The Smartest Guys in the Room Book Summary - The Smartest Guys in the Room Book explained in key points
Listen to the Intro

The Smartest Guys in the Room summary

Bethany Mclean, Peter Elkind

The Amazing Rise and Scandalous Fall of Enron

4.4 (66 ratings)
24 mins
Table of Contents

    The Smartest Guys in the Room
    Summary of 10 key ideas

    Audio & text in the Blinkist app
    Key idea 1 of 10

    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.

    Want to see all full key ideas from The Smartest Guys in the Room?

    Key ideas in The Smartest Guys in the Room

    More knowledge in less time
    Read or listen
    Read or listen
    Get the key ideas from nonfiction bestsellers in minutes, not hours.
    Find your next read
    Find your next read
    Get book lists curated by experts and personalized recommendations.
    Shortcasts New
    We’ve teamed up with podcast creators to bring you key insights from podcasts.

    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.

    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
    example alt text

    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.

    Categories with The Smartest Guys in the Room

    Books like The Smartest Guys in the Room

    People ❤️ Blinkist
    Sven O.

    It's highly addictive to get core insights on personally relevant topics without repetition or triviality. Added to that the apps ability to suggest kindred interests opens up a foundation of knowledge.

    Thi Viet Quynh N.

    Great app. Good selection of book summaries you can read or listen to while commuting. Instead of scrolling through your social media news feed, this is a much better way to spend your spare time in my opinion.

    Jonathan A.

    Life changing. The concept of being able to grasp a book's main point in such a short time truly opens multiple opportunities to grow every area of your life at a faster rate.

    Renee D.

    Great app. Addicting. Perfect for wait times, morning coffee, evening before bed. Extremely well written, thorough, easy to use.

    People also liked

    Start growing with Blinkist now
    28 Million
    Downloads on all platforms
    4.7 Stars
    Average ratings on iOS and Google Play
    Of Blinkist members create a better reading habit*
    *Based on survey data from Blinkist customers
    Powerful ideas from top nonfiction

    Try Blinkist to get the key ideas from 7,000+ bestselling nonfiction titles and podcasts. Listen or read in just 15 minutes.

    Start your free trial