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The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

4.09 of 5 stars 4.09  ·  rating details  ·  7,676 ratings  ·  289 reviews
There were dozens of books about Watergate, but only All the President's Men gave readers the full story, with all the drama and nuance and exclusive reporting. And thirty years later, if you're going to read only one book on Watergate, that's still the one. Today, Enron is the biggest business story of our time, and Fortune senior writers Bethany McLean and Peter Elkind a ...more
Paperback, 480 pages
Published September 28th 2004 by Portfolio Trade (first published 2003)
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Michael
In the mid to late 90's, Houston based company Enron shone brightly as the pin up boy of corporate America. At it's peak in August 2000 it had over 20,000 employees world wide, projected revenue of $101 billion and a share price that hit an all time high $90. Fast forward just over a year and the unthinkable had happened with the company filing for bankruptcy as it share price ended the year at a disastrous $0.30.

The story of how Enron collapsed so quickly is one of corporate greed and deregulat
...more
Jarrod Jenkins
That I am an internal auditor at a major oil and gas company undoubtedly contributed to my interest in this book. Nonetheless, McLean and Elkind's ability to present a convoluted and complex topic in an intriguing way culminate in this page-turner that anyone with even a moderate interest in business, accounting, economics, or current affairs will enjoy. The authors strike an effective balance between providing the nitty-gritty details of the accounting, the bigger picture, and the gossip.

In ma
...more
Rishi Prakash
I had read about the scandalous fall of Enron while studying in graduation but it was just a news for me that time which was like any other news in the business page. It was much later that I started seeing the refernce of Enron in various corporate stories while reading and that is how my curiousity started building. And i must confess I would have never ever understood the significance of the entire Enron story if not for this great book. Enron has gone on to become a master case study to set ...more
Ryan
Jul 15, 2007 Ryan rated it 4 of 5 stars  ·  review of another edition
Recommends it for: people interested in business ethics or think smart people will make the right decisions
Detailed history of Enron from its foundation to collapse, with particular attention paid to the critical characters (Ken Lay, Jeffrey Skilling, Andrew Fastow, etc.) Interesting if you think fall of Enron is an interesting subject (I do, but don't blame you if you don't). My biggest takeaway was the question of whether getting "the smartest guys" all together in a room will lead to good results, since it was clearly such a catastrophe in this case. And, if getting the smartest guys together in a ...more
Mathias
Another excellent work that provides insight into how financial incentive regimes (Regulations, Markets, Competitor Behavior)influence the actions of micro-players (CEO's, divisional managers, etc) in the business world.

Enron's collapse is a case study of what can go wrong in an economic system that lacks adequate checks and balances coupled with the increasing disempowerment of other important economic actors (labor unions etc). Unfortunately whatever lessons have been learned from Enron have y
...more
George
This book is a must for just about everyone. It reads like a novel, but unfortunately its all non- fiction. This book proves that truth is sometimes stranger than fiction.
For anyone who has an interest in protecting your wealth and hard earned money, this is a must reead. I learned how important it is how your personal actions and behaviours can have such a detrimental affect not only to those around you but way beyond those that might seem unafected. The enron scandal was something that everyon
...more
Zack
I watched the documentary based on this book, and while it was entertaining (in a sad, "how the hell do they get away with this sort of stuff" kind of way), 110 minutes is nowhere near enough time to unwind all of the chicanery and manipulation at the heart of the Enron scandal. The book, I'm happy to say, is far more comprehensive. And yet, although dealing with potentially dense, head-scratching issues of the structuring of complex financial instruments, it manages to be a compelling, dare i s ...more
Nicola
The Smartest Guys In the Room is a well-written, well-researched attempt to unravel the financial shenanigans that led to Enron’s bankruptcy. It’s a compelling (and sometimes soapy) indictment of the worst side of business, and it queasily foreshadows the financial crisis of 2008.

I can’t say enough about how well McLean and Elkind present the material in this book, but the fact remains that (a) it’s really, really long, and (b) it’s about finance. I learned a lot about securitization (etc.) as a
...more
Leah
Very well-researched and detailed book, sometimes too detailed. It's pretty well-written, but I gave it three stars because you can really get bogged down in the all the financial mumbo-jumbo. It's also kind of exhausting to read because you will be irritated by how arrogant and stupid the Enron leaders were, and as they make the same mistakes over and over, it's easy to lose interest as a reader. If you are someone who really likes reading about financial markets and business, though, this will ...more
Virgilio Pigliucci
A great depiction of one of the biggest example, in modern history, of the "mafia" evolution to the highest levels, where the street violence and the low-level crime become high volume bribery and financial crimes that are capable of hitting way more people than the mob of the 70s.
I read the book in a few months... very interesting but hard to follow between so many numbers, episodes and not an easy narrative plot. When I was done with it I found the documentary on Netflix and after those 2 hour
...more
Athan Tolis
This book is generally acknowledged to be the definitive account on Enron and the creative accounting era. And it is a truly overwhelming piece of research.

In contrast with "Barbarians", "When Genius Failed" or the more recent "Billionaire's Apprentice", it does not read like a narrative, and that's because it really can't. Enron was a lot more complex than a single transaction or a single hedge fund. It was an agglomeration of businesses, each with its own specific character. You can't go over
...more
Billy Keene
I normally won't write a review but for this masterpiece I will make an exception. This book goes into great detail profiling the giant behometh known as Enron and the genius behind its marketing, product, and accounting structure which later turned out to be a pure illusion. The scope and breadth of the research involved was enjoyable to read. I especially enjoyed the way the characters were able to relate to and the author did a great job highlighting Kenneth Lay and Jeffrey Skilling's "Win-At ...more
Katherine
This book takes accounting fraud so complex that Wall Street write large didn't understand it for years and boils it down in a way that is understandable and, more surprisingly, fairly riveting. I am a bit of a junkie for this kind of story (I'd really like to be a prosecutor of white collar crime, I think), but the writers do a pretty incredible job, and given what a major issue Enron has been in our economy, in the law, and in the regulation of corporations, I think this is a worthwhile read f ...more
Thom Dunn
"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 erer 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...." (from the inside fron
...more
Ben
I enjoyed the documentary based on this book when it came out a few years ago and the book is fantastic as well. The book goes into a lot of detail about the chaotic profit-obsessed groundwork that led to the eventual scandals at the company. For example, years before their bankruptcy, Enron became so enamored with hotshots from Ivy League schools that they started ONLY hiring hotshot Ivy Leaguers who wanted to close big deals but had no interest in doing the grunt work necessary to make those d ...more
Frank
An excellent summation of one of the most complex court case/bankruptcy/fraud. The book starts with the author comparing himself to Woodward and Bernstein's "All the President's men" which I found a bit presumptuous and set off a red flag. But after reading the book, I have to agree a bit with the analogy. While there's obvious differences (the author isn't even found in the book. Company versus government. Mildly complex but easy to understand vs. "WTF" levels of complexity" The comparison actu ...more
Bryce Wong
This book offers its readers a peek into the lives of Enron’s masterminds, graphically describing the events leading up to their demise. What first started out as a winning formula to earning truckloads of cash from trading soon culminated into a series of accounting frauds, lies, and deceptions to deceive the public into thinking that they were actually successful despite racking up huge debts. Think of Enron as the mother of energy back in its heydays. They had assets that were comparable if n ...more
Kate
If you scratch your head trying figure out all of these acronyms in finance, it's worth going back and reading about some of the boys who took off-balance sheet transactions to a whole new level. So much has been written about the rise and fall of Enron, but this book does it succinctly and at a layman's level. Plus they give you the whole People magazine backstory on these traders, including the names of the strip clubs in Houston the frequented and Ken Lay's difficult childhood.
Lance Cahill
A (fairly) dispassionate narrative of the collapse of Enron. The authors focus primarily on weaving together a narrative of Enron while providing details of the specific financial transactions which led to Enron's ultimate collapse and subsequent regulatory inquiries. At times, the authors seem to inject some hindsight analysis into some of the narrative, which may be seen as unfair to the players involved, however evil we see them today.

The authors focus heavily on mark-to-market (MTM) account
...more
Diane Pfaeffle
“malfeasance n. intentionally doing something either legally or morally wrong which one had no right to do. It always involves dishonesty, illegality, or knowingly exceeding authority for improper reasons. Malfeasance is distinguished from “misfeasance,” which is committing a wrong or error by mistake, negligence or inadvertence, but not by intentional wrongdoing. Example: a city manager putting his indigent cousin on the city payroll at a wage the manager knows is above that allowed and/or lett ...more
Ellenw
It's hard for me to explain why I like this book so much. It's not just that I was very interested in the market manipulations by Enron during the California energy crisis (having been an intern in Governor Davis's press office for a few months of that) and this book does a great job of explaining that, but rather the people involved in the Enron scandal are *fascinating*.

This book can be a tough read- this was a purposefully complex scandal and I'm still only sort of sure what happened, but th
...more
Richard
Very well done piece, especially when keeping mind what would happen about 5-6 years later on Wall Street. A story of some very intelligent, but also very greedy and ruthless individuals who seemed to really believe they were running an excellent business while all the while committing what basically amounted to fraud for an extended period. The book reads quickly and while it does include some technical elements, specifically in the finance/accounting fields, it does provide explanations for th ...more
Greg Talbot
Agog with a sky-rocketing stock and astronomical return rates, Enron’s rise and cataclysmic fall is a breath-taking story. The book shows how the company transformed from Ken Lay to the big thinker, flippin brilliant Jeff Skilling. Skilling turned the energy world on its balding head, giving it renewal through multiple energy ventures and tricky accounting before the project feel apart.

You really get a sense reading this, that all involved parties were drinking the kool aid (or strawberry marti
...more
Murali Neelakantan
A well researched account of the key events and actors in the Enron saga. A book that every corporate executive ought to read every few years so that they are reminded that once the line is crossed, it is forgotten and there is no turning back. Unsurprisingly, despite the amount of press coverage that the scandal got, there seem to be a number of similar events over the last decade. What should worry us is that we now have a breed of executives in corporations, banks, consulting firms, law firms ...more
Achtung Englander
It all started with Enron. Before the banking crises that saw Lemhan Brothers file for the biggest bankruptcy in history, the word "Enron" was synonymous with failed business of a scale never heard of before.

The book is written in a gripping manner that is both easy to read without wallowing in the intricacies of its financial machinations, and delves into the personalities and politics of people who scammed the business. You will be shaking your head in anger at the sort of money we are talkin
...more
Nick
Absolutely superb. This is captivating. Admittedly I have worked in areas that overlap a little with Enron (not power, oil & gas though). But in this book, which is c.420 small print pages, the revelations and facts just keep on coming and keep you reading. It is genuinely a page turner, and you wouldn't necessarily expect that from a book about esoteric off balance sheet accounting.

But, of course, this isn't really about the accounting. It is about the people. Those people whose greed and a
...more
Carl
Few are as good as Bethany McLean at telling a comprehensible, compelling story about very complicated business topics. While I think her All the Devils Are Here (with Joe Nocera), about the 2007-8 financial meltdown and credit crisis, is better, this first book of hers (with Peter Elkind) is also superlative. The writing seems more controlled in the second book, and the story much harder to tell; the accomplishment there seems superior...but that's niggling criticism. The Enron story continues ...more
biafra
What an adventure. In short, the book describes the key players, their personalities, ambitions, and background, along with the financial forces at work that created the culture of Enron and thus the seeds for its dramatic rise and fall.

While a bit more background on the history of Northern Natural Gas (predecessor of Enron) would have been interesting, the book does a great job of describing the various markets that Enron entered (from securitizing natural gas futures to the attempts to do the
...more
Libby
Loving it so far. Very readable.

p. 41 "The most dangerous problem of all is the very thing that makes mark-to-market accounting seem so seductive in the first place: growth. When the initial deals are cut and all the potential profits are immediately posted, a company using mark-to-market accounting appears to be growing rapidly. Wall Street analysts applaud, and the stock rockets upward. But how do you keep that growth rate up? True, you're still receiving the cash from past contracts. But you
...more
Aaron Dev
This book is as ambitious, encompassing and massive as the firm in which it endeavors to cover. Fortunately, Ms McLean doesn't succumb to sounding like the 'pure intellects' the title is so named for, writing in brisk prose and simple language that leaves this firm's history easily accessible for most high school students.

The book gives a tremendously detailed account of the key players, the chess moves and the 'in the moment' justification that went into all of the chicanery which brought down
...more
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Bethany McLean is a contributing editor to Vanity Fair magazine, and known for her work on the Enron scandal. She had been an editor at large and columnist for Fortune magazine.
McLean grew up in Hibbing and received her BA in English and mathematics at Williams College in 1992. After college and prior to joining Fortune, she worked as an investment banker for Goldman Sachs.
More about Bethany McLean...
All the Devils are Here: The Hidden History of the Financial Crisis The Impact of Freddie Mac and Fannie Mae

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“The tale of Enron is a story of human weakness, of hubris and greed and rampant self-delusion; of ambition run amok; of a grand experiment in the deregulated world; of a business model that didn’t work; and of smart people who believed their next gamble would cover their last disaster—and who couldn’t admit they were wrong.” 1 likes
“McKinsey partners tend to be designers of ditches, not diggers of ditches. When it comes to executing their lofty theories, well, consultants lean toward leaving those messy realities to the companies themselves.” 0 likes
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