What skill do top gamblers and business people have in common? A good ability to assess risk.
That’s exactly what FedEx founder Fred Smith used when he put his company’s future on the line on a Las Vegas blackjack table back in 1972.
The story is legendary in business circles and is worth retelling.
Back in FedEx’s first year, the company had one plane and a very big problem. They needed $24,000 to pay for jet fuel, but had only $5,000 in cash. Without a quick cash infusion, the fledgling company would be out of business forever.
So Smith did a little risk assessment math and hopped a plane to Las Vegas and headed straight for the blackjack tables. After a weekend of high stakes gambling, Smith had built up a roll worth around $27,000 (or around $140,000 in 2012 dollars).
When he got back to Memphis, Smith’s business partner was understandably shocked until Smith explained his risk assessment of the situation.
Smith calmly laid out how the $5,000 didn’t mean much unless the planes could fly, and without $24,000, the planes couldn’t fly. And while blackjack is still gambling, anyone with a solid mastery of basic blackjack strategy has a decent chance at coming out ahead.
A good sense of risk assessment paid off in a big way for the upstart businessman. Today, Smith is a billionaire with some pretty great stories to share about the business lessons they don’t teach at Harvard.
Do you think Smith used sound logic when he put it all on the on the line on a blackjack table? Let us know in the comments section below.