Fred Smith founded FedEx by copying airlines: route everything through one hub in Memphis instead of connecting cities directly. This cut nine routes down to just nine connections for ten cities, making overnight delivery possible. Today FedEx moves 15 million packages daily.
Have you ever wondered how you could ship a package across the country in a single day? Well, it's all thanks to this guy. And here's the story. In the 1970s, package delivery is a logistical nightmare. Imagine just 10 cities. If you live in one city, you need 9 delivery routes to reach the rest. But each of those cities also needs 9 delivery routes, and suddenly you're managing 45 unique routes. Now imagine scaling that to hundreds of cities, and it's practically impossible to manage. So packages are constantly late if they even make it at all. But then comes along this guy, Fred Smith, who starts up a new business called Federal Express. He invents a system called the hub and spoke model, inspired by how the airlines operate. Instead of connecting every city directly, he routes all of the packages through what are called central hubs, and each hub connects them to their final destination. Now he can reach 10 cities with just 9 routes. Fred puts his first hub in Memphis, Tennessee, centrally located in the country, good weather for most of the year, and easy access to highways and railroads. And suddenly FedEx can guarantee overnight delivery, and it's a promise no one can make at the time. And today FedEx handles over 15 million packages each and every single day.
