Very well researched account of the rise and downfall of Enron. It chronicles the start and the ultimate demise of this company, which never really had a great business model - (sorry Jeff Skilling). It is amazing that so many "smart" people did not understand basic business skills and the simple difference between economic and accounting gains. Jeff Skilling, a former McKinsey partner, should have stayed with the consulting firm where theory is safely differentiated from real world. Skillings' first mistake was not understanding his own limitations first and foremost. He breaks out a bottle of champagne to celebrate SEC's acceptance of a change in Enron's accounting system. Accounting does not create value - it does not appear that many Enron executives (especially Skillings who should have known better) understood this.

McLean and Elkind do a nice job presenting some of the schemes and scams that Enron executives used to make themselves look good to investors, analysts, bankers and the general public. There are some scams that I had a hard time following, but the reader will grasp the general idea behind them. In light of recent accounting scandals, this is an important book to read for any investors and the public in general. Unfortunately the book ends around summer of 2002 and we do not find out what happens to some of the key characters. My interest was sparked enough that I researched some of the more recent findings after reading the book. Despite its difficulty to read at times I highly recommend it.

This book goes through Enron's rise and fall while analyzing each main character. McLean and Elkind have researched well.

This is quite entertaining and a fun read. The only downside is the large number of characters, but the authors have provided a character description list in the beginning of the book. I frequently referred to the characters' descriptions.

Overall, a good book on Enron's choices over the years.

A very well-written account of the rise & fall of Enron. I couldn't put it down

I purchased the book after seeing the documentary in an Ethics class taken during an MBA program at Oklahoma City University. I wanted a little more detail on how things got so blatently out of hand at Enron. I've also read the Conspiracy of Fools. I'm very intrigued by the human nature aspect of this story. We are not being realistic, if we don't think this very same situation could happen anywhere at anytime. More people didn't come forward because their personal livlihood was in jeopardy, even though they had concerns about the ethics of the operation. These were very smart people who let their arrogance get in the way. In the end, everyone was to blame, but no one was to blame. Based on what I understand of the personalities of the Enron Leaders - this was their destiny. It was bound to happen - it only took some time. The biggest question of all - who is next.

Bad management and the amazing power of human beings to self-delude is on full display in the Enron debacle. This book does a good job of telling a complex story with a large cast of characters. I think it will help supervisors and business owners more that the latest fad book on business and leadership. These guys make excellent bad examples.

I purchased this book after having watched the movie of the same name. The book is a very detailed and meticulous recounting of the rampant greed and corruption that was Enron. What you come to discover is that through highly-technical accounting schemes and tricks Enron turned itself into a seeming juggernaut of a business from just a staid old pipeline company. Enron really thought that the free market enabled it to do anything and trade any kind of commodity from weather derivatives to paper pulp, oil, and broadband. What you come to find out in this book though is that they never really had a way to deliver what they kept promising Wall Street.

Enron was a big house of cards all propped up by their stock price. Once that dropped, all hell broke loose. The company was obsessed with the stock price, posting it in elevators and encouraging employees to invest as much of their 401K monies into it as possible. They even created elaborate hedge funds that were based on the stock staying above certain levels. In order to keep the stock at lofty levels they lied and used "creative" accounting to fool Wall Street.

The real reveal in reading this book however is that Jeff Skilling and Ken Lay really have a vast number of compatriots to join them as teh villians here. Andy Fastow, now the government stoolie, was arguably worse than both Lay and Skilling. And yet, thanks to his cooperation, he gets far less jail time.

This book is a slow read, and not for the half-hearted. For the vast majority you are really better off watching the film.

Just cause you went to college and wear a suit people think you know what you are doing...

Enron's fame and fall both were sensational. Although most of us have heard of this incredible tale of corporate greed and grandiose, our knowledge of Enron's story will remain incomplete without reading this astoundingly insightful book on the rise and fall of Enron Corp.

Smartest Guys in the Room provides a chronological, comprehensive, consistent, clear and complete account of the way Ken Lay presided over the building of a company whose sole goal was to become the preeminent player in the field of energy regardless of which side of ethics was it on. His vision and dreams got a new boost with the advent of Jeffry Skilling who in no time took Enron up on the path of growth and glory - even though much or most of it was by the innovative use of mark-to- market accounting. Skilling's vision to build the most innovative company in the world was based on the strategy to hire the smartest guys and provide them all resources to make the target growth happen at any cost. The drive to achieve the goals at any cost more often than not relied upon less than fair means, and upon creative accounting duly supported by an accounting firm no less capable and reputed than Arthur Andersen.

Every greedy rise has a generous fall and Enron's was as spectacular and scandalous as it gets. The insight and detail that Smartest Guys in the Room provides is almost breathtaking. It (sadly) stops as soon as Enron enters chapter 11 (that eventually became Chapter 7) bankruptcy. The untold story thereafter is much less exciting. Apart from that possible appendix Smartest Guys in the Room is indeed as comprehensive, and as candid as a book can be.

A must read for any person who wishes to know about Enron.

McLean and Elkind did a wonderful job in preparing this book. Using a chronological method, the reader is able to follow through the case from the beginning. The backgrounds of the situations, conditions and persons involved with the case are well explained. After reading this book I am now understand what is actualy the enron case all about, how did they do it and why it happened. This is really important to someone who has interest in the internal control - internal audit area.

This is one of the most interesting books I ever read. The writers did a great job presenting Enron's scandal as both a story and providing the reader with the economics and financial issues behind the fraud that took place. It is simple, easy to understand and very exciting. I was initially quite reluctant of buying the book because I had no idea what Enron was. I only knew it was an American energy related company that popped up once or twice on BBC back in 2001 with little details presented. The only comment I would like to state is related to the main concept of Market Markup Accounting practiced by Enron, it was not very easy to understand although the writers did try to simplify it those who are not Accountants would find it hard to understand. Another issue is Enron's practices were they compliant with the GAAP standards, the writers discussed this very briefly but didn't answer the main question, was the accounting method used accepted by GAAP? Setting that aside this is a lovely book full of information so simple and reading it was great fun I found it hard to put the book down. Yes buy it.

This book does a terrific job describing how the people at the top of Enron took corporate malfeasance to a new level.

This book puts in plain language who the actors involved are, what happened, and how people let it happened. It is a must read for any Californian interested in knowing why brown-outs came to be, anyone interested in deregulating energy companies, former investors of Enron (myself included) who want to know how their money disappeared, and pretty much most other Americans too.

This is a great book about a truly remarkable part of our economic history. I have a minor physical complaint I might as well get off my chest: In their desire to make sure readers get bang for buck (fear not: you do), the publishers have elected to set this book in miniscule type, meaning firstly that you may need reading glasses if not before then after reading it, and secondly that while this looks like a 400 page book, if it were ordinarily typeset it would have the heft of an MM Kaye novel.

On the other hand, if over-length in a business book is the sort of thing that dissuades you, don't let it: this is one of the most riveting books on the history of finance you'll read, and it gets more and more addictive the further you go on.

As a number of reviewers have noted, it is simply staggering that Enron can have ever got where it got to at all, let alone stayed there for the best part of a decade, with all the ostenisble checks and balances that sophisticated capital markets provide. Staggering. In checks and balances I don't mean regulators, who will always be the last ones to find out where market-based moral turpitude is concerned, but investors, stock analysts, brokers, lenders, rating agencies and fund managers: people who don't just earn huge remuneration, but stake their reputations on being sceptical in the face of unconvincing bluster.

But as McLean and Elkind make clear in chapter after chapter, barely disguised and unconvinving bluster was, in large part, all Enron was. For all the "black box" accounting, it is simply inconceivable that Enron's true internal wiring could be kept anything like properly secret, since far too many people had to know about it. Internal and external to Enron there must have been junior lawyers, accountants, auditors, traders and marketers who all had to know what was going on, and people *do* talk: they gossip, they change jobs, they make inappropriate remarks. What's more, the existence (if not the detail) of many of the more toxic situations - the LJM Partnerships, the prepay contracts - were on the public record, so the burning question to my mind, which McLean and Elkind do not address, isn't so much how people could have been so greedy and deceitful (that's not hard to understand at all), but what sociological and psychological factors caused everyone else, collectively, to entirely suspend the critical faculties which they used to evaluate risks in the market. This is no idle query: accurately calibrating and understanding risk is the very key to making money on Wall Street: it's hardly an incidental oversight.

Making a pejorative moral assessment of the acts of the Skillings and Lays with the benefit of hindsight is futile, self-serving, and actually unjust: our moral view of corporate behaviour *today* is conditioned and informed by the example of Enron; before Enron, the received propriety of the business and financial community was ipso facto different - if it had not been, given the market-wide (if unwitting) "complicity" documented by this book - Enron *simply couldn't have happened*.

If we assume that, in the context of the markets, "received propriety" is really no more than fiscal prudence - aimed at making sure people don't needlessly mislead, deceive or unfairly disadvantage each other (and is enforced by short sellers as effectively as regulators), the far more interesting question is *how could the prevailing moral framework have failed so badly*? Why was it so inadequate at dealing with outcomes of actions we can now see (with the benefit of hindsight and our newly adjusted moral binoculars) are transparently odious?

And that prompts a deeper question yet: what could it be about the prevailing, Post-Enron economic mores which could allow a disaster on a similar scale to happen again? That's the 300 pound gorilla that all the post-facto moralisers (and they are as prevalent within the investment banking community as without it) will never address.

Had Elkind and MacLean ventured into that territory this would have been an outstanding book (it is still worth 5 stars in my view): as it was - and with an admirable absence of judgmental prurience - the writers stick to pure reportage, to the point where the epilogue ends rather abruptly without so much as a conclusion.

But that's small beer: this is a fascinating, rewarding read.

Olly Buxton

This book grabs you from the get-go with the details of the Cliff Baxter suicide in the introduction. It is a heart pounding page turner from that point on. Sometimes the technical explanations of some very complex accounting machinations might have you reading and re-reading the same passages, and you might not completely understand some of the high level concepts, but stick with it. The authors did an amazing job of making the characters and culture at Enron come alive.

After 50 pages you will feel like you need to take a shower - such was the nature of the things you begin to learn went on.

After 100 pages you feel as though you absolutely know enough - you now "get" the Enron mess. And you certainly know more than anyone you will meet in life's normal situations.

But now you're hooked. The book becomes a page turner. What's gonna happen next? How much more convoluted can this company become? How much more denial can the execuatives live with? And how will it all come unglued?

All those questions and more are answered. Wonderfully written. Simplifies a complex mess down into elements we all can understand.

My take away? As a society we can never live by laws alone. Morality and fair play must be felt inside each of us for our society to thrive an survive. The Enron guys took the attitude that if a law was not broken in its most technical form, then nothing wrong was done. Silly. Incorrect. And thank fortune justice was served - though way too late.

Well organized and clearly presented, it makes a fun read and, believe it or not, it's exciting too.

A must read for anyone investing in the stock market! Well written and keeps your attention from page 1 to the end. Enron is just the tip of the iceberg. Reading this book will give you a real view of how the stock market, lenders, investment bankers, auditors, and corporate leaders really function. It is 2007 and the CEO of Home Depot just walked away with $210 million for driving down HD's stock. The shenanigans and good-old-boy network of money making is alive and well!

There was a LOT of material in this book that was never covered in the documentary by the same name. I was very surprised to find out about some of the additional characters and rivalries at Enron. Moreover, there is lots of really scandalous stuff in the book that is not shown in the documentary. For instance, it seems a lot of the female execs were having affairs with the male execs. Another example is the rampant spending by Ken Lay and his family, and Ken Lay's cheating on his first wife, despite his supposed piety and close relationship with evangelical Christians. I wonder why that was not in the documentary? There are some interesting black and white photos in the book, although I could have used more!

This book knocked my socks off. I agree with the other reviewers that this is an authoritative, comprehensive, and easy-to-follow behind-the scenes look at Enron's rise and fall.

However, the authors needlessly intersperse personal opinions and judgmental asides into their narrative in a way that is not only unnecessary, but distorting.

For example, in a chapter on Enron's involvement in California's 2000 energy crisis, the facts the authors present make it clear that primary blame for the debacle lied with the bureaucrats and politicians who created California's labyrinthine and easly-exploited electricity market. But, the authors waste no time in brandishing words like "hubris" and "unethical" to describe not the bureaucrats but Enron's traders. I realize that in a book about Enron, an analysis of California's power-sector bureacracy would be tangential at best--but so harshly condemning only Enron's California executives distorts the reality of the situation.

Overall, I heavily recommend this book. There are enough facts here to allow readers to form their own conclusions about Enron.

The authors of this book have done an outstanding job of telling you of
the meotoric rise and crushing fall of Enron.You are taken to the humble
beginnings of this company.This company rose to become one of the biggest
corporations in America.At the height of their influence they had the
revered status ad the seventh largest company in the United States.This company was the toast of Houston,Texas.The CEO and founder of Enron,Ken
was one of the most admired and beloved figures in Houston.He wore the
title of Mr. Houston.
All of that came crashing down.After some disastrous projects the company had to declare bankruptcy.It was later discovered that some of
these disasters were hidden by creative accounting.Arthur Andersen,the
largest accountin firm in America had to close their doors over this
situation.Enron employees and retirees lost everything that they had
because of the crash of the company.
This book also gives you some excellent background on the employees and
officials of Enron who helped bring about the crash.Ken Lay,Jeff Skilling,
and Andrew Fastow are given attention.Many of these people testified
against Lay and Skilling when they were recently tried.
This is a very good book about the disaster known as Enron.Be sure to read it.

If you are intrigued about "what really happened at Enron" and "were they evil or just stupid", there is no better source than this. The authors not only manage to track the extensive history through the lives of various characters, they also manage to explain some difficult business concepts lucidly and to maintain a consistent voice of reason (rather than bias - which is as easy when you talk about scum like Farlow or Skilling as this!).
I would rate this book higher than "The den of thieves", "Liar's poker", or "Barbarians at the gates" - each of which is an all time classic in the genre.
It is through gems and authors like this that Fortune continues to be a great magazine. Hope they can do it more often that they already do.
I wish authors of a similar calibre and diligence can write a book on the Bush Administration and the single-handed destruction of human lives, safety of the planet, and international law. One can find many parallels with Enron about misplaced sense of power, self-worship, arrogance, and basic lack of morals - no wonder some of them were back-slapping buddies. Kenny Boy, indeed! Sadly, this bunch won't be sentenced and no cost can be recovered that people of this world already have paid, some with their lives.

Incredible chain of events for the rise and fall of one of the greatest energy companies.

Although clearly there was criminal activity by a number of people, I believe it raises the larger question on "Why wasn't Anderson Consulting Employees held criminally liable." Anderson was paid to protect the interests of investors by auditing financial risks and results, and completely overlooked the factors that were misrepresented or risky.

Not a fan of the business book since I've found many of them so boring. I got this book based on the recommendation on BusinessWeek (I'm a fan of this magazine) and am not disappointed. It's well-written, easy to understand. The writer seems to have all the details nailed down and have a very entertain-able writing style. Almost like reading a very good novel except that this is true, which is very rare when it comes to business book. You will finish it in no time. Unputdownable.

My two cents-

This book is probably a heck of a lot more interesting if you are a regular reader of various business journals/papers. (I am not, honestly). Though the authors do their best to explain some pretty complicated financial misdealings and simplify them, and I did my best to learn, it was a lot of wrok. It will be more enjoyable, especially in the middle sections, that you have some education of the "normal" internal workings of Wall Street. To be honest, though I am not one to say this regularly, the movie of the same name is more "for the masses", and I mean that in a good way.

As alluded to above, the first few chapters about how the idea of Enron came about and the last hundred or so pages of the collapse is the best parts of the book. The middle drags.

The authors do try not to completely demonize the crooked characters, and try to approach this from a more unemotional standpoint. In this way, it's journalistic.

I am not entirely sure this was worth the time to wade through the 400 pages, even though this was one of the most important bankruptcies of the modern US banking era.

While there was a great amount of greed that contributed to Enron's downward spiral (illegal investment vehicles, ridiculous executive salaries and corporate perk largesse), what makes this different from the cornball `big bad greedy company causes its own downfall' tagline, though, is the book's thesis that business machismo caused Enron's collapse. Note the Enron culture of landing big deals, particularly in new industries and tertiary markets where Enron could be viewed as a trailblazer. Enron loved landing front-page news of its deals; what it failed to do was to see them through and ensure they financially contributed to the company's well-being. As well, during the Jeff Skilling era, there was a constant and unhealthy fixation with Enron's stock price. Enron's corporate performance was directly pegged to the stock price; Enron executives begged, borrowed, and stole to ensure rosy financial statements and a love-in with Wall Street bankers and analysts. Never mind that Enron was bogged down with loser, capital-draining businesses (Broadband, Enron International) that were causing liquidity problems even years before Enron declared bankruptcy. As long as Enron was making deals and the stock price was high, everything was sunny.

Of course, this perversion of corporate values was partly attributable to Enron's leaders; particularly the now-deceased Ken Lay and Jeff Skilling. Not only did they turn a blind eye to and even encourage many unethical, and borderline illegal, schemes, their continual denial of responsibility for anything that went wrong and bland assurances to anyone that would listen that everything was going great while the Enron ship was sinking rendered them irrelevant and fostered an `inmates running the institution' mentality.

As gripping as Enron's collapse really was, I would have liked more of a discussion as to what it was that caused Enron to be so accomplished and respected. Enron's successes seem to be taken for granted; it would have been nice to have more context as to why it was that Enron exerted such power over the `Street. Additionally, the book largely ends with Enron's declaration of bankruptcy in late 2001. I would have been interested to read about the congressional hearings and criminal/civil trials implicating the various execs discussed in the book that followed; perhaps this could be inserted in a future edition?

In the end, this is a case study that indicts not only the morally bankrupt Enron executives but also the starry-eyed bankers and accountants that largely enabled Enron's deceptions. This age old "Emperor has no clothes" narrative is immensely entertaining, even to those with little understanding of business.

Although I never owned Enron stock, I have heard a lot about Enron on the local TV news because I live in Houston, where Enron was headquartered. So I was very interested in reading "The Smartest Guys In The Room." From Enron's beginnings, where Ken Lay's Houston Natural Gas was acquired by InterNorth, yet became the dominant partner in the merger, to it's end with the filing of the largest bankruptcy case in U.S.
history, McLean and Elkind tell the whole sad story of Enron, with the blame for Enron's and Arthur Anderson's (the accounting firm destroyed by the scandal) mainly lying with Lay, the CEO more obsessed with the trappings of the CEO position rather than the responsiblities, Jeff Skilling, who installed the corrosive culture that turned many Enron employees into SOBs who thought they were better than everyone else and prevented Enron from being saved by Dynegy, installed the mark-to-market accounting system that ultimately showed Enron's profits were actually losses and was obsessed with the big ideas, or enchiladas that wasted so much money even as Skilling said those big ideas were profitable right now and Andy Fastow, the ex-CFO whose Global Finance team created all the accounting games that made Enron appear profitable even as he secretly enriched himself behind Lay's and Skilling's backs. Neither are other executives like Rebecca Mark, Lou Pai, Ken Rice, Cliff Baxter, Tim Belding and Greg Whalley spared by the authors, who expose their arrogance in black and white as well. In retrospect, it's just as well that one Enron trader's dream about ExxonMobil buying Enron and Skilling becoming CEO of ExxonMobil never came true because the Enron disaster would have hit a lot more people, myself included. I will be content with imagining Skilling and Fastow in jail, two of the smartest guys in the room stripped of all their power and prestige and having to live with that fact if they ever face reality and admit what they did was not only wrong, but also ruined so many lives.

As a novice reader, I have not fully developed a litmus test for deeming a book as good, bad, or great. Nor do I feel I have the right to criticize any author, writing style or subject. So unless I feel I'm the expert on the matter, which will most undoubtedly be never, I'll simply feel my way through this with the hopes that it will help.

The Smartest Guys in the Room grabbed me from the beginning, but mildly lingered after the first few chapters. I suppose it was necessary to take the time to break out all of the components and players that made up the Enron house of cards. But I kept hoping to get to the juicy details of their demise and didn't get any sort of payoff until the end... some 300 pages later.

The book challenged me on several levels. I found it uncomfortably easy to relate to the executives and their unforgiving lust for money. It was fun to pretend that I was in their shoes and could reap the monetary rewards that they were able to "create." Even more captivating was the level of greed that they were able to obtain... I guess money will do that.

This book will force you to contemplate your personal limits as you imagine yourself as an executive at Enron. In hind-sight, it's easy to follow the slippery slope... but had I been there, living the extravagance, at what point would I have thrown the yellow flag? At times, I even felt bad for a few of those guys. For the most part, they actually believe that what they did was legit!

But by the end, I wanted them to get hammered for what they'd pulled. I feel like there are many layers to uncover in this scandal and I wanted the book to detail their lavish spending and continue through the legal battles. I want to watch their arrogance and greed get shoved down their own throats as the world receives its justice. That part, which is probably the most interesting to me, wasn't included.

Have fun,

David Tobias
Redondo Beach, CA

I picked up this book the day that Ken Lay died, since it spurred my curiousity regarding Enron and what exactly it was thta Ken Lay (and Jeff Skinning and Andy Fastow) did. This book answered all my questions and kept me engrossed the entire time. Coincidentially, I happened to be reading this book at the same time I was studying greek tragedy at University. This expose is not only highly factual but also very well written and a fascinating read.

Elkind and McLean introduce the characters: Skilling, Fastow, Lay, Pai, Mark, and others. They explain their backgrounds, their social lives, their personality traits and their business acumen. The authors introduce the early days of Enron, before Fastow when the firm was essentially run by Rich Kinder and his crew. The amazing rise of Enron really is a fascinating story - one of confidence and one that leads to the hubris that would contribute to it's demise (much like a greek tragedy).

McLean and Elkind turn towards the business aspects of the firm - the accounting tricks, the factories they built, the pipelines they managed (and the broadband they didn't), and the trading floor they operated. The authors methodically break apart each aspect of the firm and how they all interacted and contributed to the fraud.

I expected the book to leave me angry at Lay and Skilling, but rather, at the end I felt pity for Lay and Skilling. Neither one of them was assertive enough to run a corporation of this size and both of them were obviously very dillusional and negligent. The authors didn't convey that Lay or Skilling were particularly evil but rather that they were just oblivious (and complicit). Fastow (and his crew) is a different story. The authors left me feeling his sentence wasn't strong enough.

I would highly recommend this book to anyone who wants to enter corporate America. This book warns of the consequences of being a "yes"-man and not being assertive (or becoming dillusional with extreme wealth).

Before purchasing this book. I had read many reviews about the book was too technical. On the top of that, I also noted the two authors were financial writers. My perception was the book would be dry like text book. Regardless, I was interested in Enron, so I bought it.

To my surprise, the book was fun to read. The flow from one chapter to the other is seamless. The authors are good story tellers. And I am wondering if they had ever written any fictional books and I would like to check them out as well. If anyone wants to skip the technical stuffs and just go for the story, the book is a great read and a good novel. But please do read it in its entirety, it is well worthy the time.

Terrifically detailed book about the collapse of Enron. Extremely detail oriented. Brings incredible clarity to a story so over-exposed that perhaps we are desensitized to the incredible breadth and depth of this event. One of the 10 largest companies in the world simply crumbled into liquidity. Add up the corruption at WorldCom, Tyco, Adelphia, and all the others... combined they don't come close to the level of hubris, corruption and sheer destruction of Enron. The scandal by which all other scandals will be measured. This book is a great account of every facet of Enron's collapse.

GREAT STORY ABOUT HUMAN FOLLY, AMBITION AND CRUELTY. FORMIDABLE ACCOUNT OF HOW VERY BRIGHT PEOPLE- OR SOCIETY?- WENT AWRY. BE PREPARED TO RE-READ SOME CHAPTERS IN ORDER TO REALLY UNDERSTAND HOW DEALS WERE COOKED.

Yeah, the title of my review links both Andersen and Enron, into Andersenron, just as they were linked. This is the best book on what was going on at Enron and its associated helpers--the investment banks, Andersen, analysts, E's "board", etc. Better than Eichenwald's as to content and Eichenwald's was too long for what it said, but I suggest you buy both books, because each provides some interesting observations--but get this one for sure. I got a much better understanding of the people and the culture in Enron from this book (McLean and Elkind), and wish to tip my hat to them for assembling a fine bit of reporting and for a nice job of writing. This book does explain a bit more about what the shenanigans were, and most importantly, it does a good job in explaining what the motivations were that underlay (no pun intended on Ken Lay) the actions or inactions of all those that brought Enron to what it once proudly stood for, and now infamously stands for, in American business culture.

What a great book! As you read about another unethical, greedy, unbelievable thing these guys did or permitted, you will think to yourself there is no way they could top that one. Wrong! The book promises and delivers cover to cover, with in-depth explanations of technical business topics explaining the demise of a company caused by a sociopathic solidarity justified as an organizational culture. A lot of similar themes with the book "The New, New Thing" about Silicon Valley in the 1990s. One of the best reads of the year.

If you really want to read a tale about the very worst of US corporate practices, The Smartest Guys in the Room is the book for you! authors McLean and Elkind spare no detail of dodgy finance, sleaze, greed and ineptitude as they bring us an accurate dissection of the rise and fall on Kenny-Boy Lay and his associates.

The authors, both writers for Forbes, are well-qualified to understand their subject and present it in good, journalistic prose form. The book makes a fine double-read with Eichenwald's "Conspiracy of Fools." While the latter is much more sympathetic to the Enron execs, both books point stongly to incompetence at the top as a main factor in the fall of Enron.

As others have noted, there is a real Greek Tragedy element to the tale; that "brought low by hubris" story that, with schadenfreude, most of us enjoy. However, this book is no morality play, it is a true story.

If one were to isolate a failing of the book, it is that it does NOT get preachy. We all could use a little sermon about Enron, and not just about Greed. We could use a sermon about the failure of ethics in modern American business as a whole, and especially in MBA programs.

What's more, maybe some speculation on the nature of modern US Corporations is called for. Mergers and Acquisitions, Hedge Funds, Buy-Backs, sell-offs, and clever paper shuffling seem to have replaced doing a good job of making and selling something people want. Perhaps that's the ultimate lesson of Enron. If so, the book's sole flaw is that this was not really brought out.

I was looking for a book on Enron that would give me a bird's eye view of the whole Enron problem.I didnt want a detailed explanation of every problem that ocurred in Enron.I found it in this book. The authors did a magnificent job in explaining the problems and tribulatons at Enron.Their style is simple, clear and they use common terms that people like me could understand. The book goes deep into the offices,buildings and personalities of Enron. It is clear that people like Lay,Skilling,Fastow,Rice and others were in it for the money and the ride.These people are just garbage in every sense of the word.They thought they could play God and they got what they deserved.I recommend this book for anyone who wants to understand a little bit of corporate America and how personalities play a major role in business.I truly enjoyed this book.The authors did a fantastic job researching and looking for information in all the right places.Great work!

This book is not the only one I have read that really shows that Enron's problems did not originate with Fastow and that it has been very strange place for a long time. As the book makes clear, they never asked the most basic questions any director should ask. Sadly, these directors will probably never be held accountable for their malfeasance. If justice prevails, at least Lay, Skilling and Fastow will ultimately do hard time and forfeit their enormous illegal gains.

This book was very well written. It follows a logical sequence of events that allows the reader to learn in depth what happened at Enron. A fair amount of research details the characters (Ken Lay and Jeff Skilling in particular, but other architects such as Richard Kinder) and how their social and professional lives intertwined back to the 1980's and earlier. Long before the headlines (that is the late 90's headlines raving, and the post bankruptcy rants) there were a number of events that lead to what would be one of the most notorious flame outs in corporate history.

I was impressed by the impartial narrative. The reader is not bombarded with a sense of the author's point of view, and there is no excessive use of colorful detail. Rather, the facts ar presented in a very readable manner, and the reader is allowed to make his own decision on the fall of Enron.

One does not need to understand much about the Enron debacle to enjoy such a rich, fact-filled and engrossing story as this. McLean and Elkind do a superb job of unraveling both the scheme and describing how it was accomplished. While much of the story centers on some difficult financial concepts, a patient reader will soon come to understand how the company had woven a complex web. That web was deliberately complex: the company attempted to cover its misdeeds through very creative interpretations of financial law. The writers present the material as it would have been presented to anyone on the outside looking in, and then they pick through the scheme and bring sense to what happened. Brilliant work of nonfiction!

A great read for those who want every detail about the Enron scandal. In my opinion, it was far too detailed, to the point of redundancy. The account of Enron's atrocities could have been just as poignant in half as many pages.

25 Apr 2006

The authors of this book are journalist from Fortune. Fortune published the Feb 19 2001 article titled, "Is Enron Overpriced?" that started the Wall Street Journal articles.

This book has far more historical fact. The accounting analysis is not as detailed, but sufficient for lay reading. The best book amongst the 4 or 5 books I have read about Enron.

Some impressions about some of the other major characters who helped built Enron but did not get as much of the publicity:

John Wing - the guy who got equity in the plants he bought, but it was fair, according to the book. The equity kicks in only after it made money.

Rich Kinder - left because he didn't get the CEO post from Ken Lay. He was the controller in Enron. And according to the book, "One former board member says that "it was one of the saddest days for Enron when Rich Kinder left." ... And that director wasn't the only one who felt that way. Though long gone from the company, John Wing still held millions in Enron stock. When he learned that Kinder was leaving, he sold most of his shares."

Seems like they were respected by the authors of this book.

Plenty of rumored romantic tie-ups: John Wing and Rebecca Mark, Ken Lay and Linda Lay, Jeff Skilling and Rebecca Carter, Ken Rice and Amanda Martin. Kind of makes me wonder, if things like that can be allowed to happen at the top tier of the organisation, then what's happening elsewhere?

I know some people who worked for Enron personally. No one I know in Enron IT is mentioned at all. Is that good or bad?

This book makes a compelling case that the folks who ran Enron were greedy, arrogant, overbearing, obnoxious, and probably criminal. I don't doubt any of it. A point in their favor though, lost among all the negatives, is that they tried to make stuff happen. They took risks, made deals, put pedal to the metal in their overly ambitious attempts to gain market share and enter new areas. The errors that they made were on the side of action rather than the side of caution.
Contrast this behavior to a company like Exxon. Due to run ups in the world price of oil the company has generated lots of cash over the last couple of years. Enough cash to go on the prowl for lots of new deals. Build refineries, develop new fields, invest in the energy infrastructure, etc. In short they should be doing deals and making stuff happen. Instead what actually happens is paralysis by analysis. They just sit on a big pile of cash instead of putting it to work.
I'm not excusing Enron for their dubious accounting, lack of ethics, and shell game financial structures. I'd just like to seem some of their aggressive spirit imbued in the lethargic energy giants of today.

As we learn in "The Smartest Guys in the Room," through complicated and "creative" accounting tricks, including hiding massive debt, the people at Enron, led by Ken Lay, Jeff Skilling, Andy Fastow, and others, successfully portrayed their company as being almost magically profitable. This resulted in inflated credit ratings and astronomical loans, which, in turn, resulted in a soaring share price, which would then be leveraged against all sorts of shady deals, furthering the illusion of extraordinary profit. Lay -- the great showman, who knew so little about the inner workings of his company. Skilling -- the brilliant "visionary" -- no one could quite follow what he was saying, until people realized he was the emperor who wore no clothes. The banks and brokerage houses -- complicit in questionable deals and accounting techniques, as long as they continued to receive exorbitant commissions and saw Enron's stock price continue to rise. The public continued to be fooled until it all fell like a house of cards towards the end of 2001, leaving some very sorry investors, especially the lower level employees who had not cashed in millions in stock options as did their bosses, but were encouraged to put their life savings in this supposedly infallible company.

The "Smartest Guys" authors meticulously describe (sometimes to a fault) many of Enron's biggest scams, which differs from the movie, where the nuts and bolts are not discussed. We learn about Fastow's so-called "independent" affiliated corporations (trading mostly on Enron stock, while Fastow skimmed whenever he could), the California energy debacle, the various international power plant disasters, the broadband
catastophe, and the incredible arrogance of the Enron traders. Thank goodness the authors provide a "Cast of Characters" at the beginning of the book, or I would have been totally lost with all the names involved.

The Enron story can be succinctly summarized on pp.319-320, when the authors describe one astute investor's discovery about a corporation called "Baldwin United," considered a hot investment in the 1980's:

"Baldwin was, in essence, a giant Ponzi scheme that raised money secretly through its subsidiaries, turned the money over to the parent to support its enormous capital consumption, and used agressive mark-to-market [anticipated profit as opposed to actual earnings] assumptions on its portfolios and annuities to create fabulous earnings growth. When it comes to stock-market frauds, history does repeat itself [i.e. Enron]."

In the end, perhaps, one can refer to the old adage that if something sounds too good to be true, it probably is. I was lucky enough to be reading the book throughout the Enron trial (as I'm writing this, the witnesses have all testified, and the lawyers are about to do summations). As the authors state (p. 417): "The government portrayed Enron as a company that was operated to create the illusion of prosperity, not the reality. In other words: a fraud."

A very interesting, albeit difficult, read. It's much different than the movie of the same name in its focus on detail, so it doesn't matter whether you see the movie, or read the book, first.

This is a superior book and much better than the movie. Read it if you are interested in the details of this saga and in the personalities behind the crimes.

Professor John W. Kercheval, III
Georgetown
Washington, DC

For anyone who is into the tales of accounting scandals, this is the book for you. It is very well written, and although you know the outcome, its still an exciting read. It goes into the morality and culture of the Enron firm, and it gives you a better understanding and connection with the players involved.

As a Wall Street type for 40 years, one who owned his own broker-dealer (BD) for seven years, I learned a great deal about accounting and economics from full immersion on a daily basis. When these authors talk about mark-to-market accounting in thin markets; the portrayal of extraordinary gains as current net income; of 97% debt in off balance sheet entities with 3% equity, and of negative to zero cash flow with unrealized and current loser-write-downs deals hidden from the public eye; of bribed accountants failing to discharge their public duty; and of unseemly lawyers posing as erudite men of honor, I know exactly what they mean. These Enron guys weren't smart, they were criminal.

Jeff Skilling is a psychpath and Ken Lay is a weak mitted, posturing, bureaucratic intellectual, a strutting peacock, with few redeeming graces. And, Fastow and his agents are just sickening to behold. They're the dark side of capitalism, the twisted face of unadulterated greed and the poster boys for shady dealing. These are the kinds of people who make you wish they'd bring back the firing squad. They make the mining stock, shell corp, bandits in Canada look good by comparison.

The authors do a great job of outing this sordid tale which could only have ended in financial collapse. For Lay and Skilling to go before the peoples court and lie in the way they're currently doing is a travesty, and hopefully the wisdom of crowds will see through it.

For them to "make their quarter" by marking up the value of partnerships with no liquid value and taking that value into current earnings is just appalling; no it's breathtaking. These Enron guys were paying huge commissions and fees to "the Street." Arthur Anderson was being paid a million a week and Vinson & Elkins, the Houston blue-shoe law firm, almost as much. They were completely corrupted. Of note, virtually all the big name firms in Wall Street were fighting with each other to get in on the Enron, fee generating, gravy train - Merrill Lynch, Goldman Sachs and many more. And, the more fees they received, the less scrutiny they performed until the whole thing finally resembled the last days of Pompei.

The spectacular takeaway one gets from this book is how could Skilling, Lay, Fastow and the rest think they could get away with this? At least Cliff Baxter, the only one so far, felt enough shame to liquidate himself. To think that Enron could call itself the best company in the world goes beyond hubris. And, the authors do a first rate job in cataloging Enron's day-by-day adventures. Again, this wasn't about corporate miscues, it was about outright criminality with the felons playing an impossible game of hide-the-banana.

Enron, a new age company selling bandwidth futures? And, gaming the state of California's electrical and power grid to the detriment of everyday onsumers? It's all here. Read it! Learn the financial terms. It's an education for the uninitiated, a story you couldn't make up. Psychopaths....and more than one of them....they're the kind attracted to this kind of situation. And they accompanied their crooked fantasy with all the bluster of a bogus imperial wizard. A tale of sound and fury, told by an idiot, signifying nothing save the huge losses that trusting investors everywhere were compelled to endure.

This book chronicles the adventure of Enron in a relatively compact 400 page package. Enron's lifeblood (executives, lenders, analysts, environment, etc.) are presented in a format that reads like a novel. It's easy to see how this book became a documentary film. I saw the film first and knew that the information, as impactive as it was, could only be deeper and better if read. The question of "How could this have gone on for so long?" was too compelling to let go.

Unfortunately, I wasn't prepared for the hard read. Specifically, the corporate financial jargon. I can barely do my own taxes and I'm trying to comprehend SPE's, derivatives, off-balance sheet accounting, and a load of other "techniques" and "vehicles" that are legitimately pivotal concepts that affect the enjoyment of this book's read. The authors did try to give definitions of many of the concepts, but not in a context or length that gave me a clear understanding of how grand the schemes were in building the rat's nest that was Enron's stucture. This would have lengthened the book quite a bit, but what's another 100 or so pages added to what was already a truly commendable effort the authors made at piecing this story together?

The book was written with a bias, too. I doubt anyone would smile on the devastation Enron left in it's wake, but that's to be left to the reader. Enron was a black place, but the authors didn't put any effort into painting a contrasting white scenario for contrast in a corporation's economic existence. Millions and millions of dollars were quoted here and there regarding investments, salaries, bonusses, equity, debt, etc., but how did all of this compare to other corporation's operations? You don't get that in this book. No historical comparisons worth mention. It's an Enron-bash session (how hard is that?), not a case study from which to compare, contrast, and learn. This left me a bit disappointed.

This book is a must read for those interested in finace, corporations, brazen personalities, and the cost of believing your own delusions for a bit too long.

This is a reasonably entertaining account of the Enron saga, and possibly the most up-to-date one (bar anything that has happened during the trial). It provides plenty of information that is easy to follow, even being a dry topic for a reader with little knowledge of or exposure to the topic.

However, like in many so-colled investigative journalism articles, there are three key flaws:

1. The book heavily criticizes many business decisions, some of which can only be seen as poor after the facts. The kinda 20/20 expertise in hindsight that the authors push is only but unfair, especially when the authors themselves cannot claim to have been in management positions that required guts and business know-how.

2. The book displays a clear left-wing bias when it does not miss any opportunity to bring up issues such as regulation of markets is better than free markets, free markets hurt "little people" and favours "big business", the smart and the powerful are "bad" and the ordinary person is good, MBA are young and greedy but the workers are victims.

3. It tries to put the blame on Bush and Republicans for what Enron did on the basis that Enron contributed and lobbied the GOP. However, it does not point out that MOST American corporations (and people as well) make plenty of contributions to every political party, liberal, greeny or whatever. Nothing could be implied just by the fact that Enron supported the GOP.

All in all, the book looks like the typical drivel of a liberal writer trying to throw cheap potshots. This is like everything that Michael Moore wrote. There is every reason to believe that the film baed on this movie will possibly win an Oscar, simply because the Academy is infested with left-wingers.

I thouroughly recommend this book. I have not read a book fully in about 10 years. Can never seem to finish them. This book I could not put down and finished in record time. A fantastic read and well structured.

This book helps the reader get from, "They're all a bunch of crooks" to understanding the crimes and criminals of Enron. Ken Lay comes across as a politician in capitalists clothing, blissfully (and perhaps purposefully) ignorant of the company underneath him. Jeff Skilling is the intense visionary, who quickly gets in over his head as a manager, and is willing to do anything to keep the ship afloat. Andy Fastow is the cleaner, the man they go to when they need their accounting fixed. If a name is in the news related to Enron, you can get clear unbiased reporting on who they are, and what they were accused of.

When written, the book served as an early explanation for what went wrong. Now it's background material for the white collar trial of the decade. Definitely worthy reading for anyone interested in Enron or white collar crime.

Superb history of the corporate hubris that brought down what was once considered one of this country's giants of capitalism. All the scandalous behavoir that was symptomatic of the "dot com" era is recaptured in the incredible but true history of Enron. All the major and minor figures are covered and their stories still resound today.

Today, Enron is the biggest business story of our time, and "Fortune" senior writers McLean and Elkind are the new Woodward and Bernstein. Drawing on a wide range of unique sources, their book follows Enron's rise from obscurity to the top of the business world to its disastrous demise.
It's intriguing and comprehensive, and after the introduction, you'll be hooked.