00:39:03,558 --> 00:39:04,733 I'll be back in the office by tomorrow morning. 900 00:39:04,820 --> 00:39:06,648 Let's go. 901 00:39:06,648 --> 00:39:09,521 So on January 31st, 1975, 902 00:39:09,521 --> 00:39:12,959 Fred Smith is indicted for financial fraud. 903 00:39:12,959 --> 00:39:14,830 The founder of Federal Express 904 00:39:14,830 --> 00:39:17,877 is now facing 20 years in federal prison. 905 00:39:17,877 --> 00:39:20,488 I think Fred Smith had confidence 906 00:39:20,575 --> 00:39:21,794 that you can't learn. 907 00:39:21,794 --> 00:39:23,448 You either have it or you don't, right? 908 00:39:23,448 --> 00:39:25,145 That's part of your DNA. 909 00:39:25,145 --> 00:39:27,669 This is a guy who has ice running through his veins. 910 00:39:27,669 --> 00:39:29,976 Smith fights the criminal charges. 911 00:39:29,976 --> 00:39:32,979 Fred Smith beats the forgery charge, 912 00:39:33,066 --> 00:39:34,894 meets the fraud charge. 913 00:39:34,894 --> 00:39:36,852 And in the end he walks free. 914 00:39:37,897 --> 00:39:39,028 And you thought you were lucky 915 00:39:39,028 --> 00:39:40,508 to get your package on time. 916 00:39:42,380 --> 00:39:44,512 Brass balls have got to have a pretty 917 00:39:44,512 --> 00:39:46,732 high shipping and handling charge. 918 00:39:46,732 --> 00:39:50,562 That created a aura around FedEx 919 00:39:51,693 --> 00:39:52,912 that was extremely powerful 920 00:39:54,304 --> 00:39:55,523 and they capitalized on. 921 00:39:55,523 --> 00:39:56,916 As people learn of a service 922 00:39:56,916 --> 00:39:58,874 that guarantees overnight shipping, 923 00:39:58,874 --> 00:40:01,224 the orders start flooding in. 924 00:40:01,355 --> 00:40:03,357 All advertising is good advertising 925 00:40:03,357 --> 00:40:04,750 in terms of people being able to 926 00:40:04,750 --> 00:40:07,405 hear the name of the company for free, 927 00:40:07,405 --> 00:40:09,363 even if associated with the scandal. 928 00:40:09,363 --> 00:40:13,193 It reminds people of what Federal Express does, it ships. 929 00:40:13,193 --> 00:40:16,457 And so the next time they have a need, they're thinking, 930 00:40:16,457 --> 00:40:17,850 what about that Federal Express place? 931 00:40:17,937 --> 00:40:20,026 In the latter half of 1975, 932 00:40:20,026 --> 00:40:21,549 for the first time ever, 933 00:40:21,549 --> 00:40:25,423 the company posts a profit just over $50,000. 934 00:40:25,423 --> 00:40:28,077 Then Fred Smith catches one more break. 935 00:40:28,077 --> 00:40:29,644 In the 1970s, 936 00:40:29,644 --> 00:40:31,341 it's a period of tremendous economic turmoil 937 00:40:31,341 --> 00:40:33,169 and a lot of business leaders 938 00:40:33,169 --> 00:40:35,084 argue that regulations are strangling American business. 939 00:40:35,084 --> 00:40:36,782 And so in 1978, 940 00:40:36,782 --> 00:40:39,349 president Carter signs the Airline Deregulation Act. 941 00:40:39,349 --> 00:40:41,264 One of the things that it opens the space for 942 00:40:41,264 --> 00:40:43,571 are these delivery systems like Federal Express. 943 00:40:43,571 --> 00:40:45,181 The following year, 944 00:40:45,181 --> 00:40:48,837 their profits soar to $3.6 million with their overnight 945 00:40:48,837 --> 00:40:52,580 shipping service now available in almost every major city, 946 00:40:52,580 --> 00:40:56,889 and they're now handling more than 19,000 packages a day. 947 00:40:56,889 --> 00:40:59,805 1978, FedEx went public on the New York Stock Exchange. 948 00:40:59,805 --> 00:41:03,373 And so that was the beginning of modern FedEx. 949 00:41:03,373 --> 00:41:05,680 And by the time you get into the mid 80's, 950 00:41:05,680 --> 00:41:08,553 UPS said, "Oh, we gotta get in the air." 951 00:41:08,553 --> 00:41:11,686 And they've built the second biggest air parcel system 952 00:41:11,773 --> 00:41:13,993 in the world after Federal Express. 953 00:41:13,993 --> 00:41:17,562 Today, FedEx employs 550,000 people 954 00:41:17,562 --> 00:41:19,868 in over 220 countries 955 00:41:19,868 --> 00:41:23,089 and has an annual revenue of over $92 billion. 956 00:41:24,873 --> 00:41:27,441 FedEx is so fundamental to the fabric of America. 957 00:41:27,528 --> 00:41:28,834 If you're gonna ship something overnight, 958 00:41:28,834 --> 00:41:30,096 it's called FedExing. 959 00:41:30,183 --> 00:41:31,314 There's a word for it. 960 00:41:31,314 --> 00:41:33,316 It's become part of the lexicon. 961 00:41:33,316 --> 00:41:35,144 It just means get it there fast. 962 00:41:35,231 --> 00:41:37,451 Without FedEx, without UPS, 963 00:41:37,538 --> 00:41:39,322 the world would come grinding to a halt. 964 00:41:39,322 --> 00:41:41,542 By 1975, 965 00:41:41,542 --> 00:41:44,284 UPS becomes the first package delivery company 966 00:41:44,284 --> 00:41:48,070 to serve every address in the continental United States. 967 00:41:48,070 --> 00:41:50,290 We're doing pretty darn well with our trucks, 968 00:41:50,290 --> 00:41:52,510 all over America delivering stuff for everybody. 969 00:41:52,510 --> 00:41:55,817 And today, UPS delivers 6.2 billion packages 970 00:41:55,817 --> 00:41:58,254 a year in over 220 countries 971 00:41:58,254 --> 00:42:01,867 for a total revenue of $100.3 billion. 972 00:42:03,390 --> 00:42:05,740 We take for granted our ability 973 00:42:05,827 --> 00:42:09,570 to get anything from anywhere when we want it. 974 00:42:09,570 --> 00:42:11,616 You can order something from overseas 975 00:42:11,616 --> 00:42:13,531 and get it the next day, 976 00:42:13,531 --> 00:42:15,576 and none of that would be possible 977 00:42:15,576 --> 00:42:18,187 without the advances made by UPS and FedEx. 978 00:42:18,274 --> 00:42:22,235 Where would we be if we couldn't get that T-shirt of Yoda 979 00:42:22,235 --> 00:42:24,063 wearing sunglasses the very next day? 980 00:42:25,107 --> 00:42:26,369 You know?