The 77-Year-Old Entrepreneur Shares His Candid Views on a Host of Issues with The Wall Street Journal
4/19/22 – – FedEx founder Fred Smith, who will be stepping down June 1 from the CEO position he’s held for almost 50 years, is a rare breed of entrepreneur. Unlike such brilliant but short-tenured disruptors as Travis Kalanick (Uber), Adam Neumann (WeWork) and John Foley (Peloton), Smith successfully launched and stuck around to shepherd an audacious concept — criticized as “interesting but unfeasible” by his Yale economics professor — through a half century of growth, innovation and sustainability.
It’s hard to remember how the world functioned before Frederick W. Smith convinced us that our packages “absolutely, positively have to be there overnight.”
In April 1973, the first modest fleet of Federal Express aircraft (20 small Dassault Falcon jets) took flight, delivering packages to 25 cities overnight. Today, FedEx’s 689 planes, including aircraft as large as Boeing 777s, fly out of 650 airports in 220 countries around the world. The company employs more than 560,000 people globally to execute, near flawlessly and with very few crises, its air and ground logistics services.
Smith expects the company, which he took public in 1978, to surpass $100 billion in revenue next year.
Last week, The Wall Street Journal published a fascinating interview with Smith, now 77 years old, as he looks ahead to handing over his CEO responsibilities to the company’s president, Raj Subramanian (Smith will remain chairman). I’ve included a link below to the article, and would like to highlight a selection of interesting exchanges between the very candid Mr. Smith and the Journal’s Tunku Varadarajan:
How FedEx “Literally” Saved the World During the COVID Pandemic
“We, and UPS, and to a lesser degree the Postal Service and a company called DHL, literally kept the world operating,” Mr. Smith declares. “I don’t think that what our people did is understood or appreciated nearly to the extent it should be.”
Then came the miracles from Moderna and Pfizer: “There are only two networks that could deliver the vaccines—us and UPS. And we did tens of millions, at 99-plus accuracy. It was just unbelievable.”
The Causes of the Global Supply Chain Crisis
Congress’s last Covid relief stimulus “created an enormous amount of withdrawal of labor from the market,” and that had a direct impact: “People make the supply chain this arcane subject. Hell, it was a lack of people to off-load trucks, and of people to drive the trucks.” There wasn’t “a big problem going through those ports out there. They weren’t even working three shifts. It’s simple: you couldn’t move it once it got ashore.”
What Could Have Made Today’s Inflation Even Worse
“Had we passed the Build Back Better bill that Biden wanted, my guess is that we would be Weimar Germany right now,” he says. “We’d have 25% inflation rather than 9% or 10%.” Sens. Kyrsten Sinema and Joe Manchin, the Democrats who stymied the bill, were “like the Dutch kid with the finger in the dike.”
In the same vein, he tells me he thinks modern monetary theory—which holds that federal spending ought not to be constrained by revenue—is “insane.” You can’t “print money without regard to the fundamental laws of economics.”
The Future of Our Economic System
In his view, one of the problems with our political discourse is “the isms. People talk about capitalism and socialism and communism. There’s only two kinds of economic systems: the market-driven and the government-directed. That’s it! The more you move toward a state-directed economy, the less efficient and more corrupt it becomes.”
On the Importance of Free Trade
Free trade is Mr. Smith’s greatest passion. Trade, he says, has enabled the U.S. to be the only global power in human history to get rich while also enabling the rest of the world to prosper. In his view, the neglect of U.S. industry in favor of the financial and tech sectors—for which successive administrations in Washington are culpable—has led to a spike in populism that casts global trade as a villain.
The Threat of Chinese Mercantilism
“You can’t pretend that a mercantilist state like China is a free trader. It’s not.” He’d like a “coalition of the willing” of free-trade states to challenge the Chinese at every opportunity. For his part, he’d like to have a chat with Xi Jinping. “I know President Xi. I met him when he was the party head down in the eastern part of China. If I had a conversation here today, I’d say, ‘Mr. President’—just as I did with Trump—‘I strongly advise you to re-embrace open markets, which made you rich.’ ”
America’s Role in Sustaining a Positive World Order
After nearly 50 years at the helm of FedEx, he can remember times when American political discourse wasn’t “this balkanized electronic thing, where no one compromises.” His service with the Marines left him with the enduring belief that his country is a force for good—and that a Pax Americana is part of the natural global order. This American peace, he believes, is about more than just preventing war. “It means trade as much as you can and make the world open for commerce. Trade helped to lift 600 million Chinese out of abject poverty. Somebody’s got to defend it.”
I guess after all these years we can forgive Smith’s narrow-minded economics professor. He missed the most important predictor of success in his young student’s business plan: Fred Smith. No dream is too big when advanced by the passion and commitment of a determined individual. And when such an individual values the contributions of others, even “unfeasible” concepts can take flight.
In my opinion, you absolutely, positively have to read this interview: