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The Smartest Guys in the Room summary

Bethany Mclean, Peter Elkind

The Amazing Rise and Scandalous Fall of Enron

4.4 (72 ratings)
24 mins

Brief summary

The Smartest Guys in the Room by Bethany Mclean and Peter Elkind is an in-depth analysis of Enron's rise and fall. They discuss the individuals and culture that made Enron a powerhouse, but also examine the deceit, corruption, and greed that led to its devastating collapse.

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    The Smartest Guys in the Room
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    Enron, a company whose decades of deceit ended in bankruptcy, nearly met the same fate just two years after incorporating.

    Does it ever feel like history is repeating itself? It sure seemed that way in 2001 when the American energy colossus Enron filed for bankruptcy. The company’s demise due to huge debts and fraudulent business practices mirrored problems they had experienced years earlier, when first starting out.

    In fact, in 1987, just two years after it was founded, Enron was already saddled with debt.

    Enron was formed in 1985 through a merger between two pipeline companies, Houston Natural Gas (or HNG) and InterNorth. An intelligent and ambitious man named Ken Lay assumed the role of CEO, and in 1986 the company was renamed Enron.

    Unfortunately for Lay, it wasn’t long before Enron was in dire financial straits. By early 1986, Enron reported a first-year loss of $14 million, and by January 1987 its credit rating was at junk status.

    What happened?

    Enron had been engaging in dishonest business practices that had brought the company to the brink of bankruptcy, and a specific subdivision called Enron Oil was causing the most trouble. Enron Oil wasn't producing or selling oil, but simply speculating on oil prices; not only that, but the oil traders were manipulating their earnings.

    For example, they would set up deals with fake companies that let them take a huge loss on one contract, only to cancel out these losses with a second contract that generated the same amount in profits. Their fictitious losses enabled them to move earnings from one quarter to the next.

    Enron was trying to prove to Wall Street that it could turn a steadily increasing profit, a trend that the stock market is quick to reward. However, by 1987, Enron’s oil trading game had taken such a loss on high-risk bets that the entire company was on the verge of bankruptcy.

    But Ken Lay was prepared to act. He assured analysts on Wall Street that this downturn was just a freak event that could never repeat itself. But as we now know, this kind of deceit and carelessness was at the very core of Enron’s company culture.

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    What is The Smartest Guys in the Room about?

    The Smartest Guys in the Room (2003) tells the remarkable tale of energy trader Enron – once a poster child for market innovation on Wall Street – and its dramatic fall from stratospheric heights. These blinks detail a gripping story of financial deceit, while shedding light on the personalities that built Enron’s corporate culture and set it up for disaster.

    The Smartest Guys in the Room Review

    The Smartest Guys in the Room (2003) delves into the rise and fall of Enron, one of the biggest corporate scandals in American history. Here's why this book is worth reading:

    • It offers in-depth research and analysis, shedding light on the complex web of deceit and corruption that led to Enron's downfall.
    • By exploring the personalities and motivations of key players, the book uncovers the human elements behind the corporate greed and unethical practices.
    • Through a compelling narrative and a clear explanation of financial concepts, the book manages to make a highly complex subject engaging and accessible.

    Best quote from The Smartest Guys in the Room

    Although it took place a long time ago, it seems obvious now that the Enron Oil scandal was the canary in the coal mine.

    —Bethany Mclean, Peter Elkind
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    Who should read The Smartest Guys in the Room?

    • Anyone hoping to learn more about the cataclysmic downfall of Enron
    • People interested in the widespread use of fraudulent business practices
    • Any business leader, executive, CEO, analyst or accountant

    About the Author

    Bethany McLean authored Fortune’s March 2001 article “Is Enron Overpriced?” and in doing so became the first person at a national publication to openly question what went on at Enron. McLean now works as a contributing editor at Vanity Fair and a columnist at Reuters.

    Peter Elkind, an award-winning investigative reporter, authored The Death Shift and Client 9: The Rise and Fall of Eliot Spitzer. He has previously published articles in The New York Times and The Washington Post and is now editor-at-large at Fortune.

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    The Smartest Guys in the Room FAQs 

    What is the main message of The Smartest Guys in the Room?

    The Smartest Guys in the Room reveals the disastrous consequences of unchecked corporate greed.

    How long does it take to read The Smartest Guys in the Room?

    The reading time for The Smartest Guys in the Room varies, but the Blinkist summary can be read in just 15 minutes.

    Is The Smartest Guys in the Room a good book? Is it worth reading?

    The Smartest Guys in the Room is a thought-provoking read that exposes the dark side of big business.

    Who is the author of The Smartest Guys in the Room?

    The Smartest Guys in the Room is written by Bethany McLean and Peter Elkind.

    What to read after The Smartest Guys in the Room?

    If you're wondering what to read next after The Smartest Guys in the Room, here are some recommendations we suggest:
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