UPS was founded by 2 teenagers, 1 Bicycle, and $100 borrowed from a friend | Hacker News Reader

UPS was founded by 2 teenagers, 1 Bicycle, and $100 borrowed from a friend

todayifoundout.com

79 pointsgrinich25 comments

FedEx also has an interesting story:

"In 1962, Smith entered Yale University. While attending Yale, he wrote a paper for an economics class, outlining overnight delivery service in a computer information age. Folklore suggests that he received a C for this paper, although in a later interview he claims that he told a reporter, "I don't know what grade, probably made my usual C", while other tales suggest that his professor told him that, in order for him to get a C, the idea had to be feasible. The paper became the idea of FedEx (for years, the sample package displayed in the company's print advertisements featured a return address at Yale)."

Smith used his time in the military to get insights in how to refine his idea:

"As a Marine, Smith had the opportunity to observe the military's logistics system first hand. He served two tours of duty in Vietnam, flying with pilots on over 200 combat missions. He was honorably discharged in 1969 with the rank of Captain, having received the Silver Star, the Bronze Star, and two Purple Hearts. While in the military, Smith carefully observed the procurement and delivery procedures, fine-tuning his dream for an overnight delivery service."

link: http://en.wikipedia.org/wiki/Frederick_W._Smith

I thought it was pretty interesting. Found it because I've been spending a lot of time seeking companies that have the following attributes: (1) extremely high barriers-to-entry, (2) good growth potential for the next 15+ years with little obsolescence risk, (3) a high quality management team, and (4) a good balance sheet. FedEx was one of the companies which met all the above categories.

What other companies did you find fit those attributes?

Not a whole lot.

Sysco (SYY), the food distributor. Fiserv (FISV), they do a lot of payment processing.

But, those two benefit from having business models which are more resilient to economic downturns than FedEx.

I heard a story (I don't know if it's true or not) about Fedex and Frederick Smith: supposedly at one point in the company's early history, they were going through a rough time and realized by Wednesday there wouldn't be enough money to make payroll. So Frederick Smith took the $30,000 the company had, flew to Las Vegas and put it all double or nothing on one roulette bet. He won, and deposited the money Thursday night so they made payroll Friday morning.

I don't know what would have happened to him if he had lost.

I'm not sure whether to conclude from that story that it takes determination, or that Fedex exists today because he was lucky.

The black jack win was more of a confidence booster. He was going through a tough time, his investors would not raise additional funds. So he made $30K playing black jack which boosted his confidence and went on to raise another $10M or so.

Sometimes, I think that when you are setting goals to get to tough places - putting up certain milestones like that are extremely helpful.

Arrhenius' college dissertation, containing revolutionary research that served as the foundation for work which won him a Nobel Prize in Chemistry, was graded such that he initially received a 4th class degree.

http://en.wikipedia.org/wiki/Svante_Arrhenius

It's not completely fair to contrast with FedEx, which had one of the largest startup costs of the time because they were different types of delivery services but:

> Smith supplemented a $4 million inheritance from his father with $91 million in venture capital to get his idea off the ground.

http://www.fundinguniverse.com/company-histories/FedEx-Corpo...

There was just a HN story asking about non-developer success stories (sorry don't have the link, writing this using the HN iPhone app) this is a perfect story for that discussion.

A large % of companies were started by non-coders, and this is a good example of one. Not to say anyone can solve hard technical problems but just because you can't code doesn't mean you can't start something great.

There is nothing wrong with starting a business in a traditional industry, the most important thing is doing something you love and want to do.

"UPS developed software that routes trucks such that they minimize left turns in their deliveries. By doing so, they reduced their annual fuel consumption by nearly 51,000 gallons in Washington DC alone. The reduction in fuel comes from drivers not having to sit idling at red lights waiting to make left hand turns."

I wonder if mapquest, google maps et al do that.

Probably not. UPS trips involve a lot of points the truck has to pass, so they do a lot of turning. Most trips I've planned with Google Maps and friends seem to be "get onto the freeway, go near your destination, get off the freeway".

I wish they would put these kinds of statistics in context. Is 51,000 gallons per year in DC a lot? Is it 10% or 0.00001% of their annual fuel usage? It's sort of meaningless without context.

heck I route my vehicle like that when i drive. i wrote a small program in 'spatio-geo-English" and it runs on a squishy grey organic microcontroller in my skull

$100 back then would be a fair amount of money today. Nice story though, the big thing to notice is that opportunity and timing + determination made it work, age, capital and so on were secondary.

$100 back then would be a fair amount of money today.

It would be about $2400 today (http://www.wolframalpha.com/input/?i=100+1907+dollars).

Interesting story. I actually have worked for a small package delivery service between high school and college. That was a fun job.

My UPS connection is an old friend whose first job was data entry at UPS. And I see on Facebook that she still works there 29 years later. God I'm old. :-)

I did IT at a UPS call center. I had to take a test after orientation that included knowing company history.

Another interesting tidbit: even in a call center/office we had to adhere to the same "grooming standards" as drivers (hair, facial hair, etc).

It's a wonderful thing what persistence and vision can do. Still, that was back in the day when your could execute an idea based on vision and business prowess alone.

Not saying that it's impossible, but the rise in status of developers over the last few years is a result of the increasing technical difficulty of managing a business and growing it to size.

Make note of history, learn from the present, execute on the future.

Here's a question I hope someone else can answer. I get the whole idea of the underdog seeing a niche and taking it over.

What I don't understand is the progression from 2 kids, a bike and $100 into a 50 billion dollar multinational corporation.

How does that work?

Thank you in advance.

You do the same thing, over and over again.

If you look at some of the most successful businessmen in history, you'll see that a lot of what they did was find some kind of unexploited area of the market and take advantage of it.

Usually it starts in their home town, but it can often by replicated and expanded outside of that area. And when they do that they generally get to take advantage of the economies of scale. Along the way, if they iterate and refine on the process -- they get stronger and stronger till they become the $50B MNC you're talking about.

Looking at the history of UPS, this seems pretty apparent. They started doing deliveries in Seattle > California > West Coast > New York > East Coast > Midwest > Canada > Europe.

Walmart and McDonalds kind of did the same thing. In every instance there is a certain level of innovation that keeps them ahead of the pack.

yeah i think that's basically it. Find a business model that works and repeat it over and over in different geographies or markets. Or even: do it once, sell, do exactly the same again (e.g Hutchinson Whampoa with Orange (sold to France Telecom) and now 3).

> Casey pursued a Spartan business philosophy that emphasized military discipline, drab uniforms, and reliability over flash—a model that is still reflected in UPS culture today.

http://www.amazon.com/Big-Brown-Untold-Story-UPS/dp/07879940...

> The company prefers to hire people who fit the culture, who share its core values of hard work, cooperation, and commitment, over those who may be more experienced but lack these valued traits. The belief in commitment has been so strong that the company only recently relaxed a rule that forbid rehiring anyone who had left the company. Orientation programs, taught by UPS employees, not outside trainers, emphasize values and norms along with skills and procedures.

http://hbswk.hbs.edu/archive/2296.html

1907 - 1962: Jim Casey does UPS-work.

Moral of the story: make sure you are doing what you love if you're trying to start a business, right now, because you'll do it for frickin' ever.

lesson: start a biz now. then 60 years later retire very old and rich! success! i'm only half-kidding.

With the piffling matter of having a sustainable idea and a business model, and being able to execute, in between all of that.

> In the early days of UPS, the United States Postal Service was their biggest client. UPS handled delivering all USPS special delivery mail in Seattle.

Bet USPS regrets that now!

Just kidding :)

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