32 Slices
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4. This Dog Might Hunt!

Roger Frock Berrett-Koehler Publishers ePub

23

In mid-April 1972 I arrived at the offices of Arkansas Aviation Sales to present our last progress report prior to preparing a final report. We started with a tour of the facilities and met some of the employees, most of whom were involved with sales operations and care of the corporate jets. While the offices at Arkansas Aviation were at best Spartan, the hangar area was quite a different story. Crammed into every possible parking space were beautiful, shining, expensive corporate jets of various configurations and with a variety of company logos and color schemes designed by their previous owners, which Arkansas Aviation had purchased for resale.

There was even an Aston Martin sports car parked in the corner of the hangar similar to the James Bond model. Curiosity got the better of me and I just had to ask what that beautiful car was doing parked in an airplane hangar. Fred had taken the car as a down payment in trade for one of his smaller propeller planes, as he turned his attention to the more rewarding corporate jet market. As he explained, “It takes up a lot less space than the plane.”

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15. The Marine Corps Boot Camp Mode

Roger Frock Berrett-Koehler Publishers ePub

83

The “system test” network generated so few packages that we decided to cancel the flight schedule and place the packages on commercial airlines. We did not fly planes in the package system again until the next startup. It was a matter of reducing our operating expenses and conserving our dwindling supply of funds.

The daily volume from the five original cities averaged only about ten to twelve packages. Later we developed sophisticated analytical tools and ran the program to understand more about the test network. We discovered that the expected volume between all ten original cities was only forty packages per day for the penetration level we anticipated. The analysis also showed that each new city added to the network raised the volume levels geometrically. We were facing the classic chicken-and-egg dilemma: Federal Express needed an expanded network to reach higher volume levels, and an infusion of funds to expand the system to a level of sustainability.

In March, Charles Brandon joined us as our vice president of operations research. With his wrinkled corduroy jacket, worn blue jeans, and long rumpled hair, Charles was our technical wizard, the stereotypical absent-minded professor. Our management structure was constantly in flux throughout the early years; flexibility and fluidity were its main characteristics. There was no hierarchy, just a partnership of equals.

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29. Concordes, Dirigibles, and Separation

Roger Frock Berrett-Koehler Publishers ePub

185

During the remainder of 1980 and into the following year, I spent much of my time in Canada and Western Europe, returning to my base in Memphis to write and issue reports, arrange for upcoming trips, and gradually develop a concept for service to Western Europe. This was like reliving the stimulating experiences of the startup. It was perhaps even more interesting and rewarding because Federal Express was already well known and highly respected in the European business community.

The company now transported packages of up to 70 pounds and shipments of up to 150 pounds, which mandated a different design for our courier vans. Fitz’s design now included high-cube courier vans with diesel engines produced in Western Europe, and he and I made frequent transatlantic trips together. We visited business executives, transport companies, and truck and engine manufacturers and were welcomed with open arms. We had little contact with the day-to-day function of the company, but that did not bother us in the least. We were back in the entrepreneurial mode, out of the exasperating idleness, and certain that our efforts would be the base for great things in the future.

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19. A Little Help from Our Friends

Roger Frock Berrett-Koehler Publishers ePub

111

As Thanksgiving 1973 approached, we tried to count our blessings. The mail runs were becoming routine, the Falcon modifications were progressing satisfactorily, and the priority package network now included thirty-eight cities stretching from Boston to Los Angeles and Miami to Minneapolis. Service levels stood at over 97 percent, and package volumes were steadily increasing. Still, we weren’t out of the woods yet, not by a long shot.

Our anxious local lenders were repaid from the private placement funds, and replaced by equally apprehensive and even more rigid national institutions. The stringent covenants that allowed the banks to withhold $5 million of the “committed” funds meant that we would not breathe too easily. During the ensuing months, we frequently wondered if we were making any real progress on our quest to make Federal Express financially viable.

Following the closing, Charlie, Brick, Larry Lawrence, and Phil Greer joined the board of directors to represent the investors and banks. Charlie described the early board meetings this way: “The first board meeting was like fight nights at Starkey’s. Representatives of every investor were lined up two deep around this huge table. They each had their own questions and their own agenda. It was like a free-for-all. It was virtually impossible to get anything done under those conditions.”

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16. An Inauspicious Beginning

Roger Frock Berrett-Koehler Publishers ePub

89

We needed to show our potential customers that we were very different from any other shipping service. We tried to keep things simple by providing representatives with a sales talker, a Dick and Jane story: These are our planes, these are our trucks, this is our system, here is our sorting facility. Our system was so simple, so unique, and so new that it required explaining. Our sales group put up posters of the Federal Express planes in each prospect’s shipping area as a reminder of our closed-loop system, but that still wasn’t enough.

In the early days, people had a difficult time understanding the concept of shipping through the hub. Diane, one of our customer service agents doing telemarketing at the time, was explaining to a prospect that our central sorting hub was the reason we were so reliable.

The prospect said, “You mean that if I ship a package from Milwaukee to Chicago, it has to go through Memphis?”

Diane responded, “Look, sir, if you don’t tell your customer, we won’t. It just will be there by noon tomorrow. Will that work?”

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