A delivery man, a running man, a calculating man—and more
Not all of the successful new risk takers made their fortunes in electronic esoterica. Others have earned megabucks by putting an alluring gloss-on mundane products or performing commonplace services in newer, more efficient ways. In many of the cases, they nursed their creative ideas for years before venturing into the chancy world of profit-and-loss statements. Profiles of five who made it:
Overnight Wonder
Like the iodine content of kelp, air freight is something most Americans have never pondered. But Frederick W. Smith, 37, thought about it as far back as his undergraduate days at Yale in the mid-1960s. In a paper for an economics course, Smith proposed the idea of an airline that would carry small packages overnight from city to city. The airline would have its own aircraft and truck fleet, operate independently of the commercial schedules and routes and deliver its cargo anywhere in the U.S. between dusk and dawn.
Smith received a grade of C on the paper, which was almost a charter for the company he founded: Memphis-based Federal Express. Now almost ten years old, Federal Express has grown to handle 100,000 parcels and letters nightly. Last year's revenues reached nearly $600 million, and profits totaled $59.3 million.
Unlike many of the entrepreneurs, Smith was wealthy before he began Federal Express. A Viet Nam vet (200 missions in forward-control planes) and the son of a millionaire Memphis businessman who died when Smith was only four, he put $4 million of family money into his idea for Federal Express and went to New York City on a search for more. Smith was able to persuade half a dozen institutional investors with his sharp intellect and directness and several market research reports predicting that Federal
Express would work. He returned to Memphis with $72 million in venture capital from such organizations as Chase Manhattan, Citibank and New Court Securities.
The greatest challenge Smith faced was to create the entire delivery system and have it in place before Federal Express had so much as accepted its first package. Said he: "People were not interested in shipping things just to Columbus, Ohio. They were interested in being able to ship things anywhere in the United States."
So they were. Losses were high at first—$29 million during the first 26 months—because fuel prices jumped after the 1973 Arab oil embargo. After that, the fortunes of Federal Express rose sharply. By the mid-1970s, revenues were running at 50% above projections. Smith now has plans to expand his overnight service to Europe.
Fast Track
New crazes and entrepreneurs sometimes come together with timing worthy of the Great Wallendas. Such was the case with the fitness mania and Phil Knight, 43. His company, Nike Inc., of Beaverton, Ore., now designs and sells $500 million worth of shoes a year. Nike sells shoes for jogging, basketball, tennis, football, baseball, soccer, volleyball, wrestling, hiking and even just walking.