I haven't posted in some time but I think "The Smartest Guys in the Room" is worth mentioning here. First of all, thank Meredith for the Christmas gift, I had been wanting to read this for quite some time.
The book is about the rise and fall of Enron. It is well written and focuses more on the people and their motives than it does on the industry. Working in energy certainly made this more interesting to me but the story of the people is really what makes this a great read.
It has a pretty straightforward structure; Ken Lay grows up and forms Enron, hires Jeff Skilling who comes up with the idea for a "Gas Bank," which revolutionized gas trading. They, and Enron as a whole, embodied the idea that free markets are perfect and capitalism is the most pure form of business where intellect and innovation will reign supreme. There were a few close calls in the trading ops in the early day but Enron started to grow at an incredible rate.
The middle of the book starts to explore decisions that would come back to haunt the company. From their relatively early days Enron did their best to work the rules to their advantage. They greatly expanded the use of mark to market accounting, something still widely used. This section also starts to explain complicated financing structures used to hide debt from the balance sheet. This seems to be where the executives became addicted to hitting Wall St. targets (which also lined their pockets). Quarter after quarter there would be a rush to hit their goal, often by closing deals that were destined to lose money over the long haul (mark to market accounting allows you to book the gain when the deal closes, long before you see any cash. Some of the rules have been changed and, at the very least, disclosures are now more closely watched). The middle of the book could be a bit technical but if you don't understand you aren't alone. It appears that the board of directors, the analysts and many of the accountants didn't really know what was going on.
Eventually reality caught up with their fairy tale and it all started to unwind, quickly. In the month before Enron filed for bankruptcy they blew through nearly $2 billion in cash (this fact help 86 a deal that, perhaps, could have saved some of Enron). The amazing part of the story is the attitude of the Enron executives. Many seemed to believe if something wasn't explicitly illegal there was no moral/ethical reason not to take advantage of a certain situation (the part about California was a good example of this. Also, I enjoyed this part because I cover our CA market and enjoyed confirming my suspicions, CA can't get out of their own way).
This post has grown quite long. I'd recommend this book to anyone interested in energy, Wall Street, scandals, history of business, management etc. It's not for everyone but I found the story engaging.
It's not available on Kindle though, that sucks.
http://www.amazon.com/The-Smartest-Guys-Room-Scandalous/dp/1591840538/ref=sr_1_1?ie=UTF8&qid=1360074460&sr=8-1&keywords=smartest+guys+in+the+room
The book is about the rise and fall of Enron. It is well written and focuses more on the people and their motives than it does on the industry. Working in energy certainly made this more interesting to me but the story of the people is really what makes this a great read.
It has a pretty straightforward structure; Ken Lay grows up and forms Enron, hires Jeff Skilling who comes up with the idea for a "Gas Bank," which revolutionized gas trading. They, and Enron as a whole, embodied the idea that free markets are perfect and capitalism is the most pure form of business where intellect and innovation will reign supreme. There were a few close calls in the trading ops in the early day but Enron started to grow at an incredible rate.
The middle of the book starts to explore decisions that would come back to haunt the company. From their relatively early days Enron did their best to work the rules to their advantage. They greatly expanded the use of mark to market accounting, something still widely used. This section also starts to explain complicated financing structures used to hide debt from the balance sheet. This seems to be where the executives became addicted to hitting Wall St. targets (which also lined their pockets). Quarter after quarter there would be a rush to hit their goal, often by closing deals that were destined to lose money over the long haul (mark to market accounting allows you to book the gain when the deal closes, long before you see any cash. Some of the rules have been changed and, at the very least, disclosures are now more closely watched). The middle of the book could be a bit technical but if you don't understand you aren't alone. It appears that the board of directors, the analysts and many of the accountants didn't really know what was going on.
Eventually reality caught up with their fairy tale and it all started to unwind, quickly. In the month before Enron filed for bankruptcy they blew through nearly $2 billion in cash (this fact help 86 a deal that, perhaps, could have saved some of Enron). The amazing part of the story is the attitude of the Enron executives. Many seemed to believe if something wasn't explicitly illegal there was no moral/ethical reason not to take advantage of a certain situation (the part about California was a good example of this. Also, I enjoyed this part because I cover our CA market and enjoyed confirming my suspicions, CA can't get out of their own way).
This post has grown quite long. I'd recommend this book to anyone interested in energy, Wall Street, scandals, history of business, management etc. It's not for everyone but I found the story engaging.
It's not available on Kindle though, that sucks.
http://www.amazon.com/The-Smartest-Guys-Room-Scandalous/dp/1591840538/ref=sr_1_1?ie=UTF8&qid=1360074460&sr=8-1&keywords=smartest+guys+in+the+room
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