“Life is short and it ends, the clock is ticking. Don’t get all wrapped up in your personal self, that’s a very unhealthy thing to do.” - Fred Smith, Founder of FedEx (1944 - 2025)
On June 21, 2025, the business world - more specifically the supply chain world - lost a giant. FedEx Founder Fred Smith passed away at the age of 80. Like anyone who manages to have an outsized impact in their field, Smith was a complex character, but there can be no question that he changed our supply chains forever.
Foundations of a Founder
Frederick Wallace Smith was born in Marks, Mississippi in 1944. As the story goes, he first imagined a company that could provide overnight delivery for an Economics paper he wrote at Yale in 1965. Supposedly got a C on the paper because his professor found the business plan improbable.
As misguided as that seems today, most of us would have sided with the professor back then. In the 1960s, air freight was carried in the cargo hold of passenger planes. It was a secondary consideration to the airlines’ primary business: passenger travel. The needs of the two lines of the business weren’t quite the same. To achieve his full vision, Smith would need dedicated equipment.
But the vision would have to wait.
After graduating from Yale, Smith served two tours in Vietnam with the U.S. Marine Corps. He served as a platoon leader and a forward air controller and would earn a Silver Star, Bronze Star, and two Purple Hearts.
He never went to business school, in fact he considered the Marines his business school. While in Vietnam, he had an opportunity to learn from military procurement and delivery procedures, never losing sight of the dream of offering overnight commercial delivery.
Fast Forward to FedEx
After Vietnam, he launched FedEx. The company started operating in April of 1973 in Little Rock, Arkansas before moving to Memphis, Tennessee for its location and weather. He raised $80 Million in VC money plus a few million from friends and family. It was the largest private investment package ever put together up to that point.
Their first night in business, the FedEx team moved 186 packages on 14 jets to 25 cities. To put that in perspective, by 2023 the company was moving 16.5 million packages a day.
That massive growth shouldn’t suggest that Smith didn’t face any challenges. In the first two years, FedEx lost $27 Million - a million dollars every month. The company first delivered a profit in 1976, but they wouldn’t really start to grow until after the airline industry was deregulated in 1978. The federal government no longer had to approve routes and prices. FedEx could afford to buy larger planes and by 1983 - ten years after starting operation - they had earned $1 Billion in revenue.
Smith remained as the CEO until 2022, when he stepped down and became the Chairman of the Board.
High Flying Innovation
One of Fred Smith’s favorite things to say was that all businesses are always fighting commoditization. Only constant innovation could overcome that drag. For that reason, he liked employees who brought him cost savings ideas, and often got involved personally when customers complained.
They also invented customer-facing tracking, which actually required multiple inventions. As Smith explained, “There had been barcodes that said, I'm a can of tomato soup, but nobody had ever made a five-part air bill that had a number that said, I'm 1, 2, 3, 4, 5, and then stick it on the package. Then we tried to have a little device that could read it.”
Most impactful of all was FedEx’s hub and spoke system. At the time, most packages were being transported point to point. It was faster for each package, but far more costly and less efficient.
Hub and spoke is faster because regional points are more likely to face delays than national hubs, which can be deliberately placed for optimal speed and useability. It is also more scalable, because the hubs can tolerate increases in volume more easily than regional stop points can.
Today, FedEx Express has 15 global hubs, FedEx Ground has 50, and FedEx Freight (LTL) has 60.
Fred Smith overcame enormous challenges to bring his C-grade vision to life, and he revolutionized logistics and shipping in the process. His innovations - and his business philosophy - serve as a legacy that is having an impact far beyond the walls and range of FedEx.
