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  • Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron
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Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron Hardcover C Jan. 1 2003

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醍狭曝

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Until the spring of 2001, the Houston energy giant Enron epitomized the triumph of the new economy. Feared by rivals, worshiped by investors, Enron seemingly could do no wrong. Its profits rose every quarter; its stock price surged ever upward; its leaders were hailed as visionaries.

Then a young
Fortune writer named Bethany McLean wrote an article posing a simple question - How, exactly, does Enron make its money? - and the company's house of cards began to collapse. Though other business scandals would follow, none has had the shattering effect of Enron's bankruptcy, which caused Americans to lose faith in a system that rewarded top insiders with millions of dollars while small investors, including many Enron employees, lost everything.

Despite enormous media coverage of Enron, the definitive story of its astonishing rise and fall comes alive for the first time in this gripping narrative, by McLean and her Fortune colleague Peter Elkind. Drawing on a wide range of private documents and well-placed sources, many of them exclusive, McLean and Elkind lead you behind closed doors and deep into Enron's past, to pierce the veil of secrecy that has surrounded the company's inner workings and corrupt culture.

The Smartest Guys in the Room is fundamentally a human drama -- of people drunk on their own success, people so ambitious, so certain of their own brilliance, so fueled by greed and hubris that they believed they could fool the world. The book explores the motives, thoughts, and secret fears of a fascinating array of characters, including:

* Ken Lay, the genial but clueless CEO who reveled in the trappings of his office but ducked the responsibilities. From the earliest days of Enron, his weakness allowed greedy lieutenants to run amok.

* Jeff Skilling, the brooding, mercurial genius who was the architect of Enron's greatest triumphs-and its ultimate disgrace. "I
am Enron," he once boasted. As the company unraveled, so did Skilling.

* Rebecca Mark, the glamorous "It" girl of Enron International who raced around the globe in high style and battled Skilling for control of the company.

* Andy Fastow, the brutally ambitious, deeply insecure whiz kid. Inside Enron his colleagues marveled at how his complex schemes allowed the company to scam Wall Street-not realizing that he was secretly scamming Enron.

* Ken Rice, the Midwestern farm boy who was seduced by Enron's fast-money culture and who cashed in while hyping a high-tech business that didn't exist.

* Cliff Baxter, the manic deal maker and Skilling confidant who resented Fastow's murky self-dealing. "He's a goddamn master criminal," Baxter would rail.

Just as Watergate was the defining political story of our time, so Enron is the biggest business story of our time. And just as
All the President's Men was the one Watergate book that gave readers the full story, with all the drama and nuance, The Smartest Guys in the Room is the one book you have to read to understand this amazing business saga.

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From 醍狭曝

Like its subject, The Smartest Guys in the Room is ambitious, grand in scope, and ruthless in its dealings. Unlike Enron, the Texas-based energy giant that has come to represent the post-millennium collapse of 1990s go-go corporate culture, it's also ultimately successful. Penned by Fortune scribes Bethany McLean and Peter Elkind, the 400-page-plus chronicle of the scandal digs deep inside the numbers while, wisely, maintaining focus on the "smart guys" deep-frying the books. The likes of paternal but disengaged CEO Ken Lay (dubbed "Kenny Boy" by George W. Bush, one of many prominent public figures with whom he rubbed shoulders), cutthroat man-behind-the-curtain Jeff Skilling, and ethically blind numbers whiz Andy Fastow vividly come to life as they make a mockery of conventional accounting practices and grow increasingly arrogant and bind to their collective hubris. They're not a likable lot, and the writers find it difficult to suppress their astonishment and revulsion with the crew who rapidly went from golden boys and girls of the financial world to pariahs when the bill finally came due. The authors' unrepressed sarcasms are more than often unnecessarily given the scope of the outrage. Enron's leading lights were or a time celebrated for their ability to concoct nearly unfathomable business schemes to hide mounting shortfalls and keeping track on their machinations can be a chore, but, by sticking hard to the story behind the fall, McLean and Elkind have reported and written the definitive account of the Enron debacle. --Steven Stolder

From Publishers Weekly

Fortune reporter McLean's article in early 2001 questioning Enron's high valuation was cited by many as an early harbinger of the company's downfall, but she refrains from tooting her own horn, admitting that the article "barely scratched the surface" of what was wrong at America's seventh-largest corporation. The story of its plunge into bankruptcy (co-written with magazine colleague Elkind) barely touches upon the personal flamboyances highlighted in earlier Enron books, focusing instead on the shady finances and the corporate culture that made them possible. Former CEO Jeff Skilling gets much of the blame for hiring people who constantly played by their own rules, creating a "deeply dysfunctional workplace" where "financial deception became almost inevitable," but specific accountability for the underhanded transactions is passed on to others, primarily chief financial officer Andrew Fastow, whose financial conflicts of interest are recounted in exacting detail. (Skilling seems to have cooperated extensively with the authors, though clearly not to universal advantage.) A companywide sense of entitlement, particularly at the top executive levels, comes under close scrutiny, although the extravagant habits of those like Ken Lay, while blatant, are presented without fanfare. The real detail is saved for transactions like the deals that led to the California energy crisis and a 1986 scandal, mirroring the problems faced a decade later, that left the company "less than worthless" until a last-minute rescue. The book's sober financial analysis supplements that of Mimi Swartz's Power Failure, while offering additional perspectives that flesh out the details of the Enron story.
Copyright 2003 Reed Business Information, Inc.

Product details

  • Publisher ‏ : ‎ Portfolio Hardcover
  • Publication date ‏ : ‎ Jan. 1 2003
  • Edition ‏ : ‎ First Edition
  • Language ‏ : ‎ English
  • Print length ‏ : ‎ 320 pages
  • ISBN-10 ‏ : ‎ 1591840082
  • ISBN-13 ‏ : ‎ 978-1591840084
  • Item weight ‏ : ‎ 816 g
  • Dimensions ‏ : ‎ 16.51 x 3.68 x 24.13 cm
  • 醍狭曝 Rank: #52,099 in Books (See Top 100 in Books)
  • Customer Reviews:
    4.6 out of 5 stars 4,038 ratings

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Top reviews from Canada

  • Reviewed in Canada on March 20, 2024
    Verified Purchase
    AWESOME
  • Reviewed in Canada on July 30, 2017
    Verified Purchase
    Little writing and high light but except that good condition
  • Reviewed in Canada on March 7, 2022
    Verified Purchase
    Book is fascinating, narrator was great - overall a terrific listen
  • Reviewed in Canada on June 23, 2017
    Verified Purchase
    Extremely well written and researched.
    A fascinating read
    One person found this helpful
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  • Reviewed in Canada on November 3, 2003
    This book will be especially valuable to those who have a keen interest in "the amazing rise and scandalous fall of Enron." I also commend to their attention Smith and Emshwiller's 24 Hours: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America. The "smartest guys in the room" included Kenneth Lay, Jeffrey Skilling, Rebecca Mark, Andrew Fastow, Kenneth Rice, and Clifford Baxter. Whereas Smith and Emshwiller explored the same company as investigative reporters, McLean and Elkind seem (to me) to have approached their subject as corporate anthropologists. Both books reach many of the same conclusions as to what happened...and why.
    Two significant differences are that Smith and Emshwiller limit their attention primarily to a period in 2002 extending from October 16th (when Enron announced huge losses caused by two partnerships) to December 3rd (when Enron filed for Chapter 11 bankruptcy); McLean and Elkind cover a two-year period of the company's "amazing rise and scandalous fall." Also, McLean and Elkind devote far more attention to each of the "smartest guys"; Smith and Emshwiller seem far less interested in them, except in terms of the impact of their mismanagement and corruption. Let's say there are two books about the collapse of the twin towers at the World Trade Center; one focuses on the human tragedies associated with it whereas a second book addresses design, construction, and structural issues. Obviously, both approaches are valid.
    McLean and Elkind suggest that the eventual collapse of Enron was caused less by the greed of senior-level Enron executives than it was by their arrogance and incompetence. Their lack of basic business acumen is astonishing as is their defiance of regulatory agencies and contempt for customers. None of them seems to have had a moral "compass." They exemplified, indeed nourished a culture of brutal competition between and among their subordinates. Each used Enron as a personal ATM as well as a means by which to structure all manner of corporate partnerships and high risk/high yield investments without fear of any personal liability. If one prospered, so did they. If it failed, the loss was Enron's. On to another.
    Primary blame for all this must be shared by Lay, Skilling, and Fastow. McLean and Elkind rigorously examine the inadequacies of each, suggesting that if only one of the three had not been involved, it is probable that Enron would not have had the problems it did. Attorneys, accountants, brokers (notably Merrill Lynch) and bankers (especially Citibank and JP Morgan Chase) apparently were aware of Enron's bending and then breaking of various laws but were earning so much in fees that they chose to remain at the Enron "trough" side-by-side with Lay, Skilling, Fastow, and other Enron executives.
    Consider this brief excerpt from Chapter 10 (page 149):
    Here's how another former employee explains the process: "Say you have a dog, but you need to create a duck on the financial statements. Fortunately there are specific accounting rules for what constitutes a duck: yellow feet, white covering, orange beak. So you take the dog and paint its feet yellow and its fur white and you paste an orange plastic beak on its nose, and then you say to your accountants, 'This is a duck! Don't you agree that it's a duck?' And the accountants say, 'Yes, according to the rules, this is a duck.' Everybody knows that it's a dog, not a duck, but that doesn't matter, because you've met the rules for calling it a duck."
    There are so many other brief, equally revealing excerpts which I am tempted to include but won't. Earlier, I suggested that McLean and Elkind display in this volume many of the skills of a corporate anthropologist. I also commend them on their skills as storytellers. Of course, it helps to have many colorful characters and such an interesting narrative. Among business books, this is one of the rare "page turners." If Enron remains a classic example of organizational dysfunction, my guess is that this book will remain the definitive analysis of the causes and effects of that dysfunction.
    One person found this helpful
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  • Reviewed in Canada on May 3, 2004
    Enron was the largest corporate bankruptcy to date. Just a year earlier it was a 70-billion dollar company and the most respected company in the energy field. By the end of 2001 Chuck Watson of Dynegy said he wouldn't take it if it were free. What happened? How could such a large and powerful conglomerate, in which analysts hyped right to the bitter end, fall so fast. Bethany McLean and Peter Elkind take the reader from the beginning of Enron's rise to the colossal fall.
    From the beginning Enron was determined to rewrite the "rules" of how the business of energy was done around the world. Ken Lay, the founder of Enron, learned the natural gas business from his early days at Florida Gas and then Transco Energy. In the early 1980's gas prices were largely regulated by the federal government. This led to gas shortages when prices were too low and oversupply when the government hiked prices. Distributors would try to lock into long-term contracts called "take or pay" to protect themselves from future shortages. These contracts were bad from the pipeline owner's point of view because they had to pay the higher rates even if lower rates were available. Lay saw a way out of this dilemma, however. He set up a fledgling spot market for natural gas. The producers who let Transco out of these long-term contracts could sell directly to their customers, paying Transco to move the gas. Lay was a hero and it would propel him toward his vision of a deregulated gas world in which customers would always have the gas they need at the best price.
    When Ken Lay created Enron he had a different view of energy than anyone else in the business. When energy was deregulated in the late 19080's prices plunged. Money wasn't being made in oil; it was being made in trading oil. This was Lay's grand vision. In the words of the authors:"Oil trading was about trading, not about oil." The senior executives didn't know much about trading but as long as it made money no one cared. Oil trading was a way of promising to deliver oil in the future while locking in the price today.
    From its earliest days Enron struggled to survive. Lay had a vision of the future but he needed someone to show him the way. Enter Jeff Skilling. To Skilling natural gas wasn't about energy; it was about supply and demand. Whenever there was too much supply or too much demand there was money to be made. Instead of long-term contracts between suppliers and customers Skilling envisioned Enron acting as an energy bank. They would purchase gas from producers at one price and sell it to customers at a higher price. Enron would profit from the exchange and the customer would always be able to get gas. All Enron needed to do was to have matching customers for every contract to buy natural gas. He would revolutionize the oil industry. He never cared for the old oil executives; he wanted smart Harvard graduates under him. It didn't matter to Skilling if they never worked in the industry before; they would figure it out.
    The problems with Enron can be traced back to these early days. The people involved had great ideas but were poor in their ability to manage and carry them out. Those that could were treated as second class citizens by Enron management. They rewarded the people with the best ideas. It didn't matter if their grandiose plans never made any money. It would become the culture at Enron-a corporation built on vision but near-sighted on detail.
    The book is a long and difficult 414 pages. The deals and machinations of Enron's senior management are difficult and complex. The Smartest Guys in the Room is about these deals and not about the people. We know very little about how people truly felt about Enron through its rise and fall but we know a great deal about the gory details. For those with some accounting background it is a fascinating story. For the general reader it probably will be a bit bewildering
    One person found this helpful
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  • Simon
    5.0 out of 5 stars 'Let's sell it--and we'll figure out everything else later."
    Reviewed in the United States on June 4, 2024
    Verified Purchase
    The Smartest Guys in the Room by Bethany McLean and Peter Elkind digs into one of the most infamous and largest corporate business scandals in America¨s history. This was such a wild ride. Everything from corporate greed, mismanagement, cowardice, rivalry, a toxic work culture, and a need to constantly prove profitability to the public led to one fraud after another until Enron was literally built on a house of cards, or, to be more exact, on a house, nay, a mountain of debt. All this was hidden from the public investors they were supposed to protect, while executives were profiting from the soaring stock price.

    ^So you take the dog and paint its feet yellow and its fur white and you paste an orange plastic beak on its nose, and then you say to your accountants, `This is a duck! Don¨t you agree that it¨s a duck?¨ And the accountant say, `Yes, according to the rules, this is a duck.¨ Everybody knows that it¨s a dog, not a duck, but that doesn¨t matter, because you¨ve met the rules for calling it a duck. ̄ - Former Enron employee

    Back in the early 2000s, when it all came crashing down, I remember only a few bits and pieces here and there. Mainly, I saw on television old white guys in the headlines dominating news channels regarding a business scandal and fraud. I failed to realize or feel the impact. Decades later, with more financial knowledge and investments made in the stock market, I wanted to finally revisit this saga and learn just how it all went down. It definitely blew my mind.

    ^I¨ve thought about this a lot, and all that matters is money. You buy loyalty with money. This touchy-feely stuff isn¨t as important as cash. That¨s what drives performance. ̄ - Jefferey Skilling¨s conversation with Terry Thorn

    A tremendous effort has obviously been made by the authors to untangle the Enron mess after they imploded to give us the inside scoop on how this scandal went down. Although it is a fairly big book, it clearly deserves every page, in my opinion, as it slowly and methodically laid out from the very start of Enron to its ultimate demise. There are a lot of players and actions involved. Although no CPA myself, I was shocked to at least have understood the mark-to-market strategy of reporting year-end earnings, especially how it was used to game the system. Although there were many other accounting tricks used to commit fraud, it basically came down to hiding losses on their balance sheet and presenting itself every quarter to investors, analysts, and Wall Street as the coolest company ever in hopes of raising its stock price.

    In fact, it was anything but effortless; there was nothing at Enron that required more effort, more cleverness, more deceit-more everything-than hitting its quarterly earnings targets. - Book authors

    The last few chapters of the book were particularly exciting and kept me reading all night. The inevitable crash was coming. You knew in hindsight, so you just kept waiting for it until it finally started to unravel, and it was like watching a car crash in slow motion, but only because we now know the full story and extent of the problem and how Enron got there. I can¨t help but wonder how things would have turned out if Enron weren¨t as crazed about boasting their stock price and actually reporting true earnings as well as executing on their actual ideas. Would they have been in the coveted top 10 position in the S&P500 index today? They genuinely had some good ideas and were truly ahead of their time, but they didn¨t have the patience to see things through, not to mention a host of other issues as well.
  • Jose
    5.0 out of 5 stars No todo vale para ganar
    Reviewed in Spain on October 5, 2019
    Verified Purchase
    Muy interesante libro que refleja la ca┴da de un imperio energ└tico (y financiero) as┴ como el final de una era. Si no fuera porque los protagonistas vulneraron sistem│ticamente la ley con muchas de sus decisiones (y su desmedida ambici┏n), casi se podr┴a sentir admiraci┏n por ellos. No todo vale en esta vida para ganar y este libro sirve un ejemplo paradigm│tico.
    Report
  • James
    5.0 out of 5 stars Excellent, detailed account of the Enron scandal
    Reviewed in Australia on December 25, 2021
    Verified Purchase
    This outstanding, detailed and methodically researched book gives a blow by blow account of Enron in its glory days and Its eventual downfall. Highly recommend.
  • Kiro
    5.0 out of 5 stars J-SOX 云よりずっと叨に羨つ
    Reviewed in Japan on May 22, 2008
    Verified Purchase
    SOX 隈が恬られる圷となったエンロン並周のドキュメンタリ`。

    干-皆或掛隈は、さまざまな坪何由崙のプロセスをg廾することを勣箔するが、云慕をiむとgはエンロンはその謹くのプロセスをgは隔っていたことがわかる。ただ、プロセスは、このような並周を軟こすことを契げるわけではなかった。

    J-SOX 隈の貨がおわったら、肝に採を佩うべきか。いろいろなヒントがまっていると房う。

    g佞淋はここまでとしても、gに繁gvSのドキュメントとしても、匯瞳である。啌鮫は晩云Z忖鳥つきで DVD になっているものの、云の鍬Uはまだのようだ。匯震も壼く鍬Uが竃てほしいと房う。
  • Prameet
    5.0 out of 5 stars extremely well researched
    Reviewed in India on April 10, 2023
    Verified Purchase
    Brilliant book, dives into exhaustive detail. Sketches out the characters complexity really well. Worth a read to understand some of the behaviour flaws that ruin a giant corporation.