Today, Americans ship over 21.6 billion
parcels a year.
We take for granted our ability
to get anything from anywhere when we want it.
And spend over $188 billion
to ship goods to their doorstep overnight.
If I wanna order Sriracha,
I want it the very next day
because what am I gonna do?
Eat my foods without it?
The industry is a modern marvel
that wouldn't be possible
without bold innovators.
We could be delivering packages literally overnight.
This guy goes all in to fuel
what he thinks is gonna be the future.
UPS will just have to take on
the United States Post Office.
This is a huge gamble.
I give you Federal Express.
They fought these battles state by state,
city by city.
You would think $80 million in capital raised
couldn't possibly fail.
You'd be very, very, very wrong.
They come from nothing...
They literally created the packaging industry
out of thin air.
and risk everything.
I think the term is financial fraud.
To connect the world.
Without FedEx, without UPS,
the world would come grinding to a halt.
What do you think?
He's now created one of the most enduring brand identities
in all of American business.
Today, consumers can click
a button and have any item they want
delivered right to their door overnight.
But at the turn of the 20th century delivery as we know it,
doesn't exist.
Prior to the Industrial Revolution,
there wasn't much like purchasing from afar.
People would go to their local merchants
and often just take home what they bought.
The only thing Americans
are sending door to door is letters
through what is then called the US Post Office Department.
So for the first 50,
60 years of the American Republic
from the days of the Constitution up
to the Civil War, the United States Post Office
is the most important government agency.
It's the one that has the most employees.
It's also spread all across the spreading United States.
Everywhere you go, there are post offices.
Before the telephone,
letters are the way to get information across the country.
In the mid 19th century
when California becomes part of the the union,
there's a real desire to connect the east to the west.
There's tremendous emphasis on information
and trying to move information as quickly as possible.
And parcel delivery
was especially primitive.
During westward expansion,
there becomes a need to transport
valuable items like gold bullion.
So you have this newish bank, Wells Fargo,
which is literally transporting
this gold by stage coach with a shotgun.
This is where we get the term riding shotgun.
But the new territories
are difficult to get to by stagecoach or carriage.
So in 1860,
a company enterprise and company creates the Pony Express,
which is gonna send mail via pony relay
from St. Joseph, Missouri,
all the way to Sacramento, California.
With the Pony Express, mail would be picked up at certain
points along the way by a rider
and distributed to final destinations.
Pony Express is a business failure.
It runs for about 18 months,
from April of 1860 to October of 1861.
It loses money every single day of that operation
and it is quickly surpassed
by the Transcontinental Telegraph system.
Samuel Morris develops
a truly revolutionary technology, the telegraph.
And so through morse code, dots and dashes,
people can communicate written messages
to each other in far away places.
Of course, it's important to remember
that telephones were just
becoming available at this period too.
But relatively few people had access to electricity,
much less a fancy accessory like a telephone.
So that was still out of reach for most Americans.
But even telegrams need to be hand
delivered to their final destinations.
Now, most people didn't have telegraphs in their home.
So the telegraph solved one set of communication issues,
but created a need for another innovation,
which was a messenger service to actually deliver
that telegram and bring it to the person
who was supposed to receive it.
And in 1913,
one of the people offering such a messenger
service is Seattle-based businessman Jim Casey.
We have got 22 telegrams going out so far.
Last one came in at 2:00 AM.
Jim Casey was the son of Irish immigrants.
He dropped outta school when he was 11
to help support his family.
He was very pragmatic, always impeccably dressed,
always very keenly aware about the way he presented himself.
When was 19 years old,
he started his own company.
Jim Casey borrowed a hundred dollars
to start a messenger service.
It was called American Messenger Service
and he and his brother George,
bought two bicycles and they hired six kids
and they would deliver a telegram
to whoever's supposed to have it.
But then they also ran errands for people.
And when they started it,
there were nine other companies in Seattle
doing the same thing,
running all these errands all over town for people.
Errand wise, we have babysitting six hours
and the college needs someone
to pose for an art class, two hours.
The errands aspect was a little strange,
but basically the errands could be anything from dog walking
to following an unfaithful spouse.
They delivered opium to people and it was 24/7 service.
So they slept in the office
like on an old luncheonette counter.
American Messenger Company
will one day pave the way
for shipping as we know it,
becoming the biggest courier in the world,
shipping over 24.3 million packages a day
in over 220 countries earning over $100 billion a year.
But for now, the brothers are in over their heads.
And then there's Mrs. Alcott.
She needs an escort to her brother's wake.
So what's that?
Four hours I guess.
Ultimately the business began to plateau.
There were too many errands
and the errands take so very long.
It's not like dropping off a telegram.
So if an errand takes a long period of time,
you lose that employee for that period of time.
What's all this.
Mayweather's department store?
Wants these delivered to their customers.
By the early 1900's,
department store popularity is on the rise.
The department stores had everything under one roof.
They sold clothing, they sold furniture,
and when appliances came along,
they sold that, they sold everything.
With the Industrial revolution,
more people are buying more things.
People have more disposable income,
there are more merchants
which are offering more products
to fill consumer appetites.
And somehow those products need
to get from store or warehouse to the consumer.
It's hard to believe
that having a store deliver your goods
to your house was considered novel or even a luxury.
But the truth of the matter is,
if you went to a department store in the earliest parts
of the 20th century, you had to take things home.
And in a time when not a lot of people had automobiles,
that was quite an endeavor.
Department stores begin hiring messenger
services to handle home deliveries.
When do they have to be delivered?
Today.
Not possible.
I'm supposed to follow that guy's wife later today.
They would run these errands and it was very difficult
to manage that 'cause you never knew
how long you'd be out doing that task.
The Casey's realized
that the need for department store
deliveries are increasing by the day.
Jim Casey ever this sort of silent, watchful,
yet knowledgeable observer, sees an opening.
They make an unprecedented deal
with a Seattle department store
to become their exclusive delivery service.
What he does is he offers the services
of his company as the delivery entity
that the department stores could rely on.
So they didn't have to worry about staffing their own fleet.
Let him deliver all of the packages for them
and then they can just concentrate on merchandising.
That had never been done before.
Talk about a risk taker.
This guy goes all in to fuel
what he thinks is gonna be the future.
In 1913, delivering a package
at all is a novel concept.
Even the post office department is only just beginning
to offer parcel delivery.
When the postal service begins
to deliver more than letters,
this is hugely exciting for people.
They begin to think about all the things that they
potentially could ship and they do.
So you have the postal service handling everything
from pitchforks to eggs
to snakes in some cases, and even children.
There are seven documented cases.
There might have been more of children actually being
shipped through the mail 'cause it could be cheaper
to actually send a child through the mail
than it could be to buy a ticket
for that child and to take them yourself or to go along.
The Casey's new business model,
only delivering from department stores
to consumers is a hit.
Casey always prided himself
and his whole organization on being on time.
If they say they're gonna be there at 3:00 PM,
they're gonna be there at 3:00 PM
and it was incredibly successful.
Ended up with contracts with four of the Seattle stores.
And the thing about this,
as it's true of so many great entrepreneurs,
is nobody else saw it, right?
I mean there were all these other delivering messengers.
There are still courier companies
all over the United States,
but nobody turned and looked.
Well, what about these big stores.
And the Casey's roll,
their growing profit into staying a step ahead.
Every great entrepreneur takes as much advantage
of technology as possible.
You're always looking to watch the new thing,
whatever it takes to improve their service.
So faster is better.
So you move from bicycles to motorcycles.
Motorcycles have been around
for nearly 30 years,
but weren't widely used in America until 1899.
Even the US Post Office department
only started using motorcycles in 1907.
Casey's brilliance is in recognizing
this new technology and being willing to invest in it
as a way to grow his business.
So motorcycles are faster than bicycles.
That's the next innovation.
Cars carry more than motorbikes,
then car's your next innovation.
In 1915, they're able to add a Model T van for just $600.
Jim Casey also decides to evolve their name.
They call it Merchant's Parcel Services,
which is an indication he's not a messenger company anymore.
Soon enough, they were the biggest
delivery service in Seattle.
The Casey's soon realized
their business could be replicated in any major city.
The department stores were huge
and most cities had five, six, seven, eight, 10.
New York probably had 30 or 40 and everybody shopped there.
So they begin buying up smaller messenger companies
and smaller delivery companies, truly building an empire.
But when Jim Casey tried to expand it
to the San Francisco market, he hits a bit of an obstacle.
There's already a company called the Merchant's Parcel.
In order to set themselves apart,
they need to rethink their name again.
George is the one who saw United Fruit,
which was a giant company and he said,
"I like the word United."
Jim says, "We gotta have parcel in the name
and then we gotta put service in the name
'cause were a service company."
Merchant's Parcel is now United Parcel Service.
UPS.
But the journey to become
a worldwide shipping powerhouse
will take a battle of almost 50 years.
By the mid 1920s,
the United Parcel Service is now running successful
department store delivery operations
in major cities along the west coast.
One of the things about UPS is it really grew largely
through acquiring existing delivery companies in cities.
They're really what we call a self-financed enterprise.
They grew from their own profit.
So then they decide to work on the branding.
What do you think?
It's... it's kind of ugly.
I figured something like white.
Do you know how dirty that'll get?
So will yellow.
So what color won't look dirty?
At the time, the railroad was really seen
as the vanguard of sophistication,
luxury, travel, modern engineering,
especially the Pullman cars.
Pullman cars were extremely popular,
elegant railroad sleeper cars and they were always
associated with their signature color, brown.
So based on the Pullman cars and the prestige
that they carry, he chooses the color brown
for his fleet of trucks.
More the than that he said,
"We should have brown like the Pullman."
They don't show dirt and that's why they went with brown.
Throughout the 1920s,
the Caseys focus on setting up their department store
delivery services within other major US cities
with military-like precision.
You have this giant logistics machine.
I mean, they aren't supposed to make left turns,
they're never supposed to back up.
They carry the vehicle keys in their right hand
so it's easier to start.
The routes are all figured out.
They're technically not supposed to walk to your door.
They're supposed to run.
UPS has to be one of the most efficient
corporations on earth.
By 1930, they have 400 employees
and they've relocated their
headquarters to New York City.
Not only have they created this very efficient ground
transportation entity,
but on top of this,
they've created one of the most enduring brand identities
maybe in all of American business.
And over the next two decades,
UPS employment balloons to 3000 workers.
By the late 1940s,
it's operating in 17 of the nation's biggest cities
and on its way to becoming one
of the largest employee-owned companies in America.
But as suburbanization is overtaking the United States,
people's shopping habits change as well.
With the booming of the economy,
we can now enjoy the great,
fruits of American prosperity and American capitalism
and it's kind of symbolized by moving to the suburbs,
driving your Chevrolet.
People have these big cars
to take all their shopping home in.
Now that Americans
have the ability to transport their own goods home,
the need for a department store delivery service wanes.
We're finished.
To survive, UPS needs to adopt
the model of an industry giant.
UPS will just have to take on
the United States Post Office.
It was a one horse race.
It was just the postal service and it was one entity
handling all mail and all packages for an entire nation.
Unlike the post office department,
UPS is restricted from operating
in many parts of the country.
Each state and sometimes even individual
cities have their own regulations,
which prevents UPS from operating freely nationwide.
Jim Casey and UPS from the outset
were battling regulations.
The regulators, they set all the rules.
They told you where you could go.
They told you how much you could charge.
You had to have a special license
if you were gonna deliver all over a county or a city,
and then to deliver from one state to the next,
you had to have another license
that could take years to give.
This sparks the first of many court battles
to systematically gain the rights
needed to operate in all 50 states.
And they fought these battles state by state,
city by city.
Meanwhile, in New Jersey,
two struggling engineers have no idea
that they are about to stumble upon a revolutionary product.
Al Fielding was born in 1917,
grew up during the Great Depression
in Hackensack, New Jersey.
He was interested in how machine shops work
and how you put things together.
Marc Chavannes studied chemistry and physics.
He was from Switzerland,
a family of authors and scientists and clergy men
and very accomplished aristocratic family.
The inventors have been tinkering
with thin sheets of plastic.
Mark had an idea that he was going
to make waterproof fiber
that was breathable so he could make raincoats.
The problem with raincoats at the time was that you could
use oil skin, which puts a coating on a canvas like cloth,
or you could use gabardine to make trench coats.
But they both were heavy and sweaty,
so he wanted to find something that would keep the rain off
and let the material breathe.
While plastics had been around for decades,
they didn't find common applications until World War II.
It was really important for the war effort to be able
to ship large amounts of supplies to the troops
that didn't weigh so much.
So imagine something even like a metal comb.
You ship thousands of those, that's very heavy.
If you can do that in a kind of light molded plastic,
that's gonna be much easier to ship.
Plastics even proved essential
to the building of the atomic bomb.
The Manhattan project scientists
even used a form of plastic,
Teflon, to protect the most volatile parts of the atom bomb.
From the beginning of World War II to its conclusion,
plastic production in the United States quadrupled
from 200 million pounds to 800 million.
And Chavannes and Fielding want to be
on the leading edge of plastic innovation.
So they come up with a technique for raincoats.
When you laminate two plastic sheets and texture it,
you get a material that was breathable,
but not penetrable by water.
That's when an interior designer asks them,
"Can you make textured wallpaper?"
Al said, "Sure, of course we can make textured wallpaper."
Well, not exactly what we expected.
The problem was air got trapped inside.
When they showed the bubble to the interior designer,
he didn't want bubbles.
Why would anybody want bubbly wallpaper?
Wouldn't people just pop it?
Well, no they didn't.
He wasn't looking for a bubble, but that's what they got.
One day, their attempt
at textured wallpaper will become a 10.7 billion a year
product used by consumers worldwide
and revolutionize what can be sent and how it's shipped.
But for now, without a clear use,
Chavannes and Fielding will have to keep
their dreams under wraps.
Meanwhile, in nearby Connecticut,
a 21 year old undergraduate at Yale University is presenting
a term paper to his economics professor.
Frederick Smith came from Memphis and was born
into privilege to a significant degree.
His father owned the Greyhound franchise
in the southeast, back when intercity bus service was big.
So Fred came from wealth.
He was driven,
very, very bright, an overachiever and always
had sort of big ideas and had the charisma
to get others to cotton to his ideas.
What we need to be doing is making sure that every package
from every city flies into a hub, a central location,
a sorting facility.
He felt that there was a very clear problem
in the existing shipping model.
The post office department
and UPS don't have their own airplanes,
so they rely on commercial airlines
for air freight services.
Back then, the airlines would carry a package for you,
but it was a secondary business form.
And if all the passenger's luggage used up the belly
of the airplane, they weren't gonna carry
your package and it was outrageously expensive
and they weren't always reliable.
But Fred Smith wants to change that.
We could be delivering packages literally overnight.
For his school assignment,
he had come up with a business plan,
essentially a means of overnight shipping where you could
get anything to anywhere in the country overnight.
Everyone thought it was ridiculous
because it just seemed too expensive and impossible.
Like most great business breakthrough ideas,
in retrospect, it looks like it was a no-brainer.
Why didn't everybody think that?
99% of the good ideas are laughed out
of the room the first time they come up.
But one day,
Smith's visionary business plan will create one of the most
important companies in the world
with an annual revenue of $93 billion.
But the irony was his teacher didn't see the genius,
didn't see the vision, and gave him a C.
It's 1960 and Fielding and Chavannes
have filed a patent for their unusual bubbly plastic.
After they got the patent,
they formed Sealed Air Corporation
and began to book for a market.
They actually come up with 200 possible uses.
They tried greenhouse insulation, window insulation,
wrapping water tanks with it to avoid condensation.
But so far, no one is interested.
They know that this sheet of plastic
with bubbles in it has to have a place
somewhere in the realm of American industry.
And one industry
that is quickly gaining momentum is computer technology.
This is well before desktop computers and it was big thing
for small businesses because they were able
to do their inventories, personnel management,
anything like that.
In 1960, IBM is the number one tech company in America.
They have a hundred thousand employees.
They are the giant in the tech industry in that moment.
In 1960,
IBM releases their new 1401 computer,
which consists of several fragile components
and boasts a hefty $370,000 price tag,
over $2.2 million in today's money.
The computers had to be delivered
in good shape and they had to work.
If they couldn't do that,
IBM would lose its reputation.
How do you send those small,
delicate parts necessary
to make these big mainframe computers work?
All of the packing materials that were out there,
newspaper, sawdust,
that would all generate dust and computers at that time,
had very delicate chips subject to damaged by dust,
dirt and damaged by jarring.
You don't want something like that shipped in paper.
That would be not enough protection.
Suddenly they realized that they had a material that could
be the perfect material for the IBM 1401.
It's lightweight, it's clean, and it's kind of cool.
So, if you're rolling out a new computer,
how about rolling out in this brand new bubbly stuff?
The inventors wrap up a computer chip
in their plastic and set up a meeting with IBM.
This is a make or break moment for Sealed Air Corporation
and for IBM, because IBM's reputation
is on the line and Sealed Air,
if they could land this big contract,
then they would be able to have insights
into other contracts.
It was a moment of truth.
In 1963, IBM agrees to ship their 1401
computer using Chavannes and Fielding's invention,
which soon becomes known as bubble wrap.
It was a big deal.
They were hot income,
they had a regular customer, they had other customers,
but they were basically a one-trick pony
selling to the tech industry.
So the inventors looked
to expand their reach in shipping.
They began diversifying their operations
and they made what is called mail light envelope.
They're envelopes of paper
on the outside and bubble wrap on the inside.
They sold it through the post office.
They were also selling bubble wrap direct to consumers
at that point, and that's when it took off.
The new slogan of Sealed Air at that point
was "Our products protect your products",
and that's what they do.
Today with revenue
surpassing 10 billion a year,
bubble wrap makes a global
shipping industry worth 14 trillion, possible.
In 1971, Fred Smith purchases
his stepfather's failing aviation business.
He was blessed to have a $4 million inheritance
from his dad who had founded Greyhound,
and he sinks all of that into the company.
Fred Smith has done Yale and he'd studied business
and all that and he's been a Marine.
He understands aviation.
And makes a move to pivot
the company to cater to an emerging luxury market.
He saw that the corporate jet business was skyrocketing.
It was kind of the beginning,
the first time that you would even think
to have a private jet.
Private jets in the mid to late 1960s,
they provide efficiency of movement for corporations.
They are a status symbol among corporations.
And Smith wants to carve out
his own share of this new private jet industry.
Fred Smith saw that refurbishing
parts for a private jets
and then reselling planes could be a really good way to make
money because there weren't a lot
of specialists in that space.
And so he'd buy a plane, fix it up,
put in new engines if you had to.
He knew all the parts companies and he said,
"Oh, that guy in Seattle
makes the best propellers or this guy
in Connecticut makes this or that."
And when he sells an airplane, he says,
"If you need a part, call me."
Soon, his company's sales pick up
growing by 1500% to $9 million,
but a shipping crisis stalls his success
and his $4 million investment won't be enough
to keep the family business alive.
Fred Smith has sunk his $4 million inheritance
into an overhaul of his stepfather's business.
Hey, where is that delivery of Conrad ball bearings?
But now shipping issues
are grinding his operations to a halt.
When you've got a plane that's grounded and needs a part,
it's really annoying when you don't know
when that part is gonna arrive.
If we don't get those parts in by tomorrow,
we'll never fix that beachcraft in time.
We'll lose the client.
And if Smith loses any clients,
he also loses any hope of earning back his inheritance.
So he needs parts and then he finds out, well,
if you're in New York or Los Angeles
and you order a part for an airplane,
you get it the next day.
But if you're in Albuquerque or if you're in Little Rock,
or if you're in Charlotte, North Carolina,
it could take four or five days to get a part
because the delivery services
were so unreliable and UPS was still
battling all the regulators for the rights to deliver
packages anywhere in the United States
and the post office,
they've had their ups and downs, plenty of complaints.
Then in 1970,
postal workers in New York City vote to go on strike.
Once they vote to strike in New York,
20,000 postal workers nationwide vote to follow suit.
You've got chaos within the US Postal System.
This is a catastrophe.
President Nixon declares
a national emergency and deploys
National Guard troops to deliver mail
until the strike is settled.
It really was this great big mess.
Smith wants to take matters into his own hands.
Fred Smith decides he is going to put this brainchild
of an overnight shipping entity into practice,
despite the fact that it was greeted
with a C from his professor.
His hub and spoke model,
he knew that this was the way forward.
Smith's hub and spoke idea
is a total re-imagining of the way
goods are shipped in America.
You would pick up packages all over America,
fly 'em to a central location,
and then sort the packages
and then have the airplanes fly 'em
all out in the next destination.
But with his personal inheritance spent,
he'll have to convince his sisters
to allow him to dip into the family trust.
Okay, so you wanna get packages
from Louisville to Phoenix, right?
Well, you can't just put them
on a plane directly to Phoenix.
It's just not a popular enough route.
So how do we achieve overnight shipping for everybody?
It was a tremendous thought concept that, wow,
I could drop something off at three o'clock
and 3000 miles later at 10:30 the next morning,
it's in my cousin's hands.
That's your plan?
You want to become the new post office.
I give you the hub and spoke model.
You see, your packages get on a plane here,
they fly to the hub,
they get sorted out and then they fly back out,
ready to be delivered the very next day.
But Smith's proposal doesn't rely on commercial airplanes
like the postal service and UPS.
If he owns his own planes, he can control the planes,
what's loaded on to them when they take off,
where they go and so on.
He is not subject to the whims of commercial airlines.
And he knows exactly
which planes he wants to buy.
PanAm is selling off some of their fleet,
and in particular,
he's interested in the Dassault Falcon jet.
It's not a jumbo jet, but it's small.
It's fuel efficient
and it can land at a variety of airports.
It's not so prohibitive in terms of landing
because of its sheer size.
The thing is, even though the Dassault Falcon
is a smaller jet,
it costs $1.3 million per airplane.
But his plans won't matter
if he can't tap into his family's trust.
It's too much of a risk.
But Smith believes
he has an ironclad endorsement.
Fred Smith is a patriot and a veteran
and he obviously wants to do something
that's connected to the United States,
but also he wanted it to sound official.
There is no risk.
If your first client is the Federal Reserve.
So the Federal Reserve banks,
like 12 of 'em around the US,
they move all the checks like a billion checks a night.
Well, you deposit your money,
you then done jump into your account
for five days or whatever, right?
'Cause it's gotta be a looked at and you know,
moved trough some sort of system.
He said, "I wanna move those overnight."
That was his light bulb.
He was like, "This is the way."
But since his sisters refused to invest,
Smith needs to raise the capital on his own.
Fred Smith tells potential investors
that the Federal Reserve is ready to go all in.
All he needs is the startup capital
to be able to make this work.
A massive government contract
with the Central Bank of the US proves an easy sell.
Fred Smith manages to raise upwards of $80 million.
Smith quickly pours
nearly half of his startup capital
into his unproven idea
and signs a contract to purchase 23 Falcon Jets
to the tune of $29.1 million.
This is a huge gamble.
And relocates his business
to Memphis, Tennessee.
Memphis is a major hub,
has strong transportation networks.
It's a solid place to have significant transportation
and logistics operations.
I give you Federal Express.
Overnight shipping means that you
can collect interest on deposits days or even weeks earlier.
The only problem is the Federal Reserve
is not actually his client.
Federal Express was intended
to sound associated with the Federal Reserve.
He thought it was a slam dunk.
And Fred thought super duper wrong.
Smith hasn't made the deal yet.
Look, Mr. Smith, I love the name
and the business model would be a game changer,
but regulations won't allow your planes to fly deliveries.
In 1971, the Civil Aeronautics Board
does not allow cargo planes
with a takeoff weight greater than 12,500 pounds
to carry commercial cargo.
Even empty, Smith's Falcons weigh
more than 15,000 pounds.
Well, I have it on good authority
that those regulations are changing soon.
Sir, I assure you...
Again, I'm sorry.
They begin hemorrhaging money almost immediately.
Within a year,
they are $27 million in debt.
As long as cargo
plane weight limits are in effect,
Federal Express and Fred Smith's dream
of overnight shipping is dead on arrival.
He knew that his model worked,
but he knew he needed time to work out the kinks.
While in business, time is money
and he didn't really have a lot of either one
of those things,.
But he was laser focused, he was obsessive,
he was ready to build this thing at all costs
and it cost him a lot.
Hey Karen,
can I have the minutes
from the last family trust meeting please?
Fred Smith needs more money from the family trust fund.
He needs it tomorrow because they're perpetually
on the verge of bankruptcy and death all the time,
like every night.
But with his sister's refusal
to hand over money before the Federal Reserve fiasco,
Smith may be out of luck.
Here you are.
Thank you.
He needs to deliver a paper
to a bank saying that the family
will guarantee a bank loan,
so if Federal Express goes broke and doesn't pay the bank loan,
the family fortune will pay for it.
Fred produces a document from a meeting that took place
between all the board members in which they all voted
aye to fund this business and to keep it going.
One catch though,
that document's a big old fake.
The cool thing about that meeting is that it didn't happen
and him saying that it did and producing the document
that's called, I think the term is financial fraud.
Smith's loan application is approved,
buying him time to keep Federal Express afloat
until federal regulations change.
Then on July 18th, 1972.
The Civil Aeronautics Board changed the rules
so that you could use any aircraft in an air taxi service,
which meant Fred Smith had full license
to use any aircraft he wanted.
It was a total game changer.
Finally, Fred Smith's company
is ready to launch from Memphis, Tennessee.
He got it just in time
and then he could fly his Falcon jets
full of packages around the United States.
On March 12th, 1973,
six Falcon jets take off from the Memphis hub to various
cities loaded with the first deliveries for Federal Express.
How'd it go?
Did the packages arrive as scheduled.
Overnight and on time?
Ah, that's great.
What was our total package count?
Six.
600?
That's great.
No sir, six, six packages.
At first, they flew to four or five cities
and there just wasn't enough business.
He doesn't anticipate the high cost of fuel in the 1970s.
They're launching at a moment where fuel costs
are at an all time high.
They've gotta run these jets all the time,
but then they have to pay their fuel bills.
It's massive overhead to maintain a fleet of Falcon jets
and they're not even moving a hundred packages a day.
Clearly, they're gonna run
into financial difficulty very quickly.
Keeps telling investors, look, look,
we're growing and growing, but it was losing money.
Federal express is for sure gonna go broke.
It isn't gonna make it.
They don't have name recognition,
they don't have legibility in the market.
And so he's fighting against all that.
Federal Express becomes so cash poor
that at one point Fred Smith
finds himself in a position
where they only have $5,000 in cash.
That's all FedEx has left.
With his back against the wall,
Fred Smith has no way to meet his payroll
obligations for his staff.
But don't forget, we're talking about a Yale graduate.
Don't forget we're talking about a marine lieutenant.
Don't forget we're talking about the son
of a captain of industry.
So naturally he makes
a brilliant fiscal and financial choice,
goes to Las Vegas and gambles it.
By the summer of 1973,
Fred Smith's Federal Express is millions of dollars in debt
and down to its last $5,000 in cash.
What does he decide to do?
He decides to take that five grand and go to Vegas
and gamble to try to make payroll.
The story should end there.
Fred Smith goes to Vegas,
gambles away five grand.
And now Fred Smith,
ironically works for the post office, but no,
Fred Smith turns out to be a very savvy gambler
and a very lucky man.
Comes back with $27,000, makes payroll,
actually gets himself an extra month
of payroll and keeps the business rolling.
But Smith's reprieve is short-lived.
Mr. Smith.
What is this all about?
So his sisters filed a suit against him saying
that he forged documents
and forged their signature on documents
in an effort to obtain a $2 million loan.
Gentlemen, this is just a misunderstanding.
My sisters are angry.
You'll see.
If you arrest me,
I'll be back in the office by tomorrow morning.
Let's go.
So on January 31st, 1975,
Fred Smith is indicted for financial fraud.
The founder of Federal Express
is now facing 20 years in federal prison.
I think Fred Smith had confidence
that you can't learn.
You either have it or you don't, right?
That's part of your DNA.
This is a guy who has ice running through his veins.
Smith fights the criminal charges.
Fred Smith beats the forgery charge,
meets the fraud charge.
And in the end he walks free.
And you thought you were lucky
to get your package on time.
Brass balls have got to have a pretty
high shipping and handling charge.
That created a aura around FedEx
that was extremely powerful
and they capitalized on.
As people learn of a service
that guarantees overnight shipping,
the orders start flooding in.
All advertising is good advertising
in terms of people being able to
hear the name of the company for free,
even if associated with the scandal.
It reminds people of what Federal Express does, it ships.
And so the next time they have a need, they're thinking,
what about that Federal Express place?
In the latter half of 1975,
for the first time ever,
the company posts a profit just over $50,000.
Then Fred Smith catches one more break.
In the 1970s,
it's a period of tremendous economic turmoil
and a lot of business leaders
argue that regulations are strangling American business.
And so in 1978,
president Carter signs the Airline Deregulation Act.
One of the things that it opens the space for
are these delivery systems like Federal Express.
The following year,
their profits soar to $3.6 million with their overnight
shipping service now available in almost every major city,
and they're now handling more than 19,000 packages a day.
1978, FedEx went public on the New York Stock Exchange.
And so that was the beginning of modern FedEx.
And by the time you get into the mid 80's,
UPS said, "Oh, we gotta get in the air."
And they've built the second biggest air parcel system
in the world after Federal Express.
Today, FedEx employs 550,000 people
in over 220 countries
and has an annual revenue of over $92 billion.
FedEx is so fundamental to the fabric of America.
If you're gonna ship something overnight,
it's called FedExing.
There's a word for it.
It's become part of the lexicon.
It just means get it there fast.
Without FedEx, without UPS,
the world would come grinding to a halt.
By 1975,
UPS becomes the first package delivery company
to serve every address in the continental United States.
We're doing pretty darn well with our trucks,
all over America delivering stuff for everybody.
And today, UPS delivers 6.2 billion packages
a year in over 220 countries
for a total revenue of $100.3 billion.
We take for granted our ability
to get anything from anywhere when we want it.
You can order something from overseas
and get it the next day,
and none of that would be possible
without the advances made by UPS and FedEx.
Where would we be if we couldn't get that T-shirt of Yoda
wearing sunglasses the very next day?
You know?