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Blackjack and its importance to the growth of FedEx


25 Apr 2018

This summer marks the end of an era for courier delivery provider FedEx, following the news that freight president and chief executive Michael Ducker will be stepping down after more than four decades of service.

Ducker joined FedEx Express in 1975, but will be retiring in August. This is significant because it was back in this era that a stint at Las Vegas’ blackjack tables was effectively responsible for keeping the company afloat.

The early days of FedEx

FedEx was founded in 1971 by Fred Smith, with the idea for the business originating from a paper he had written while studying for a major in economics at Yale University.

At the time, all shippers used either trucks or passenger airplanes to transport their packages. Smith believed that an overnight delivery service would be a more efficient way of transporting small, high-priority packages.

He also proposed that one carrier should be responsible for the delivery of an item, from initial collection to final delivery, with the system in place at that time deemed too logistically inflexible to make fast deliveries.

After receiving $4 million in inheritance and then securing an additional $91 million in further financing, Smith brought his idea to life. Operations finally began in 1973, with an initial fleet of eight planes and the intention to deliver to 35 US cities.

However, the business failed to really take off in the first two years. Debts ran into the millions and bankruptcy was a real possibility. Rising fuel costs were highlighted as a significant reason.

An approach to the General Dynamics Board for vital funding had been declined, while pilots had already contributed from their own credit cards to keep the company afloat.

The final $5,000 remained in the company kitty and this wasn’t enough to even fly the planes. This led Smith to Las Vegas.

Another week of business

What happened next can be filled in by Roger Frock, a former senior vice president of operations at FedEx.

In the book ‘Changing How the World Does Business: FedEx’s Incredible Journey to Success – The Inside Story’, Frock wrote:

“I asked Fred where the funds had come from, and he responded, ‘The meeting with the General Dynamics board was a bust and I knew we needed money for Monday, so I took a plane to Las Vegas and won $27,000.’ I said, ‘You mean you took our last $5,000 – how could you do that?’

“He shrugged his shoulders and said, ‘What difference does it make? Without the funds for the fuel companies, we couldn’t have flown anyway.’ Fred’s luck held again. It was not much, but it came at a critical time and kept us in business for another week.”

What happened next?

The extra time that the blackjack winnings bought motivated Smith to push harder for new funding. Another $11 million was raised and by 1976 FedEx was a profitable company.

With a volume of 19,000 parcels per day on average being carried, a profit of $3.6m was announced.

The sky was the limit after a 1977 legislation change, with FedEx then able buy larger aircrafts. They also were at the forefront of using computers to manage deliveries and expanded to deliver to more cities throughout the USA.

Nowadays, FedEx delivers worldwide from South America to the Caribbean to Europe to the Middle East. Over 220 countries and deliveries are now connected, with over 3.6 million shipments in transit every working day.

As of 2016, FedEx is said to employ around 400,000 members of staff, while last year the total equity of the company was believed to be $16.073 billion.

A one-shot casino bet

Little to nothing is known of the blackjack betting strategy that Smith adopted to turn his $5,000 into $27,000, aside from this was the sum needed to pay FedEx’s weekly fuel bill.

It is unknown the length of time that Smith sat at the tables for, whether his stack depleted first before he hit a winning run or whether his average bet was a set percentage of his stake or whether he opted to go all in straight away.

Should you, Smith or anyone else decide to wager their whole bankroll on a single casino bet, there are bets that warrant greater consideration and others that should definitely be avoided in the hope of securing a profit.

Betting on the banker at baccarat is among the lowest house edges that can be exploited, with the house edge being 1.06%.

Meanwhile, if you have mastered optimum blackjack strategy, the house edge is widely regarded to be 0.5%. However, elements such as the number of decks being used and the size of the blackjack payout can alter this slightly.

For roulette fans, we have previously come up with a fairly detailed list of the best one-off bet if the main intention is to guarantee a profit.

In terms of bad bets, betting the tie at baccarat concedes a house edge of 14.36%, while staking on any seven at craps has a house edge of 16.67%.