
How A Lucky Run In Vegas Saved FedEx - lalwanivikas
http://priceonomics.com/how-a-lucky-run-in-vegas-saved-fedex/
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jere
A grain of salt to take with this story:

>Federal Express began to market itself as "the freight service company with
550-mile-per-hour delivery trucks". However, the company began to experience
financial difficulties, _losing up to a million USD a month._

So he saved the company by winning $27k, even though they were losing $30k per
day? Catchy tagline though.

>Smith impulsively hopped a flight to Las Vegas, where he won $27,000 playing
blackjack. The winnings enabled the cash-strapped company to meet payroll the
following Monday. _" The $27,000 wasn’t decisive, but it was an omen that
things would get better," Smith says._

[http://en.wikipedia.org/wiki/FedEx_Express](http://en.wikipedia.org/wiki/FedEx_Express)

~~~
tomkarlo
"Losing up to a million a month" doesn't necessarily mean "using a million in
cash a month." The first may be based on accrual accounting, the second is
based on cash accounting, and they don't need to equate in any particular time
interval.

E.g., if you pre-paid $12M in rent for a warehouse for a year, you might be
"losing $1M a month" in accrual accounting (as the prepaid asset gets run
down) but using no cash in that same month.

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hookshot
In the early 1970s if you took a secret plane trip alone and came back with
27k you probably didn't go to Vegas...

~~~
pksekine
The most profitable form of logistics ;-)

~~~
gonzo
Air America

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chasing
"No one but Smith knows the full details of his trip... no journalists raced
to confirm the details of his story."

So is this a true story? It just rings false to me. Down to their last dime.
Exec swooshes off to Vegas and wins enough money to keep the company afloat
for a week. Just one week, which was literally enough to make the difference
between life or death for FedEx?

~~~
frogpelt
Sounds like he took a loan from his family but wanted it to sound more
sensational.

~~~
outrightfree
Or maybe he did a Walter White.

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larrys
"“I knew we needed money for Monday, so I took a plane to Las Vegas and won
$27,000.”"

I've been hearing this story since I was in business school (and that was a
long long time ago). It's a great dog and pony show.

This could be any of the following:

a) True (but I mean who really knows?)

b) Not true (we have no record other than what Fred Smith said after all).

c) A cover for another way he got the money. Perhaps even from the mafia or
another source that he didn't want to disclose. [1]

[1] No. I don't think he robbed a bank. However it's somewhat common knowledge
that people use Las Vegas winnings to cover for illicit ways they get money.

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at-fates-hands
This was interesting to me since I heard a version told around MLM circles
(Herbal Life, Equinox, Amway) that went: "He cashed out all the liquidity of
the company, hopped a plane and went to Vegas, where he put the entire company
on one spin of the roulette wheel."

Of course the story has its embellishments like not telling you who the
company is and then at the end they say, "Have you ever heard of a company
called FedEx?"

There's a lot of red flags where I heard it like how you just cash out the
entire company's "liquidity" without anybody saying anything. Or that he was
flat broke, but could still afford a plane ticket.

I guess this how a good urban legend survives though - right?

~~~
gohrt
And now it's being used to pimp YC startups.

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Greenisus
My first job out of college was a software engineering gig at FedEx, and this
is one of many popular stories I would hear around the office.

Another popular one was that Fred Smith had the idea of FedEx for a college
paper while he was at Yale, and that the professor gave him a C on the paper
and said it was a bad idea.

~~~
larrys
"Another popular one was that Fred Smith had the idea of FedEx for a college
paper while he was at Yale, and that the professor gave him a C on the paper
and said it was a bad idea."

I've heard this as well. This goes along the lines of many similar "ironies"
that the business press likes to bandy about. The problem with saying how
foolish the business prof was (or was not) is that we don't have any data on
the other ideas that he said were foolish and never went anywhere (or the
ideas he liked) nor do we know exactly what the paper said to see if there was
a particular reason the prof thought it was foolish. Devil in the details.
Maybe something changed between the implementation and the paper. I mean has
he ever published that paper?

~~~
soperj
Also, maybe the paper itself was foolish, and then he amended the business
plan? Hard to say without reading exactly what was written.

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goeric
When did Priceonomics become a web crawling service? That's a neat pivot, but
I think a name change to go with it might help.

~~~
meritt
Their pivot is questionable to me. I mean when you have drag-n-drop web-
crawling software such as Mozenda or Connotate, it seems like it'd be hard to
justify the cost, since scraping isn't particularly challenging -- even for
non-techies.

The value comes in the understanding, analysis, and application of said data.

~~~
solarmist
That's really what their selling. The web-crawling and scraping is just to get
the data to base their analysis on. Business seems to be good for them too.

~~~
meritt
What are you basing that conclusion to demonstrate that "business seems to be
good"? Numbers? Financing? Hiring? etc

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nutjob123
Heard this story many times. Never thought it was true. I always assumed vegas
was a thin excuse for something illicit.

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budu3
How is this legal? Let's assume he lost the money, how would this show up in
the companies books?

~~~
jpmattia
_Let 's assume he lost the money, how would this show up in the companies
books?_

I'd be more curious how the winnings were reported on the books. That's a lot
of back tax penalties.

~~~
ewang1
The company books would probably just show a loan. Then he could loan/repay
the company with his winnings.

~~~
refurb
You usually can't issue a loan to an executive without some sort of director
oversight. See Tyco.

