Frederick W. Smith? Apocryphal?
Dear Quote Investigator: During the holidays I often spot FedEx vehicles delivering packages. While the business is very successful today it faced considerable skepticism initially. According to company legend the founder Frederick W. Smith described his plans for creating the company in a paper when he was an undergraduate, but the professor who evaluated the idea deemed it infeasible and gave him a low grade. Would you please explore this topic?
Quote Investigator: In 2004 a journalist at “BusinessWeek” (now “Bloomberg Businessweek”) asked Frederick W. Smith about this tale, and Smith expressed uncertainty. Emphasis added to excerpts by QI:[ref] 2004 September 20, BusinessWeek (now Bloomberg Businessweek), Online Extra: Fred Smith on the Birth of FedEx, Description in article: “Smith recently sat down with BusinessWeek Atlanta Bureau Chief Dean Foust”. (Online Bloomberg Businessweek; accessed bloomberg.com on December 12, 2017) link [/ref]
Q: Part of the lore of FedEx is that you wrote a term paper while a grad student at Yale that first explored the idea of an overnight-delivery service — and that you received a C from a skeptical professor. Was that term paper truly the genesis of FedEx?
A: The question is prescient because there wasn’t a single “eureka” moment. The original idea for FedEx came when I wrote a term paper as an undergraduate — not as a graduate student, because I never went to graduate school . . .
That was the paper, and the whole issue about the C on the grade, came from naivete on my part when I was talking to a reporter years and years ago, and he asked what I made. I said, “I don’t know, probably made my usual C.”
The “BusinessWeek” journalist attempted a second time to obtain a more definitive answer:
Q: So did you, or did you not make the infamous C on the term paper?
A: I don’t know. It was so long ago, even when that question was asked 20 years ago, I didn’t know. I’ve tried to correct it many times, and usually when a journalist like you listens to the story and realizes how complex the story is, you realize it would take your whole profile to explain it.
Below are additional selected citations in chronological order.
The first mention of a C grade known to QI appeared in “Esquire” magazine in 1978. That citation is given further below.
In November 1973 the “Des Moines Sunday Register” published an article about Smith reporting that he graduated from Yale in 1966 and subsequently served in Vietnam. In 1969 he took over operation of Arkansas Aviation:[ref] 1973 November 4, Des Moines Sunday Register (The Des Moines Register), Small package jet airline, Stephen M. Johnson (Register Staff Writer), Quote Page 10C, Des Moines, Iowa. (Newspapers.com)[/ref]
It was in 1969 that Smith also came up with the idea of an airline devoted exclusively to small-package shipment, and started research to explore the economic potential for such an undertaking. On the completion of the research, he created Federal Express Corp . . .
This 1969 date can be reconciled with Smith’s other testimony if one assumes that he re-examined the shipping idea that he had as an undergraduate when he had acquired additional knowledge after graduation.
In March 1975 the UPI News Service published an article about Federal Express and relayed Smith’s assertion that he envisioned the shipping network when he was in college. The C grade was not mentioned:[ref] 1975 March 6, Lubbock Avalanche-Journal, Airborne Company Becomes United Parcel Counterpart (UPI), Quote Page 6B, Column 3, Lubbock, Texas. (Newspapers_com)[/ref]
It covers the whole country and provides overnight delivery of parcels anywhere within 25 miles of any of 77 central market cities . . .
He says he actually got the idea for Federal Express when he was a student at Yale and did a paper in economics class on air transportation but it didn’t crystallize until later.
The tale of the C grade was included in a profile of Smith published in “Esquire” magazine in August 1978 titled “Overnight Highflier: After a Rocky Takeoff, Feisty Federal Express Looks Set for the Short Haul” by Dan Dorfman. A picture of Smith displayed the following caption:[ref] 1978 August 15, Esquire, Full Disclosure: Overnight Highflier: After a Rocky Takeoff, Feisty Federal Express Looks Set For The Short Haul by Dan Dorfman, Start Page 10, Quote Page 10, Esquire Magazine Inc., New York. (Verified with scans at archive.esquire.com)[/ref]
Cocky Fred Smith: His Yale professor gave him a C, but Wall Street rates him A.
The article stated that twelve years earlier while Smith was attending Yale he wrote a thesis arguing that an airline service could create a booming business by delivering overnight high-priority packages weighing less than 70 pounds. However, Smith’s professor foresaw obstacles and was unimpressed:
His skeptical professor didn’t think such a business had a ghost of a chance, considering the airline industry’s intense competition and heavy regulation. Nevertheless, he gave Smith a passing grade, but a mediocre one—a C.
The “Esquire” article included direct quotations such as the following, but the remark about the grade was not within a direct quotation:
The professor didn’t understand how the goddamn world worked . . . that America was spreading out technologically . . . that the efficacy of our society is to be smarter, not to work harder.
In February 1981 “The Washington Post” printed an article that mentioned the C grade:[ref] 1981 February 22, The Washington Post, Section: The Washington Post Magazine, Overnight Success by Bill Snead, Start Page SM10, Quote Page SM13, Washington, D.C. (ProQuest)[/ref]
Inspiration struck when Smith attended Yale in the mid-1960s. Desperate to find a subject for a much-procrastinated economics paper, Smith stayed up late one night and stumbled upon his legendary idea: Buy a fleet of jets, fly only in the middle of the night, shuffle packages at one centrally located hub, pick up and deliver to customers’ doorsteps and charge oodles of money. He got a C on the paper.
In June 1981 “The Atlanta Constitution” published a piece about Smith that referred to a “barely passing grade” instead of a C:[ref] 1981 June 14, The Atlanta Constitution, Section: Atlanta Weekly, Article: Fly-By-Night Success, Subtitle: When it was founded Federal Express was seen by some as an idea that absolutely positively would not work. Less than a decade later, it is the king of the airfreight business, Author: Mitchell J. Shields, Start Page K20, Quote Page K20, Atlanta, Georgia. (ProQuest)[/ref]
Pressed to find a topic for a long-delayed paper, he latched onto the subject of airfreight. “I had to write about something it sounded like I knew about,” he says now. “I knew how to fly, so I wrote my paper on air cargo. And I decided that everything people thought about it was wrong. Air cargo wasn’t going to compete with trains. It wasn’t going to compete with trucks. There was a whole brand-new market out there that nobody had even considered.” . . .
Smith turned in his term paper and waited for his professor’s’ response. It wasn’t favorable. Such a business could never work, the instructor told his student, and gave the disappointed Smith a barely passing grade.
In March 1982 “The Christian Science Monitor” mentioned the C grade:[ref] 1982 March 24, The Christian Science Monitor, A lot of people besides Uncle Sam are getting into the mail business by Deborah Churchman, Quote Page 19, Column 2, Boston, Massachusetts. (ProQuest).[/ref]
At Yale University he wrote a paper on what looked to all like a wacky idea – an overnight delivery service using airplanes, which funneled all the mail through a sorting center in his hometown, Memphis, Tenn.
The paper received a “C,” but the business it outlined, after a shaky start in 1973, pioneered the rapidly growing field of overnight delivery.
In conclusion, Frederick W. Smith states that he did write a paper while he was an undergraduate at Yale University that proposed a rapid airplane-based delivery service for small packages. In 2004 he did not recall the grade assigned to his paper. He also said that the story of the C grade was based on a misunderstanding. Nevertheless, the criticism aimed at the evaluating professor by Smith in “Esquire” magazine in 1978 suggests that the grade was not good.
(Great thanks to Fred R. Shapiro whose inquiry led QI to formulate this question and perform this exploration. Special thanks to researchers Peter Reitan and S. M. Colowick who identified valuable citations. In addition, thanks to the contributors at Snopes and Wikipedia. Further thanks to Keith Winstein who pointed out that the periodical named in the 2004 citation was “BusinessWeek”. It was later renamed to “Bloomberg Businessweek”.)
Update History: On December 14, 2017 the name of the 2004 periodical was changed from the current 2017 name of “Bloomberg Businessweek” to the 2004 name of “BusinessWeek”.