This article came out of a May 2018 lecture I gave to the Entrepreneurs’ Club, a group formed
by members of the MIT Sloan Executive Management MBA program. I had been asked to
present an interesting aspect of Federal Express as a start-up. The traditional tales are lost in
the fog of war, having been told so many times with so many variations that one’s memory no
longer separates myth from reality.
On the one hand, the most challenging and difficult issue facing Federal Express during the
start-up period was the need to raise substantial capital. Today, one can only marvel at what
Fred Smith pulled off. His tenacity, sophistication, instincts, audacity, and plain old 24/7 hard
work boggles the mind. “No man on earth will ever know what I went through...” Smith told
Author Robert Sigafoos in 1983. In retrospect, it makes me feel guilty for having had such fun.
On the other hand, finance is not my long suit. Moreover, these trials and tribulations have
been well documented by authors Robert Sigafoos in 1983, Vance Trimble in 1993, and Roger Frock in 2006.
So, I thought about the company’s vulnerability at birth. As a fledgling, Federal Express
seemed to be a sitting duck for some formidable players: UPS. Emery Airfreight. Airborne
Freight. Why didn’t they show up? What happened to “kill’em in the crib”? The late Art Bass,
COO at the time, observed: “When we started out, Emery could have kicked the crap out of us, but it didn’t...”
I concluded that a discussion of the circumstances and strategies that posed difficulties for
anyone considering entering the market concurrently with Federal Express would be an
Accordingly, I presented the idea to the group and participated in the subsequent discussion.
Consequently, it occurred to me that Fred Smith had created formidable barriers to entry.
Some of the barriers were designed. Some were a matter of exploiting circumstances. None
were by chance. After the session, I began to think more about the subject and decided it
would be interesting to drill deeper and perhaps be able to contribute to a fuller
understanding of the remarkable early Federal Express story.