Absolutely, Positively Overnight!
Yale professor gave it a C. That hub-and-spoke paper now ships 17 million packages daily. Hearts don't route blood point-to-point; neither should logistics.
Fred Smith's Yale economics professor gave his hub-and-spoke paper a C. History gave it different marks: that idea became a company shipping 17 million packages daily. This corporate history documents how FedEx inverted the industry's point-to-point model—instead of connecting every city directly, route everything through Memphis and sort overnight. The insight mirrors circulatory system architecture: the heart doesn't send blood directly from foot to brain; it centralizes flow through a pumping hub. Smith chose Memphis for its central location, reliable weather, and uncrowded airport—geographic advantages that created network-effects as every new spoke increased the hub's value. The first night in 1973: 30 aircraft moved just 11 packages. By the second attempt, 186 packages reached 24 cities. The book details the financial near-death experiences—FedEx nearly collapsed multiple times before achieving profitability—revealing how resource-allocation under constraint forced operational discipline that point-to-point competitors never developed.
Key Findings from Sigafoos (1983)
- Hub-and-spoke concept originated in Fred Smith's Yale economics paper (professor gave it a C)
- Founded 1971 with $4M inheritance + $91M venture capital; began operations 1973
- Memphis chosen for central location, reliable weather, and uncrowded airport
- First night: 30 aircraft, 11 packages; today: 17 million shipments daily
- Multiple near-bankruptcy experiences before achieving profitability documented in detail