YouSaid · the spoken record

Frederick Smith

lines on the record
19
first
2020-10-29
most recent
2020-10-29
sittings or episodes
1
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podcast

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  1. “Around you, assimilating and synthesizing different ideas. He picked up an autobiography of Dwight Eisenhower and discovered what he considered a perfect example of the role of luck in terms of success. Now this is direct quote from Smith. Dwight Eisenhower, 1940 was a soon-to-retire lieutenant colonel with a respectable but not particularly outstanding military career. But it just so happened that he turned out, now watch how he, which I think everybody does. You know, I've told you over and over again. It's amazing that when you read biographies of great people, you realize they, the people that were studying themselves read biographies of great people. Why? Because they take parallels and other people's lives and apply it to them. He's going to apply the role of timing in the success of Dwight Eisenhower to FedEx. And then he's going to further elaborate how that applies to other startups. But it just so happened that he turned out to be the right person in the right place at the right time. And most important, he had the right skills, mainly the skill to force.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “This is where Smith is direct quotes from Smith. It looked as if it were impossible. It had never been done before. At that time, I'd been reading some very different types of things about the grocery business and the price performance of computers. Well, one thing led to another and we began to look into using a version of those barcodes that are on soup cans to give a number in sequence to every packaged. It turned out to be a very good idea. It's interesting. Remember he talked about the inspiration for the hub and spoke concept he took from the telephone network. Now he comes up with this barcode idea from grocery stores and soup cans. Without it, you're talking about wow, he's talking about how important this innovation was, without it, we could not have controlled this organization. It would have been impossible to take millions of items every night and deliver them with the reliability we do. Then he talks about the very next page. He's talking about, again, he starts out with the importance of reading, of being curious of the world.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “More and more obvious, so he's talking about the innovation. According to this book, the first now, you know, you track a package, you know exactly where it is. FedEx was the first one to come up with that system, and then other people copied it. So he says it became more and more obvious that Federal Express must have the ability to track at every moment every item their system was transporting.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Just a quote from Fred on problem solving. Smith believes that the key to successful innovation is constantly to subject problems to every angle of scrutiny that can be thought of, with the idea that unless you are trying to defy the laws of nature, some risk-taking way will be found to solve the problem. And he's saying this in a 1986 interview, looking back, he's describing the very early days of FedEx. That's why I thought it was so important.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “So they managed to actually do the initial public offering, and this really helps FedEx. They're finally for the first time in their lives on solid financial footing. And this is where it just takes off like a rocket. So he's over the hill, over the really, really hard part, obviously building up in so many companies not by any means easy, but it's probably not going to go out of business. So it says the first profitable fiscal year was 1976, with a net income of 3.5 million. I'm just going to list off the profits as they go, right? Next year, so it starts out 3.5 million. Then they make 8.1 million. Then they make 20 million. And then by five years later, they're making 90 million a year in profit. So when they make $90 million a year in profit, at that time, the company was only nine years old.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “That's crazy. Okay, you want to give me a loan? Will you give me a job? The file did not show their response. It may have been considered the momentary whim of a terribly distraught man. The strain affected his home life. His wife was young and wanted a social life. Fred was not much inclined towards the social realm. When Smith was not at Federal Express or flying around the country on company business, he stayed at home to read. I read about four hours a day, he told an interviewer, so that's going to lead to his divorce. Before I get to the IPO, which saves the day, he's got a great quote on time management. You have to be absolutely brutal in the management of your time.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Around and take orders from General Estes because he didn't know what the hell he was doing in the hangar office, the men drank their beer and talked until 5.30 in the morning. We ultimately convinced him to stay. So he stays a few months, maybe a year later. He's back into financial trouble. So he goes back to Colonel Crown and asks him to, because they already did a small investment, but now they don't want to. So he asked them to guarantee another loan, and they won't. And this is where he almost glits again. General Dynamics turned him down on the loan. It was a blow that made him think of resigning. Smith wrote Colonel Henry Crown asking that they consider him for a management position in either general dynamics or trans world airlines.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “So he says it was very of us at that point that he had done nothing that he should be basically be ashamed of. He had done nothing at all that was detrimental to the company. So what they're talking about there is they get into the issue why he got acquitted was because if the difference between knowingly and willingly these are like legal terms that the judge has to explain to the jury like five different times or something but Fred made the point that he thought he had the authority to do so and he just thought by forging the documents it would be faster because he needed the money that day and that if he actually had the meeting they would have approved it anyways so that's what they're talking about the management group we knew believed two things no matter who would take over the leadership if Fred Smith wasn't there the thing would not ultimately be successful that is how much we believed in Fred Smith and his ability to know and understand the business and in his charisma and his leadership capabilities that was very sincere we felt that way and the other thing was that even if that hadn't been true we sure as hell weren't going to sit”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Smith had a six pack of beer up there. So we drank our beer and we talked to him and we talked to him and we talked to him. He was serious. He had written a letter to give to the board. Our arguments with him were basically that we got over the hard part. The hard part is just about over. From then on, it was going to be all downhill. It was very obvious at that point that he had done nothing that he should be basically ashamed of. So this is where he's under indictment. He essentially falsifies some two different banks want collateral, so he essentially, he makes up like fake minutes from a board meeting. And the main issue is that he pledged collateral that was fake. The jury winds up acquitting him, but at this time, he's like, you know, they just found out I'm going to go to jail. The FBI's on me, the district attorney's on me, so he's very down.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Now it was amazing that Fred never quit, but I don't want to give you the false impression that he didn't try to or didn't think about it. And this is where he almost quit. He says, Fred said, he's talking to a bunch of the, remember these mavericks, these nonconformists, and the people that joined him in the early days, he's talking to them. He says, Fred, I just wanted you to know I'm going to resign tomorrow at the board meeting. And one of these guys says, oh, bullshit. You can't do that. Fred said, no, I'm going to do it. And I said, Smith, you are over the hard part. He said, no, there's just too much pressure. I can't take it anymore. I'm going to resign. I said, where are you? Fitz and I will come down and talk to you. So they wind up meeting up with him. And, you know, this is an act of a genuine act of friendship here. Because imagine how different Fred Smith's life would have been if he actually went through quitting, right? They found him in his office on the second floor in one of the FedEx hangars.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “It was during this financing that Fred essentially wiped out almost all of his equity in the business. Fred Smith would take a battering. He and his family at the outset owned the controlling stock. But the effect of the third round would cut his holdings down to just 8.5%. Eventually, he buys back, I think, 25% of the company before IPO, if I'm not mistaken, something like that. So he gets this money back. It was excruciating hard. This was the end of the road. I had begun discussions with people about bankruptcy. That was going to be our next step. Stock for 90% of the business was available for just a relatively modest amount of capital. Fred was being wiped out. He had put his entire personal net worth in this thing. Whoa.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “So during this time, this is where he actually gets fired by the board. Fred Smith gets fired by the board. By the time they had this meeting, Smith had lost his position as chairman and CEO of the company, but he was left in office as a president under a two-year contract with the help of corporate headhunters. They came up with a new FedEx boss, a retired Air Force general named Howell Estes. He was 59 years old.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “And so, as you can imagine, the stress, because Fred's response is ultimately responsible for everything that's going on. And this is what he said. Fred Smith himself said that no man on earth will ever know what I went through in 1973 to 1974 when I read that. Again, because I've read so many books on him, because I would argue he might be the smartest person that I know of. I have a little Charlie Munger that I put on my shoulder, and I try to ask him questions on decisions I need to make. And he says a quote that I love. He says, life will have terrible blows in it. Horrible blows. Unfair blows. Remember, Charlie lost, I think his son was nine years old, died of leukemia. So it's just devastating. I remember reading, I think it was in poor Charlie's almanac where, you know, you just walk in the streets outside the hospital, just crying his eyes out as you could imagine. So he's saying, Light will have terrible blows in it, horrible blows, unfair blows. It doesn't matter. And some people recover and others don't. And I think the attitude.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “So, I want to tell you a little bit more about his personality and something essentially that Fred Smith would tell you, don't burden others with your troubles. What Smith learned in Vietnam about leading troops with personal courage and confidence helped him now. Nothing seemed to faze him. Of course, internally, he's distraught. But externally, you don't see that. He rarely lets you see him get down. He kept them private. He would constantly look for the bright side of trouble and laugh. That was pretty infectious, so we all kind of followed suit. Okay, so they're still trying to raise money. They come across this guy, I want to tell you about, I'm going to look for a biography on him because he found it very interesting. His name's Colonel Henry Crown. I don't think he was actual colonel, but he says they're starting to meet with him, and he's started off as poor, I think, what was he, like a...”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “They said, but Fred's interpretation was we are going to raise $20 million for you, and they're failing. So he's like, I've made commitments here because I thought I had a promise from you. He did not understand, I don't believe he truly understood, that it was a strictly a best efforts deal and the money wasn't in the bank and that he had a long road to hoe because of being misled, he had made commitments and taking risks that he never would have taken. In terms of, and this is another group, this is one of the early attorneys for FedEx. It says in terms of starting a company of this size, we were first grade novices. And I think that really played to our advantage because we were not fully aware of the obstacle we faced or the difficulty in overcoming them. I look back on it now and think, oh my God, why in the world would anybody try to do something like this?”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “The jets swooped in. Their cargo doors were flung open. Empty in all the jets bought six packages. One was a birthday present from Fred to Tetter So they have four customer packages. That is the beginning. That is the launch of Federal Express.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Looking back a few years later, Smith confessed to a Harvard business school interviewer, the business asset we had going for us was our naivete. God takes care of fools, you know. The cities to be served were mainly all within 500 miles of Memphis, hastily assembled, inexperienced Blitz teams of four or five salesmen invaded the targeted cities working two or three weeks in each to pre-sell the company's service. Advertising was confined to an opening announcement in local newspapers and direct mail. This sentence was funny. They expected the planes to be pretty well loaded up. So there's a bunch of crowd that's gathered, some early investors and employees of FedEx, and they're sitting at the airport in Memphis as the first plane comes in. It says, I saw the anguish in their faces as they waited. Most of them were worried about their future. It was a critical moment of time, a critical moment in time for all of them. Right after midnight,”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Smith hoped to inaugurate error expressed by the middle of March. The Memphis staff devised a network of a few startup cities and opened offices in each, hired couriers, provided delivery vans. Oh, so you know how they do it? It's another great thing. You see FedEx and UPS and Amazon trucks and everything. FedEx didn't have trucks. They rented them from Hertz at the very beginning. That was hilarious. So it says they were trying to get out the world at Federal Express could deliver packages overnight. The effort was all pathetically puny.”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “There would be few customers if half the time Federal Express didn't serve the city the customer wanted to reach. And so he says, so they had to put in place a system covering the whole United States just to carry one package, which meant you started off with all fixed costs and no variable cost. And the ideal business is you can get that first order and make money from day one and expand on that. And this is where he talks about, you know, founding Walmart's very hard, but FedEx has to be a lot harder. Think about this. He says, like, and I love this analogy, really for me illustrated how difficult this was. Like, you open a Walmart store, and if that formula succeeds and you do well, you open a thousand of them. But you don't open a thousand of them to take the first order, and that is what FedEx had to do. I mean, it's just really, really, again, I know I'm repeating myself over and over again. This book is about perseverance. That's the main...”

    2020-10-29 · Founders · #151 Frederick Smith (FedEx) · IDENTIFIED FROM THE TRANSCRIPT · source