I'm rereading "The Smartest Guys In The Room" so I guess I'm doing a tweet thread.

As a brief overview for The Youngs, Enron was the greatest fraud of '90s.

It was so great, in fact, that the principals even defrauded themselves into thinking they were running a real company.

"Smartest Guys" is invaluable mainly because it puts all the fraud in one place. There's actually not a ton more TO the book, and really it would have been hard to do any other way. There's just SO MUCH FRAUD to get through, that's all there's space for.

The effect pretty quickly becomes comical. When they're setting up shell companies (Chewco) to use money loaned by Barclays to effectively buy their own equity back from CalPERS at an inflated valuation? What other response is there but laughter?

Then you get to the part where they name officers as the managers of these entities and pay them management fees, and you have to find a way to laugh harder.

It's like a great episode of Sunny or Workaholics. These guys chose mayhem and they committed to the bit.

Oh and the Chewco/CalPERS deal was actually the first of many, with the loan-fueled 'returns' acting as an enticement to further investors in similarly fakakte structures.

Oh my god almost halfway through, reams of felonies already on the board and ... It's 1998.

California is deregulating retail energy.

dun dun DUNNNN

Enron's immediate next move: spend $20 million in marketing to win 50,000 Cali customers who they then sell power to ... At a loss.

Adam Nuemann was, for unclear reasons, not involved.

Then before it's anywhere close to making money they sell 7% of the retail business (EES) off to teachers in Ontario and ... To Enron's own joint venture with CalPERS.

Finding technically legal ways to sell itself TO ITSELF, while pocketing banks' cash, was a signature move.

The thing about Enron is they sucked at pretty much everything except selling money-losing contracts.

They serviced energy for Cal State for four years, and according to a manager there they didn't get a single accurate bill during that time.

Enron couldn't even do billing.

Enron was spending $50 million a year to cover the float created by it's inability to bill customers.

Its customers were effectively getting loans.

(Foreshadowing: Skilling wound up getting 16 years for all this, and got out of the clink in 2019. Lay died just before his sentencing in 2006, which under the circumstances ... Let's just say I'd like some photos of a body.)

Now Enron has a digital content business, an arm of its national broadband business, itself basically just a way to gather data for a bandwidth-arbitrage business.

In 1999.

We're beyond parody here, folks. I'm not sure how much longer this old boat can hold together.

Now these goofballs are setting up a complex off-book structure to use their own stock to underwrite a hedge to lock in ... the post-IPO gains on a $10 million startup stake?

Enron was truly the Wile E. Coyote of finance

And naturally this also leads directly to Enron getting grifted out of $20m BY ITS OWN CFO.