My offer (from Art Bass, then head of Flight Operations in part because he was, as the FAA required, a pilot) and offer letter said that (A) there would be a stock plan, (B) I would be part of the stock plan, (C) the plan would be based on salary in which case I would be quite high up, (D) the Board was considering the stock plan now and results were expected in two weeks, (E) if the plan were not equitable then the first plane out of Memphis would be full of ex-Federal Express employees.

With that, I joined, kept teaching my courses in computer science at Georgetown until the courses were over, at home got a time sharing terminal, a CP67/CMS account, etc., and dug into writing the software to schedule the fleet.

Some Board Members, including one with a lot of experience at American Airlines, doubted there could be a schedule. So, the Board wanted to see a schedule, say, for the full, planned fleet of 33 planes serving the full, planned list of 90 US cities. Some crucial funding, some equity, some loans on the planes, were being held up waiting for the schedule. The company was at risk.

I wrote the software, finished my teaching, drove to Memphis, and rented a room.

So, with the Board having doubts and the company at risk, one evening Roger Frock and I used my software to develop a schedule for the 33 planes and 90 cities. We printed out the schedule, had copies made, and handed them around.

Board Member General Dynamics had sent two representatives, one an aeronautical engineer and one a finance guy, to provide, say, adult supervision; those two guys went over the schedule fairly carefully and announced "It's a little tight in a few places but it's flyable" (pretty good from just a little fast work from Roger and I); CEO Fred Smith's reaction at the next senior staff meeting was "Amazing document. Solves the most important problem facing the start of Federal Express.". The funding was enabled. FedEx was saved. Pretty good from typing in 6000 lines of PL/I in six weeks while also teaching two courses!

PL/I is a nice language -- good on data types, data manipulations, data conversions, data structures, scope of names, exceptional condition handling, storage management, debugging, etc. E.g., its Based structures, can serve as a poor-man's classes in object oriented programming.

Later the Board wanted to see some revenue projections. I didn't want to get involved, but no one had more than wishes, hopes, dreams, intentions, etc. So, I started with the common high school question, what do we know? Well, we knew the present revenue or, if you will, number of packages per day. From our initial long term planning, we knew what revenue we expected with 33 full airplanes serving 90 US cities. So, in some at least a somewhat meaningful sense the desired projections were an interpolation between those two facts we did know.

Then the question was, how will the interpolation go? Well, why will the revenue grow? Sure: The revenue will grow as it has been so far, customers to be hearing about FedEx from current happy FedEx customers. E.g., maybe a customer to be gets a package via FedEx. So, we're talking word of mouth advertising or viral growth.

So, the rate of growth in revenue per day or packages per day should be directly proportional to (A) the number of current customers and (B) the number of customers to be. That is, the rate of growth should be proportional to both (A) and (B), that is, to their product.

So, all downhill from there: At time t, let y(t) be the revenue, say, per day, at time t. Let t = 0 correspond to the present. So, we know y(0). Let b be the revenue per day with a full system, that is, 33 full airplanes and 90 US cities. That is, we know both y(t) and b.

So, from freshman calculus, the rate of growth is the first derivative of y(t), that is, d/dt y(t) = y'(t). So, from the proportionality, we have that there must exist some constant k so that

y'(t) = k y(t) ( b - y(t) )

So, we have an initial value problem (we know y(0)) for a first order, linear ordinary differential equation.

Okay, how to get a solution? Easy, just need freshman calculus, not even a course in differential equations. And, yes, there is a closed form solution, right, with some exponentials.

Right, the solution is the famous logistics curve sometimes seen as doing well tracking, say, the growth of TV set ownership in the early years of TV. So, my derivation, as just above, can be seen as an axiomatic derivation (maybe rediscovery, maybe original) of the logistic curve. The solution may remain an okay, first-cut approach to understanding viral growth.

So, I showed my work to Senior Vice President Mike Basch, likely the one most responsible for getting the projections for the Board, and he liked my work. So, on a Friday afternoon we picked several candidate values for the constant k and drew the corresponding graphs of the revenue projections. We used my HP calculator, reverse Polish notation, stack machine, etc. -- HP should run an ad! We picked a value of k that gave what seemed to be reasonable projections and declared the problem solved.

The HP? It's still in my center desk drawer. Checking, right, it's an HP-35. My wife and I paid $400 for it.

The next day, a Saturday, at about noon, I was in my office likely working on fleet scheduling and got a call from Roger Frock asking if I knew anything about the revenue projections. Saying I did, he asked if I could come over to the HQ and explain.

So, I got into my Camaro hot rod (396 big block, etc.), and drove over. Yes, I brought my HP-35.

As I arrived, at one of the old WWII wooden hanger buildings, people were standing around and not happy. Our two guys from General Dynamics were standing in the hall with their bags packed and not happy.

Roger led me to a table with the graph, picked a point in time, and asked me to calculate the value on the graph. So, with my HP-35, I punched the buttons, stopped, slowed down, cleared the HP-35, started again, slowly and carefully punched the buttons again, and got the value on the graph. I did that for several points for the graph, and then everyone started to get happy.

It turned out that the Board meeting had been that morning; Mike Basch was traveling; I'd not been invited to the Board meeting; the graph had been presented; the two guys from General Dynamics (GD) had asked how the graph had been calculated; and everyone else at the meeting dug in trying to answer. They worked for hours with no results. Finally the two guys from GD lost patience with FedEx, returned to their rented rooms, packed their bags, got plane reservations back to Texas, and as a last chance returned, with their packed bags, to the FedEx HQ to see if anyone could explain the projections.

Somehow Roger Frock had guessed that I'd done the projections, called me, and got me to the Board meeting just in time.

It was close, but I'd saved FedEx a second time.

Right: Some people in FedEx would rather have seen FedEx go under than invite me to the Board meeting. We're talking some severe cases of jealousy, bureaucratic infighting, attacking the guy down the hall instead of the competition outside of the building, goal subordination as in organizational behavior, etc., right? Bummer.

Right: Apparently I was the only person at FedEx who still understood freshman calculus. Gads. And I never even took freshman calculus, taught it to myself from a book, and started with sophomore calculus.

I never got any thanks for saving the company the second time.

I'd been at FedEx for over a year. I had been commuting every few weeks home to Maryland for a few days at a time -- not good. There had been no more about the stock that had been supposed to come in "two weeks". The company had some problems, e.g., had nearly gone out of business due to not inviting me to the Board meeting. Also the basic planning was way off -- the planning said that we could fly the planes around half full and nearly print money, but we were flying the planes packed solid, had doubled the rates, and still were losing money -- bummer.

So that I could be a good bread winner in my marriage and for our kids if we could have some, as we hoped, I wanted something valuable no one could take away from me, a Ph.D. for my career and/or stock.

So, I'd gotten accepted for an appropriate Ph.D. at Brown (Division of Applied Mathematics), Cornell, Princeton, and Johns Hopkins.

The oil crisis hit. Saving money, especially on jet fuel, became a biggie. So, I was working on that. I was getting a lot of flack from others, especially my manager.

Finally I called a meeting to explain what I was working on, three projects. My manager said I couldn't do that because he was busy and couldn't come. I told him, fine, then don't come.

He came. So did Fred, Roger Frock, Art Bass, the top 15 or so people in FedEx. My manager was sitting next to Fred and kept objecting to what I was saying until Fred told him to cool it.

One of my problems was to use deterministic optimal control theory to say how to climb, cruise, and descend the planes.

A second problem was to use 0-1 integer linear programming set covering to develop schedules that would save on OpEx and maybe also CapEx.

A third problem was how to buy fuel during a trip from Memphis and back. So, broadly the idea was to buy extra fuel where it was cheap and carry it to the next stop or two where fuel was more expensive. We were getting fuel for $0.16 a gallon in Memphis but paying up to $0.55 cents a gallon (in Nashville). So, that's a case of what has long been known as fuel tankering. But doing that interacts with how to climb, cruise, and descend the airplane, not being late in the schedule, loads, weather, air traffic control, etc. And typically a lot of the cheap fuel gets burned off just from trying to carry it, and how much gets burned off has a lot to do with the flight plan. And any such decision to buy extra fuel is a bet on the future of the trip back to Memphis, that is, a bet against the random package loads, weather, air traffic, etc.

So, how the heck to solve that? And, for various reasons, couldn't get a solution from carrying a computer on the plane and, really, not even from using a computer on the ground after landing. I'd found a way!

So, Fred put me under Senior VP of Planning Mike Basch and, thus, made me Director of Operations Research.

But the fall came, and I had to decide actually to leave for graduate school or not. With no stock, not a lot of thanks, with a lot of scars from being attacked, still away from my wife, the company still at risk, I decided to go to graduate school. I liked FedEx, the challenges, the work, etc., but making the stockholders rich, with me not one of the stockholders, while wrecking my marriage and passing up the chance for a Ph.D. that might help my career and that no one could take away from me looked not good. If I couldn't get stock with the company still at risk and worked to make the company valuable, then what hope would I have of getting stock in the company I'd helped make valuable before getting any stock?

I went home to Maryland. At the last moment, Fred wanted me back in Memphis. He and I met with Mike Basch, and Fred said, "You know, if you stay, then you are in line for $500,000 in Federal Express stock?". Heck no; I didn't "know" any such thing; I had had and accepted such promises before, "two weeks", and after 18 months, saving the company twice, and with three projects to do much more for the company, all there was were more such promises, not on paper that a lawyer could do something with, no thanks -- "Fool me once, shame on you. Fool me twice, shame on me.".

Sure, that $500,000 would be ballpark $50 million to $500 million today. And apparently some people did get some stock. But there that last day, Fred still was just not putting it down on paper.

Since then I ran all this past a lawyer who concluded, "Legally FedEx owes you nothing. Morally they owe you everything.".

So, here on HN, maybe I definitely should tell this story as I have so that others can benefit so that more promises of stock can become ownership of stock.

Of course, there is a lot more to getting wealthy from stock in a startup than what I've outlined here.

Broad Lesson: The broad lesson for people in startups with promises of stock, become very well informed and be very careful.

My reaction: Do my own startup. Doing it. Need to get back to it. It'd be fun to make more money than Fred! I have a shot! Back to it!