Enron's Financial Fiasco Fire - Episode 71

In today's episode, Ed takes us down memory lane to one of the biggest business fraud cases of the 20th century. 

Enron was a company that was the product of two major gas businesses that merged together with a vision to change how the world viewed work culture and how to make money with wild result. 

For much of much of the 90s, Enron was the future of corporate mentality and high morale among employees with tons of opportunity and even more prospects of striking it rich in the world of negotiating deals between natural gas sellers and buyers. As the years went by, Enron continuously dropped earnings reports that showed nothing but success, year over year growth, and a cash flow that would never end. As a result, Enron got rich, its executives got rich, investors got even richer, banks were happy to lend Enron money, and its employees were excited in what they sold. 

There was one catch though... 

...No one knew exactly how Enron was making any money! And that was done by design. 

As you'll see in this episode, Enron's CEO Ken Lay, and his two conspirators Jeff Skilling and Andrew Fastow, quickly turned an honest company of limited (but honest and stable) growth to a company on a meteoric trajectory unlike anything else in American history. However, it was done by bending the rules, flagrant fraud, hiding figures, and implicating CPA firms in piles of shredded documents. 

All of us have made some financial blunders in our time, but few in humanity have successfully railroaded a billion dollar publicly traded company into the ground quick like Lay, Skilling, and Fastow did. In a few short months in 2001, These three men went from millionaires to Federally convicted felons. We may be stressing over a missed credit car payment, but at least we didn't cost the life savings, retirements, and careers of over 100,000 men and women who were oblivious to all the craziness that was taking place on the 50th floor of Enron's corporate headquarters in Houston, Texas. 

For pictures and show notes, check out The Day's Dumpster Fire website

Some other episodes Kara and Ed have put together that follows a similar "corporate greed and fraud" theme where business leaders prioritized money over literally EVERYTHING ELSE:

Therac-25 

Boston Molasses Flood

I Love the Smell of Lead

Thalidomide

Outro Music Credit:

https://www.youtube.com/watch?v=bdNYSTbPuL0&list=PLfP6i5T0-DkKlAN_qDvZ3nJwsdKRmrxI_&index=

Hey before you go! 

If have ideas for future episodes that you want Kara and Ed to look into, email them at thedaysdumpsterfire@gmail.com. They would love to hear from you!

You can also send them a text message by clicking on the link at the top. 

Be sure to head on over to www.thedaysdumpsterfire.com for the ever growing library of historical dumpster fires. 

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Transcript

SPEAKER_01 0:00

All right, Kara, I got a question for you. What's up? You go to a bank, you want to buy a house. Okay. Okay. So you want to buy a house. How how do you prove to the bank that you're worth the money that you're asking for to buy the house?

SPEAKER_05 0:18

Provide the paperwork, all the things, pay stubs, tax information, credit information, all the things.

SPEAKER_01 0:27

All the things.

SPEAKER_05 0:28

All the things.

SPEAKER_01 0:30

I like that. It's like, hey, I supplied all the things. So yeah, basically, when you go to a bank, right, and you need to pull out X hundreds of thousands of dollars or whatever, you've got to be able to prove to the bank that, okay, I need to borrow this money, this money, this much money from you, and then I will have it paid back, you know, like 30 years or whatever. That's usually your typical home loan is about 30 years. So you're gonna be like, yeah, okay, I need to borrow this much money for a 30-year loan, and then after 30 years, it'll be paid back with interest. Now, could you go to a bank today and be like, okay, I want to go buy this six million dollar house, so I need about six million dollars in in loans. What do you think the bank's gonna say?

SPEAKER_05 1:26

They'd probably laugh me out of the room. Yeah. To be honest, I'm not that bold, so it wouldn't even occur to me to do that.

SPEAKER_01 1:36

Because obviously you or I were not worth six million dollars. No, I don't I I mean, uh maybe you have that kind of cash floating around, but I certainly don't. I don't, I don't even have a measurable percentage of that. Yeah, now what happened? What do you think? Like, how how would you feel that if you went into the bank and you're like, okay, I don't have the money right now, but in 15 years I'll be worth like double that. Would the bank still tell you to just piss off?

SPEAKER_05 2:05

I would imagine so. I would hope so. I would hope so. Just knowing what happened, the crash of 29 and all the floating money that did not exist. I would hope so.

SPEAKER_01 2:17

Well, even the crash of 2008, that was kind of the a symbol. But yeah, imagine going to a bank, you know, like, I hope this works, and you say I need to take out this much money because you know, in 15, 20 years I'll be worth it. And the bank says yes.

SPEAKER_05 2:39

I mean, I I would not want to take on that loan. That sounds really scary.

SPEAKER_01 2:44

Yeah, that something just doesn't sit right. And so, like, that is what today's episode is gonna be about is accounting fraud.

SPEAKER_02 2:53

Woo.

SPEAKER_01 3:06

Hello, welcome to the day of Sumpster Fire, where we don't celebrate humanity's successes, but it's the most fantastic failures. Simple little podcast that we look at all the times in human history where we try to map things out as a species, and then we implement that plan, and then five minutes later, everything just blows up in their faces, and we get to look at the lessons from other dumpster fires in the past so we don't have to repeat them ourselves. Although, what's strange is that I'm kind of discovering is that we still end up making our own dumpster fires regardless. So, yay, job security. So I'm your host, Ed. With me, as always, is Kara. Hello, hello, hello. Kara, how excited are you for today's episode of All About Accounting Fraud?

SPEAKER_05 3:55

I'm really hoping that you can turn my opinion around because you told me what we were talking about, and I was like, oh.

SPEAKER_00 4:04

Yeah.

SPEAKER_05 4:07

Okay, but that's just because mine's not ready yet.

SPEAKER_01 4:14

Especially like your your time period of the medieval times, it's like there's not a lot of really accounting fraud. Actually, I think accounting fraud took place more rampantly, but there was no documentation. There was very few ways that you could actually prove it.

SPEAKER_05 4:29

Well, when you're dealing with the economics of a government run by a king in a monarchy as opposed to a capitalistic democracy, there are some differences.

SPEAKER_01 4:39

Not to mention, too, like there's nothing documented in terms of like that's there are lots of things documented by the crown.

SPEAKER_05 4:48

That's how we know how much debt King Louis was in when the revolution started, and so on and so forth.

SPEAKER_00 4:54

Yes, but it's nothing like it was today.

SPEAKER_05 4:58

There's no the technology was nowhere near what it is today, so that's not really a fair comparison.

SPEAKER_01 5:07

Well, I did I just feel like back then people were able to capitalize on more fraudulent activity because it was harder. I mean, go back to the 1800s. I mean, look at um Vanderbilt, he won a very expensive track of railroad that he had no idea was worth this much money, and that was only because two of his employees were in the basement printing up more and more shares of this particular stock. And as Vanderbilt kept increasing, you know, the uh the auction on it, like okay, another hundred thousand, another hundred thousand, another hundred thousand, all because these guys were just printing at more and more shares. Oh, the Gilded Age, we love it. Yeah, so like there's all sorts of shady stuff like that that could go down like that. And and in the case of like today, where we are going to be talking about the whole Enron fiasco of the 90s and early 2000s, you'd be thinking that with the amount of checks and balances that we have in place, with the amount of technology and securities and commissions and bureaus and you know, all that stuff, you'd be thinking that would there even be a chance for like large-scale business fraud to take place? And it turns out, yeah, yeah, it can it can still happen. In fact, this Enron thing that we're getting into today um turned out to be the largest bankruptcy in American history, largest bankruptcy or largest fraud incident. That too.

SPEAKER_05 6:45

Got it.

SPEAKER_01 6:46

But I go, but it's really like depending on what your how you want to look at it, from a legal perspective, yeah, it was uh one of the largest, if not the largest, fraud cases in American history. But in terms of the the billionage, I guess you could say uh the billions of dollars that were lost and the hundred plus thousand people that were affected by this, yeah, it it I think the only way I can really describe it is this a lot of my episodes, we uh we take a an incident, we look at all the events that took place, that was like the field of the dumpster fire. So we know what the dumpster fire is and how it's burning and everything like that. And then we kind of like, or at least I do, I try to pick apart, like maybe there's a perspective of this that's not commonly known. So, like our uh like our flixboro episode, uh, which I think that was the last one we did, right? Yeah. Uh I I went down the path of like, yeah, sure, tank number five and the repair was asking to explode, but the real dumpster fire started because of the coal mining strikes, and they had to basically run a schedule on who could use electricity when, which forced the plant to have to run harder than normal and all that stuff, which then resulted in a lot of problems. This case is a little different in that, like you're just walking along minding your own business, and you look over to your left, and there is a dumpster that is just roaring away, and you're like, Wow, that's interesting. I wonder how that started. So I'm kind of breaking out from my normal pattern a little bit. Um, this one, you're going to be able to pick up real fast where the dumpster fire is gonna start. Like the Enron case is one of those things when you look back at it, you're like, How did this even go on for this long? Because literally everything was shady. And thankfully, I I like this topic because I know your stance on people making stupid amounts of money doing absolutely nothing at the expense of other people making very little money and busting their butts.

SPEAKER_05 8:55

Exploitation?

SPEAKER_01 8:56

Yeah, yeah. Yeah, that's probably the most accurate way of putting it that people being exploited and like really you you ran this company into the ground and you still walk away with like 220 million dollars after you run that in the ground. Meanwhile, you could have been an employee for that company and you could have made a$5,000 mistake and you're fired. So, like, this episode should absolutely infuriate you guys. So, and it really should infuriate Kara. So, hopefully, we'll see Kara actually throw a temperatantrum for the first time in her life.

SPEAKER_05 9:32

Nah.

SPEAKER_01 9:35

I think what you'll do, like typically when you get upset, you just get more and more quiet.

SPEAKER_05 9:39

It's true. Yeah, if I'm stupid quiet by the end of this episode, that's probably why.

SPEAKER_00 9:45

It's because you're fuming.

SPEAKER_05 9:46

It's because I'm fuming and I'm trying to figure out how to not say something stupid.

SPEAKER_01 9:54

And that's Rom the opposite. Well, like when I get upset, I I I just unload. So let's get into this. Part one the early days of promise. So believe it or not, and Ron started out kind of okay. Like it was like any other company. Uh, it was essentially birthed. I hate that word. Birthed. My mom would always say that. I birthed you. No, you didn't. I was a C-section. I was yanked out. I was I was ripped out of you. I wasn't birthed. Anyways, semantics. Uh it was birthed in 1985 when natural gas giants, Houston Natural Gas, and Inter North merged into one company. So and I and it's I I I just have fun saying gas giants because I'm thinking of like two really fat, like farty dudes.

SPEAKER_05 10:53

Oh. I thought of planets.

SPEAKER_01 10:55

I thought of planets too. So imagine like Saturn and Jupiter coming together to make make supiter.

SPEAKER_05 11:02

I like Supiter. That's good.

SPEAKER_01 11:05

Or or Sapeter.

SPEAKER_05 11:07

I just I just thought of a giant soup bowl with a ring around it.

SPEAKER_01 11:11

Yeah, yeah. A cup of noodles. Yeah. Uh when they merged, it didn't have that super famous name of Enron. So like I didn't even know what they were called prior to the merge. Like Houston Natural Gas and Inner North Company. I I don't know. But for like the first year, it it wasn't called Enron. Uh, the original CEO was voted out, and then a guy that we're gonna hear a lot about, and he's probably one of the most famous businessmen for all the wrong reasons in 1990 and early 2000, Kenneth Leigh was voted in. Uh, I'm not too sure how much Lay had influenced the overall ousting of the first CEO, but I do know that Leigh helped orchestrate the merger of HNG and InnerNorth. So he was like on the board of directors or whatever, and he did kind of like pull the strings to make this merger happen. And you know, a merge like in today's day and age, companies merging is a really, really kind of a tricky thing. It has to be approved by the federal government. They've got to audit a lot of stuff because they want to make sure that they don't own too much of the market. So Ley had a lot of friends in with like politicians, like he was actually really, really, really good friends with George W. Bush, which would pay off later on. So, like Lei, he yeah, he he had his ins with a lot of political people. As soon as Ley took office, he immediately dumped$100,000 into focus groups and consultants who put together the name Enteron to represent the new company. Now, when I first saw Interon, I did kind of chuckle to myself because uh the the board was like, Yeah, interon's fine, but I think we need to workshop this a little more. We need to like uh maybe not use this name because interon is the medical word for intestines. Perfect. Now, for me it makes sense, it is a natural gas company.

SPEAKER_05 13:20

That makes a lot of sense, yeah. Ah, I like it. Yeah, it's like basically naming your company fart, yeah.

SPEAKER_01 13:30

Which that I think that'd be a great name. Like if I had my own like natural gas company and I called it the Fart Factory, I think we I think it would do okay. Yeah, I think you'd make some decent money doing that, or or have like a Facebook game like Fartville. So, like obviously the board couldn't get around naming their company the Prol for uh Pearl Medical Form of Intestines, but eventually the name Enron was agreed upon, and that is what history would remember as one of the greatest financial dumpster fires of all time. So everything was going smoothly from 1985. Let's get into the 90s where the real action took place. Uh, the federal government passed the deregulation of natural gas sales nationwide. Now, this is a big deal because natural gas was used all the way from like the early 1900s, and the federal government got involved when I think it was probably because they looked at like the Rockefellers and the Carnegies and the Morgans and how they had these monopolies on these core industries that everybody had to, you know, be a part of to some extent. Um, the federal government, uh especially after Teddy Roosevelt, was real big on breaking that that kind of stuff up. And so, like, to deregulate natural gas means that now who's ever dealing with natural gas can now do things with the pricing as they saw fit. So, according to the low-income home energy assistance program or LIHEAP, uh stated they that deregulation of natural gas was done to eliminate monopolies or introduce competition, lower prices, and address supply shortages. It also can induce monopolies, reduce competition, raise prices, and cause more supply shortages. As we'll see here, uh, I think it's either in part four or five. Okay, I couldn't find too much background of the discussion to deregulate natural gas or who the lobbyists were, but it wouldn't have surprised me if it was Leigh and Enron were the ones that really fostered the idea because everything hinged on it, like their entire business model going forward in the 90s and 2000s was going to hinge upon deregulating natural gas. So, on the surface, this regul the this deregulation of natural gas would be a huge problem for a company like Enron. However, it was the exact opposite before deregulation enlarged could essentially move into a market with natural gas needs and set up a monopoly and sell to customers. However, with the deregulation and now competition can be more and more prominent, any company could move into a market and start competing with each other to sell natural gas at a lower price. So that means now that you've got natural gas, you've got a lot more people that want to provide it, and you've got more buyers that want a cheaper price.

SPEAKER_05 16:41

Okay.

SPEAKER_01 16:41

And this is where Enron comes in. This is this is actually like this is still like in the books. This is still legal. I don't think this is super sketchy too much. Um, and I think things were kind of going okay until uh Lay brought in Jeffrey Skilling, who was originally a part of one of those consultant firms that came in to help name the company Intestines Natural Gas or whatever it was. But Jeff Skilling, we're going to hear a lot about him. He's the uh he's part of the triumvirant of corruption that goes down in this this whole Enron thing. So we'll get to the third guy here shortly. But Skilling had a brilliant idea. He's like, instead of competing with other natural gas companies to generate lower and lower prices, which also comes with lower margins, why not just do what the federal government did during regulation times and work with the other companies to establish a fixed rate contracts for natural gas? So, in other words, like when natural gas was being regulated, that meant the federal government was coming in and kind of setting the price, right? The price is what the companies had to sell it for, and the prices were set in a way that people could afford it. Okay. Yeah. Very um, very FDR. FDR was real big on that kind of stuff. Like, hey, let's have a national interest rate, right? The national interest rate will help banks make money without gouging anybody. And the consumer can also rely on that that interest rate of what they can see back if they invest or what they're gonna have to pay back when they borrow money, right? So I I don't know if FDR was the one that kind of helped with the regulation of natural gas, but it wouldn't surprise me if he did. That was kind of the stuff he employed.

SPEAKER_05 18:42

It probably would have been part of the New Deal, and then by the time you get to like the maybe the 50s or 60s, it was probably readjusted, redone, and then eventually dismantled by the time we get to 2001, 2000, whatever.

SPEAKER_01 19:00

Oh, more like 1990.

SPEAKER_05 19:01

Yeah, that's the year. Yeah, that's where we're at.

SPEAKER_01 19:04

Yeah, well, yeah, because everything was vastly different by 2001.

SPEAKER_05 19:09

Yeah.

SPEAKER_01 19:09

As as we will see, but yeah, we're in the 90s.

SPEAKER_05 19:12

I I whenever I think of this incident, I think of like when it collapsed in 2001. Yeah. So that's why my brain thought that.

SPEAKER_01 19:18

Yeah, I was graduating high school. So that's why like I remember eight.

unknown 19:23

Wow.

SPEAKER_01 19:25

I forgot you're a you're a young one. Yeah. Actually, you're only 10 years younger than me. That's not too great. Although it is kind of weird when I'm at work and I'm working with all these 20-year-olds and they're like moving these giant boxes of hardware around like it's nothing, and then I bend over to pick up a washer off the ground and blow out my back. Yeah.

SPEAKER_00 19:48

I'm like, I am seriously one of the oldest people in the warehouse. I'm like the grandpa in there. Oh god.

SPEAKER_01 19:57

But yeah, ever since I started this new job, I've my back has been in a chronic state of like, what are you doing to me? Builds character. But, anyways, um, yeah, it definitely does sound like an FDR thing. And don't forget, in the 80s, uh, we we came from the Reagan era, and you know, I'm not going to get dive into the politics, but typically uh conservative wants less regulation, they want less government involvement, whereas the liberal side they wants more government involvement. That's like the real basic idea behind it. Um, I'm not saying which one's better or worse or whatever. I I think both sides have their valid claims, and to an extreme, both sides can be really, really crazy. So just don't be crazy and you'll be fine. So, yeah, as we coming out of the Reagan era going into the 90s, it would make sense that that you know natural gas would be deregulated. And this is where just Jeffrey Skilling guy had a brilliant idea. It's like, okay, before the federal government was the one that was regulating regulating, managing all that.

SPEAKER_03 21:08

There you go.

SPEAKER_01 21:10

Words are hard at 10:30 at night. It's true. What he came up with is like, let us do the role of the federal government. We can work with the the natural gas companies, and then we we can help them find customers like power plants and whatever. And then we can go to the power plants and work with them on the best suppliers. So, like Enron would be the middleman. Enron would be the ones that would drop the contracts between supplier and consumer. In other words, your natural gas company could go to Enron to have them drop a contract and a market between your company and the buyers at a fixed rate, and as a result, stabilize the prices for a long time. This would be done at a substantial fee, of course, right? So customers, so this is the customer that Enron brilliantly put themselves in front of was the supplier and the buyers, and both of them would pay Enron for their services to lock in rates and sell, if that makes sense. So it's it's actually a really clever idea because that makes it so that your company is absolutely like critical for everything working, and then you can start bringing on account managers, you can start bringing on people that their best interest lies in like, okay, I really, really want to lock in this deal with this supplier because I have all these buyers, and both of them are going to pay me a grip of money to make them meet up and so they can make money off each other. I guess the the main thing that Enron was trying to set itself up for is that it there's a lot of stability here, right? There'll be some times where there'd be super high profit margins, there'd be other times where there'd be low profit margins, but no matter what, the buyers and the sellers needed somebody in the middle to kind of like negotiate everything into contracts. That's the key, is a long-standing contract that locks in everything that makes everybody feel better about well, everything. The nice thing about a contract is that it's predictable, you know what you're gonna be paying each time, kind of like a salary, right? People, some people prefer to be on a salary because you know what your paycheck is gonna look like every time.

SPEAKER_03 23:35

Yeah.

SPEAKER_01 23:36

But then other times you have people that you prefer hourly because you stand the chance to make more money, right? Or a lot less money. So it really just depends on where your priorities lie. Under Skilling's leadership, it wasn't long before Enron absolutely dominated the natural gas contract market with tens of billions of dollars in revenue. Not bad. Uh actually, I like I think that's fair. I, you know, he is supplying an actual service that needed to be done that keeps other, you know, natural gas providers from price gouging and doing all sorts of shady stuff like that. Who would have thought, though, that it would be Enron that would end up doing all the shady stuff? So uh Skilling also did more than just bring in billions of dollars. He really changed the culture of the company. Uh, he sent recruiters to MBA programs across the country to cherry pick aspiring candidates. Uh so like, yeah, uh Masters of Business Administration. Uh, he sent them out to like Harvard and Stanford and yeah, uh ASU and all these other colleges. And basically these recruiters were like, okay, who's got the highest GPA? Oh, well, these five people, cool. We'll take them. He they're kind of cherry-picking, really, really good candidates for this program. The the real uh, I don't know what, go-getters, I guess you could say. Um, it wasn't long before the quiet corporate environment would give way to like a rut uh ruckus shouting matches, account managers fighting account managers, and the good old-fashioned chicanery to win the most amount of money. So you would have account managers kind of like borderline sabotaging each other. I was reading uh company reviews from people in the 90s or late 90s or late 2000s, and they were like, Yeah, it's a really good company to work for, but you gotta be very cutthroat. You um you may know like your best friend may be working on a contract that will hinder the sales of the contract that you're working on. And so, like, yeah, you would kind of have to like stab each other in the back. It it became very competitive in that regard, which some people thrive in that. And the 90s was real big on that, in terms of like the stock market was real big in that approach, even trucking was real big on that. Like, I I know um I know a lot of people that worked in the trucking industry at that time, and again, it was it was like even though you're in the same company, same team, you are often fighting other people, your peers. I don't know, man. Like to me, that just seems really stressful.

SPEAKER_05 26:20

It sounds really stressful, and it reminds me of the pop culture backlash you see in the 90s. So you have movies like The Matrix, American Beauty, where you have the guy with a job that pays him well, but he's still not happy.

SPEAKER_03 26:35

Yeah.

SPEAKER_05 26:36

Um, and obviously there's more underlying societal things that feed into that, but I think part of it is these men who go to work and they're not happy at work because it's so stressful and cutthroat like that. I could see that feeding into it.

SPEAKER_01 26:50

Yeah, and and even Skilling in in the 90s, he's like he had this manosphere of only thing that a man wants is money. And so, like, that's what he thought drove everybody, right? Money does buy happiness, and the harder you work, the longer hours you put in, the more money you have. And it it really has become evident that no, it doesn't quite work like that. And and that that's something that they even discovered after COVID when or during COVID when people were working from home. People were like, I would rather make less money and work from home and actually have a work-life balance, you know. And then once that started taking over, that's when that we saw the uh what was it, the quiet quitting and the great resignation where people start going to other companies. But then it wasn't long before, like, whoa, whoa, wait, we like corporations didn't want their employees to be holding too many cards, so that's when they started doing a whole like mandatory back in the office thing. And even though a lot of these companies had the ability to have employees work from home, they made way more money, and they made a grip of more money because they didn't have to worry about like office buildings and all that kind of stuff. But they're like, wait a second, we're losing control of our employees because suddenly they want a work-life balance. Well, we can't have that. We gotta keep them hungry, we gotta keep them working, we gotta keep that hustle factor up, and so that they're chasing the dollar, and in return, the executives are making their millions. So I see you nodding your head like uh-huh. Yep. So it it yeah, it's that that whole hustle culture that I think a lot of people discovered really doesn't pay off.

SPEAKER_05 28:46

Yeah.

SPEAKER_01 28:47

And I don't know, I saw too many times where people literally did nothing and they moved up the ladder, but then you would have somebody that would put in like 60 hour work weeks, go nowhere.

SPEAKER_05 28:57

I feel like that's most people who put in 60 hour work weeks and don't go anywhere.

SPEAKER_01 29:01

Yeah.

SPEAKER_05 29:01

And it doesn't make that much of a difference.

SPEAKER_01 29:03

No, it doesn't.

SPEAKER_05 29:04

And then even if it does, even if you're making a grip of money and you're working 60 hours, what is it for? You're just at work all the time.

SPEAKER_00 29:11

Yeah.

SPEAKER_05 29:12

You go to sleep in a nice house, drive a nice car for five minutes to go to work.

SPEAKER_01 29:19

Or you drive for like three hours every day to get to work.

SPEAKER_05 29:23

On the phone, probably in a meeting.

SPEAKER_01 29:25

Yeah.

SPEAKER_05 29:26

Uh it just sounds awful.

SPEAKER_01 29:27

Yeah, and that's the thing, is like uh people have discovered that's not really the best way to live. And so, yeah, that like that's another dumpster fire unto itself, but it it really does kind of stem from the 90s here, and it's and it extends from this uh misunderstanding, or I I think it was more like a manipulation of the American dream or the work ethic, where hey, you work hard, you will be successful, but then I feel like massive, massive corporations and companies have taken that and like, hey, yeah, if you work hard, you'll be successful and that you get to keep your job. And so, like, they've they've determined that oh, yeah, success is you being able to go to work the next day. So instead of putting in that extra time to make a lot more extra money, it's more like you put in the job, you put in the time, have that expectation that you get to come to work tomorrow.

SPEAKER_05 30:24

Yay. Sounds a lot like what caused the labor strikes in the 30s, doesn't it?

SPEAKER_01 30:28

Uh a little bit, yeah. Yeah, it's uh yeah, it's uh it's almost like history is repeating itself.

SPEAKER_05 30:38

History doesn't repeat itself, but it's fine.

SPEAKER_01 30:40

It doesn't, then what's it doing? Because it certainly feels like it.

SPEAKER_05 30:44

I know. There are patterns, but it doesn't repeat itself.

SPEAKER_01 30:46

Well, I guess you have to define what is repeating.

SPEAKER_05 30:49

Yeah. For me, if you're saying it's repeating itself, it's just the exact same thing, but it's not the exact same thing. There are different causes, there are different contingencies, there are different people, cultures different. But there are yeah, yeah.

SPEAKER_01 31:01

Like for example, like slavery today does not look like slavery in the 1860s America.

SPEAKER_05 31:07

Right. It looks different, but it's still there.

SPEAKER_01 31:08

Yeah. And I think the person who said that wa Winston Churchill, I think that's what he kind of meant was a very loose interpretation of repeating itself, like, hey, if we're not careful, we will have another mass murdering dictator psychopath that will try to eliminate a huge portion of the human race.

SPEAKER_05 31:29

Right. Right. There is learning from the past and not making mistakes from it, but it's not going to look exactly the same. That's why you have to watch for patterns. Sorry. That's a tangent.

SPEAKER_01 31:41

Sorry. So, in other words, it's almost like history is forming a pattern.

SPEAKER_05 31:47

It's almost like we didn't learn.

SPEAKER_01 31:49

Yeah.

SPEAKER_05 31:50

It's almost like we didn't pay attention.

SPEAKER_01 31:51

But what's the one word that is synonymous with a pattern?

SPEAKER_05 31:55

What?

SPEAKER_01 31:56

A pattern must repeat.

SPEAKER_05 32:00

Yes. But not wholly. It doesn't look exactly the same.

SPEAKER_01 32:07

Yeah, if you look at it from a binary mathematical approach, yeah, it it would be identical. Otherwise, it wouldn't be mathematical. But we are seeing elements today that are very similar to that of the 1930s. Yes. So um one such character who really did rise from the ranks was uh our third person in this triumvirant of craziness is Andrew Fastou. And he just flew through, like he was like the golden child. And like, yeah, eventually he became the CFO. Whereas like Skilling would be the uh chief operating officer, and then Leigh was the CEO. And it gets really blurry who had what job responsibilities. I still don't understand the difference between a COO and a CEO. I I don't know. I I I've never been at that level before, so I have no idea who does what. Um, they probably don't even know, but that's just me.

SPEAKER_05 33:07

It's titles.

SPEAKER_01 33:09

Yeah. So at the helm of all this growth was Kenneth Lay. Reporting to him was Jeffrey Skilling, who oversaw the building of the wild trading operation uh that we know as Enron. And Andrew Fastau oversaw the investment strategies, he's the one that handled a lot of the accounting stuff, and he did a lot of this stuff through really complicated means. In fact, it gets to the point where like Skilling was asked, like, so how does Enron make money? And he's like, I don't know. I'm not an accountant, let me bring in the accounting team. And then the accounting team comes in, they're like, We're not exactly sure either. So we don't care what you say about us, just don't make us look bad. Nice, and to a reporter is like, uh, okay, I guess. So part two doing things differently. And I kinda yeah, I kind of see where Enron is is coming from here. I I got some clips from some promotional stuff of how Enron really promoted itself in terms of thinking differently, doing differently. Uh, they had a uh different culture and all that stuff. So let me play the first one here. It's the Enron promotion.

SPEAKER_07 34:31

It starts with good people. Recruiting, retaining, motivating, creative people, intelligent people. Really have the capability of thinking about the world a little differently.

SPEAKER_06 34:42

And if you have good people, if you have that good environment, they start coming up with good ideas and work in the markets. In the old days we used to be working, design is mechanism. You would exist here, you changed the wheelchair, everybody knew exactly what the change was. It's increasingly hard to reach a company. The newest ways of thinking of these things.

SPEAKER_07 35:45

And also from uh your employees that are are more remote from headquarters. Yeah, I'm not sure what that says about headquarters necessarily.

SPEAKER_06 35:52

And we found that the uh quality of ideas is is proportional to the distance from the 50th floor.

SPEAKER_01 35:59

So yeah, it they that was lay and um and skilling there, and they they kind of bring up some stuff that you probably have heard of today, right? Like we want to foster employees to have their own book of business. We want them to like take ownership and think differently and treat it as though it's their own, like their own business. And I don't know about you, but that's kind of how like our when we were working in trucking, that was very much the mindset is like this is your business, this is your your own little piece of the company that we're trusting you with. And when we go back to like uh, you know, Dale Carnegie, um, you know, uh he wrote the book, um, was it um yeah, how to make friends, which is a very influential book and in terms of like social development, people want to feel like they're important, they want that more than money, they want that more than anything else at a job. It's like they want to feel like they serve a purpose. And Enron was real big on that. I think they did a pretty good job making everybody uh feel that way. And yes, your paycheck shows Enron on it, but how much you make is how much you put into it. So I got another clip here. I affectionately call this one the Enron Brainwashed Chick. Okay, it's a part of the same schmaltzy corporate, like you heard the music in the last clip. It was such 90s so good elevator music.

SPEAKER_05 37:35

Yeah, love it.

SPEAKER_01 37:36

Yeah, guys, just so you know, the outro music for today's episode is gonna be 90s elevator music.

SPEAKER_05 37:43

Amazing.

SPEAKER_01 37:44

Yes, I like it. So let's let's listen to this lady.

SPEAKER_08 37:50

Biggie stuffing.

SPEAKER_00 38:20

Look at your face, Karen. It's just like you poor, poor thing.

SPEAKER_04 38:24

The music is what gets me. I love it. I love the music.

SPEAKER_00 38:31

Oh yeah.

SPEAKER_01 38:31

It's just like it kind of brings back memories of like the weather channel.

SPEAKER_04 38:36

Yeah.

SPEAKER_01 38:37

Today's high, 90 degrees. And it's just on loop. Yeah.

SPEAKER_02 38:45

It's wonderful.

SPEAKER_01 38:46

But yeah, like the you could find this, the the full like it's like a 10-minute video, uh, like a promotional thing. And it is, it is like such brainwashed employees. But like this kind of gives you an insight though, in the way of thinking. Like, employees really did like it there, uh, especially if you didn't have if you weren't the like one of the uh uh folks where you had to like stab your best friend in the back for his business, kind of a thing. But they employed a hundred thousand people, and they had jobs everywhere from working in gas natural gas production to power plants to you know 50th floor of their corporate office. That like there was a job for everybody there, and the idea is that you work for yourself. So if you were like the entrepreneur, or if you weren't like the entrepreneur type, that's okay, right? If you didn't want to be a sales executive or whatever, but you like to solve problems, that's fine. Enron's got you covered, like they've got jobs there for people that are more introverted, and you know, they they'd rather work behind the scenes. So, like the the culture was very different. The culture there at Enron. I honestly, if I went to school or I got out of school and I needed a job, I I probably would apply at Enron, not knowing what I know now, of course. And if Enron kind of stayed the course and be more on the up and up on things, it it would have been a company that you could put in 25, 30 years, get your gold watch and a pension and retire. Because it was so big, and and skilling actually did a great job making it so big and diversified that like you could anybody could work there at any position, but with that comes like a lot of complexities. So, yeah, I'm not gonna lie. I I I I would put in a resume there to see what happens. However, I would have probably quit once I got tired of that music that would be playing at all times.

SPEAKER_05 40:58

I don't know, I use it as my hold music on my phone.

SPEAKER_01 41:02

Hold music and then you go to lunch.

SPEAKER_05 41:04

Yes, just let it play.

SPEAKER_01 41:06

Enron would be considered one of the most profitable and innovative companies in America. Fortune magazine gave it the most uh innovative company award six consecutive years. Um, Fortune's most admired companies, so they won an award for that. Uh, consistently ranked among the top companies for quality of management, quality of product services, and employee talent. Uh the Horatio Alger Award went to CEO Ken Lay in 1998. Uh, there's a chairman's award of 1999, uh International Employee Driven Program Highlighting Excellence. Uh, Financial Times Energy Company of the Year. Cool. I feel that it's very specific. Um, and then OPIC support between 1993 and 2000, Enron secured over 2.2 billion dollars in loans and insurance from uh the overseas private investment corporation for overseas projects, indicating high confidence from US agencies according to the Texas State Historical Association. That is the most businessy uh award uh anybody could get.

SPEAKER_05 42:26

That is very corporate.

SPEAKER_01 42:28

Yeah. Again, this kind of reminds me of that episode of Spongebob where everybody was just saying business, business, business, business, business, and they go from like one room to the next room, and all they say is business, business, business, business.

SPEAKER_05 42:42

It's kind of how I feel sometimes. Yeah. Reading stuff like this.

SPEAKER_01 42:46

Yeah, it it is beyond like I won an award and I have no idea what it means.

SPEAKER_05 42:53

I don't know why I won it, but it's here on my desk.

SPEAKER_01 42:57

Yeah, uh, it's that shiny little statue thingy over there. Cool. The 90s saw the rise of a multifaceted company that I generally feel wanted to do things differently. Like, I kind of believe that to the employees that the public Enron was on a trajectory to change how the white-collar working scene looked and behaved. Employee reviews weren't the only measure of uh Enron's success. From the early 1990s to 2000, Enron's annual revenue grew from 10 billion to 100.8 billion.

SPEAKER_05 43:33

Good lord. That's crazy.

SPEAKER_01 43:35

Yeah, that is an annual growth rate of 65% a year. Uh even to this day, very few companies have ever achieved that type of growth. And that's not including the nineteen ninety seven to like two thousand. That was the period of the most amount of growth, uh, like from all the years combined.

SPEAKER_05 43:58

And we still don't know.

SPEAKER_01 43:59

Sorry. What's up?

SPEAKER_05 44:00

We still don't know where this money's coming from, right? Is that still in question?

SPEAKER_01 44:04

Oh, yeah, yeah. You know what they're selling.

SPEAKER_05 44:06

Air.

SPEAKER_01 44:08

That's the thing. Is you're bringing up a valid question. You're like, this is amazing, but what are you doing? Like, where where is this coming from? And Skilling really kind of he diversified a lot. Like he branched out. So Enron wasn't just doing um brokering deals between natural gas providers and buyers, um, or yeah, producers and buyers. Uh, he started breaking into all sorts of different industries, but we still don't know what they did. And and we'll we'll get into that here in a few minutes. So, stock prices in the early 90s went from$7 a share to$90.75 a share by 2000. That means in the early 90s, if you invested$10,000 in Enron or$25,$25,000 by today's value, that would net you$1,429 shares. If you sat on those shares and sold them by the year 2000, and and by the year 2000, you'd want to sell those things given what happened in 2001. Uh, like you'd want to ditch these things as fast as possible, then you would have$192,642. So in 10 years, you would have gone from ten thousand dollars to basically$130,000. That's a pretty good return, or$245,000 by today's value.

SPEAKER_05 45:41

Can I share a little fun fact?

SPEAKER_01 45:42

What's up?

SPEAKER_05 45:43

Sorry, I keep interrupting you.

SPEAKER_01 45:45

No, no, you're good. But what were you saying?

SPEAKER_05 45:46

Uh, can I share a little fun fact?

SPEAKER_01 45:48

Yeah.

SPEAKER_05 45:49

There is a Simpsons episode where Marge and Homer were buying stocks, and Marge got Microsoft and Homer got Enron stocks.

unknown 45:57

No.

SPEAKER_05 45:58

And I I think it crashed on him.

SPEAKER_01 46:04

Yeah, yeah, there was there was a lot of that. Like, you know, investing in like Apple when they first came out in like 1980. Oh my gosh. You know, and I and I think I covered that a little bit here later on. Um, but yeah, then Ron, if you if you invested in your dividends every year, then by from 1990 to the year 2000, you would be worth like nearly a million dollars. Yes, not bad for 10 years of work. And could you see while like people had worked here for 20 years? Like would be like, yeah, my retirement is going to be very nice because of this. Enron was going places and it was still a very young company. That shouldn't be any reason why Enron couldn't be the greatest company that ever existed to do many, many biggly things. To be honest, it would have it wouldn't have surprised me if extraterrestrial visitors or extraterrestrial visits rose in the 90s so they could get a piece of the Enron action. It would not have surprised me if aliens were coming here just to buy Enron stock. Maybe that's where it all went wrong. Um because now we have extraplanetary shares. Yeah, you're with me on this. Okay. So last little like, what could possibly go wrong? Like this this sounds like this is perfect. I don't know. No, yeah, yeah. What could possibly go wrong? Well, now we enter part three. How was this even approved? It is a well-established that Enron was a very progressive company, and I do think they were genuine about their approach. And when it came to like hiring people, training and stuff like that, I do feel like they really did want to hire people that thought differently and all that other fun stuff. It's one of those things where the lower you are in the totem pool, the better the experience, it seems like. Like you really didn't want to be on the 50th floor. Like, if you were at the bottom level, like, dude, that's where all the fun's at. It is also well established that from 1990 to 2000, Enron was stupidly profitable with earnings and assets and the billions of dollars. But the question remains, how in the world didn't Enron become so profitable? Literally, what you just asked a few minutes ago. That's all I'm saying. Why was their stock selling like crazy with no end in sight in terms of when it would ever slow down? To get an idea of how Enron was making so much money in the 90s, let's take a quick and very quick look at stocks in terms of publicly traded companies. So if a company wants to make a ton of money really, really fast, they can basically put themselves up for sale, but instead of selling the entire company, they sell tiny little pieces of it. And each one of those little pieces is a share. And depending on the size of the company and how much money they make determines a lot of how many shares. But yeah, you like you can buy a percentage of a company, and the idea is that okay, I will give a company a thousand dollars that'll buy me 100 shares. Okay, so I'm buying each share for ten dollars a piece. If the company keeps earning its its like financial goals and its growth goals and all that stuff, it can promise like a 10% return. So each share could go up one dollar per share, and you multiply that by how many shares you bought, then you just made like$100, right? So the shares like you bought them for you know ten dollars a share, and you got a and you got a hundred of them, and then it goes up to eleven dollars a share. Now you've made an extra hundred dollars because you know, because it keeps compounding like that. So meanwhile, the company will take that money that you gave them to buy a little piece of it, they'll use that to expand, hire more people. Uh they invest it in their company so that they can produce bigger returns for their investors. That's what a publicly traded company does, is that it makes it open to the public. So the public can come in and buy pieces of it that generates millions and millions and millions of dollars of liquid cash that then the company could turn around, reinvest, and make more money. So uh perfect case in point, if you gave Microsoft$100,000 in the beginning, then put it by today, you would be worth hundreds of millions of dollars. Uh, so yeah, like you get in early and you buy a ton of stock when it first goes public and it it explodes like that. I mean, what is it? Um, isn't like Apple like worth$900 a share or something wild like that? Um, I don't know.

SPEAKER_05 51:01

I don't follow the stock market.

SPEAKER_01 51:02

Yeah, could you imagine if you'd bought, you know, a couple hundred shares uh back in 1980 when it was like 10 cents a share? Like, oh my god, the amount of money you would be worth.

SPEAKER_03 51:16

Yeah.

SPEAKER_01 51:17

And the taxes that you would have to pay would be would be nuts. Woo! Um, so like ultimately, who determines this this price? Like, who determines the value of a company in terms of how many shares they're going to start off with and how much money um they can sell those shares for? So there's a thing called an IPO or initial public offering, which is like a gigantic auditing business, and they look at a bunch of different things. They look at market demand, you know, how much interest is there in the market for whatever it is that you're providing as a company. Um, industry comparables. Are there other businesses in the market that are similar to the company in question to compare their stock prices to the IPO, right? So is there like a direct competitor to Enron that people could look at and be like, well, okay, this is how they're working. So this will give us an idea of how Enron's working and how much money they can make. Uh, growth potential. So, what are the company's financial growth goals for the future? Don't forget about this one. So, like, over time, how much the company is it going to be worth? And they can project that out. This is something where a company can really embellish their projections. Oh, yeah, I'll I'll be worth billions down the road. Don't worry about it. It's great. Everything's fine. Yeah, we're good. Uh, then the corporate narrative. So, what is a company offering that is new and cutting edge? For example, some 90s companies received billions of dollars in valuations and they haven't even sold anything yet. They literally had nothing, but their ideas for like internet commerce and whatnot were so revolutionary that people were like, heck yeah, I want a piece of that. Like, I'll give you money to start up your business, uh, even though you haven't made a single dollar yet. That's awesome. That's weird. You yeah, the my lovely audience. If you want to give Kara and I billions of dollars because our podcast is like none other, we won't stop you. In fact, I promise Kara will send you a drawing.

SPEAKER_05 53:27

Don't do it.

SPEAKER_01 53:29

Uh fine. Leave Kara out, send me the billion dollars.

SPEAKER_05 53:35

I was trying to be sarcastic, it's really hard over an audio.

SPEAKER_01 53:39

Like, and I will send you a picture. It will it'll be like a stick figure or something, but yes, it'll be your doggy.

SPEAKER_05 53:48

Just make a million copies of your dog.

SPEAKER_01 53:51

Yes, yeah, or have AI generate the image.

SPEAKER_05 53:55

No, let's not do that.

SPEAKER_01 53:58

So when a company goes public, it's a pretty big deal. It takes a long time for this IPO process to go through, and when it does go through, like it's front page news. Uh, for example, look at Steve Jobs before and after Apple went public. This is wild. Before December 12th, 1980, Jobs was worth about a million dollars. Not bad. That's like four million dollars by today's standards. Okay, after Apple won public, literally overnight, he was worth over 200 million dollars. Jeez, that is shy of eight hundred million dollars by today's standards. Overnight.

SPEAKER_05 54:37

That's crazy.

SPEAKER_01 54:38

In fact, jobs being the uh he was very Spartan, like he bought this super fancy house, but he had like no furniture in it. The only thing he had inside this massive house is a refrigerator, some vegetables in it. That was it. He he didn't know what to do with it, and he was always like that. He was he was always um I it's the same thing with like Bill Gates. Like, I think Bill Gates drove like a Toyota Corolla all the way up through like 2010, even though he was worth 60 billion dollars, he drove a Corolla, like yeah.

SPEAKER_05 55:13

A lot of the tech guys are like that. The richer they are, the more uh normal, I guess, they look.

SPEAKER_01 55:19

Yeah, or they're self-made, like uh Warren Buffett, he's kind of the same way, like you don't see him driving Ferraris and million-dollar cars. Now, is he driving maybe like a Mercedes? Yeah, but that's like a reasonable rich person car. Yeah, it's not flamboyant, he's not walking around gold chains and all this other crap. Uh Sam Walton was probably the worst. Uh, the founder of Walmart. He went on uh when he was worth billions, he went on a business trip with his board of directors and they stayed at a hotel. And his directors are like, This is like a a motel, what is it, motel seven, motel five? Six. In between motel six, they're like, Okay, so we all getting rooms at the motel six, and he's like, Oh no, no, no, we're sharing a room, like you do. So yeah, he had like one dude take the couch, uh Sam Walton slept on the floor. There was like three board members on the bed. It's like we are we are the most profitable retail chain in the world, and we don't can't even get a real hotel, and that was just how he was. He just didn't want to spend the money, I guess. Um, so yeah, the whole IPO thing, it it is it it's crazy. And to put a cherry on top, um, Steve Jobs only had about a 15% ownership of the stock at that time. If he held on to that 15% to this day, he would be worth over 600 billion dollars because I think Apple is worth like seven six or seven trillion dollars, which is unfathomable. I can't it's stupid money, I can't either yeah, it but it's also very fiscally sound and they're not gonna go to business, they keep a lot of that cash in case of hard times come about. So, like, cool, you know, but hey, let's let the Reagan economics was trickle down. Like, hey, if a company is worth this much money, that should be making its way down to even to the janitor, and I don't think it does because I think a janitor would be making$250,000 a year.

SPEAKER_05 57:36

If that trickled down percentage-wise, yeah, yeah, that doesn't happen that way.

SPEAKER_01 57:42

No, it doesn't, it typically stays at the top. Um, okay, so that's the initial evaluation, but stock prices change daily, even by the minute, and what goes into that? Well, company performance, so strong earnings reports, revenue growth, positive future outlook of growth. There's that future word again, by the way. Uh, economic indicators like interest rates, inflation, general economic health, uh, market sentiment. So that's investor psychology, fear, greed, and general market trends. Uh, you've got industry trends, so news affecting a special sector operating ratios, that's probably the biggest one. So, how much money is the company spending divided by a uh no, I'm sorry, how much money is the company making divided by how much it's spending? So the lower the OR, the better. So if a company has an OR of say 80%, that means for every um they are making, what is it, 80 cents to every 20 cents being spent, I think. Or is it the way other way around? They're making 20 cents on the dollar for every 80 that is spent. Whatever.

SPEAKER_05 58:56

You're asking the wrong person.

SPEAKER_01 58:58

Yeah, I'm I'm trying to remember it myself, but uh where it's like if a company is like 110 or that means they're they are for every dollar that they are earning, they are losing 10 cents to that dollar because it's now exceeded 100%, meaning they're losing money. Whereas if it's 80%, they're making money.

SPEAKER_05 59:22

Okay.

SPEAKER_01 59:23

Um, and I'm not sure really what makes it like go what goes into stock prices minute by minute, but I'm sure there's some logical or magical algorithm involved that you know it's the alien news stations, yeah. The yeah, the ticker tape and all that kind of stuff. I can only imagine what what it must have been like in the 20s where all this had to be calculated by hand, all the time. Yeah, and you would have people like that, would be their sole job is just to do the math minute by minute. Like, golly, that would suck.

SPEAKER_05 59:56

Ticker tape everywhere.

SPEAKER_01 59:58

What did Lay Skilling and Fast Out do to make so much money for Enron during this time? Um, with the stock market, as I explained it. Okay. One way for companies such as Enron to make money, in air quotes, is to take out loans to progress development. So to you and I, this sounds beyond sketchyslash backwards, but it's how a lot of businesses work today, right? A lot of businesses they take out loans regardless of how much money they're making, so that they would have that cash that they could dump in. This is how banks make money, and therefore, this is how we are able to take out loans to buy cars and houses and stuff like that. Um, so that that's one way. On top of um pressing shareholders to keep buying your stock, banks will throw money at you if they feel that you're a sure bet. So, like banks will come at you if you're if you're doing really, really good, the banks would be like, Here, do you want a hundred million dollars? And the cool thing about that is banks aren't buying percent ownership of a company, they're just giving it to you so that you can pay it back with like a percent interest over time, right? But at the end of the day, they're not making business decisions, right? If you are uh if you are a private shareholder of a company, like you can buy enough stock to end up on the board of directors, and now you can have absolutely no idea how that company works, but you've got so much money invested that you can now make business decisions for that company. Banks don't do that, they typically don't do that. So as long as you can post really, really good figures, investors and banks will throw money at you, you know, from many different avenues. So you've got people buying shares, right? So you're getting money from the public, and then you're also getting money from the banks. And hey, as long as long as everything looks good on paper, they'll still keep throwing money at you. And this so this is a weird way for Enron to make money. However, Enron set up an even stranger means of making money, and what's really crazy is that the SEC allowed it. In fact, it's still used today. Introduce mark-to-market accounting scheme. This is kind of what we're talking about at the beginning of the show. Say I want to borrow money from a bank so that I can use it to make another purchase that will improve our revenue stream. The bank is going to want some sort of assurances that their money will be returned sometime later with some sort of profit to it. I, of course, don't have that kind of money. Like, I don't have anything to show for it. I don't have uh, like, hey, I'm asking for$50 million, I don't have anything worth it. So instead of like waiting over time to grow my company slowly to show that I'm I am good for this loan. Let's say I went to the bank and be like, okay, um, I don't have the money now or the value of it now, but I assure you, in due time, or say 10-15 years or whatever, I will be worth this much. And then the bank is like, okay, cool. I'll give you the money. If you say you're gonna be worth this much, then I'll give you the money uh to get there. That is completely opposite of how we get a loan from a bank. When we get a loan from a bank, God, they want to know everything about us. They want to know every single job we've had, they want every single W-2. I bought my home with the help of some stocks that I inherited from a dead family member. And I had to supply a report going all the way back to like 1945 when they were originally purchased that showed how much they were worth then, how much they were when that relative died, and then how much did I inherit them for? How long did I keep them until I sold them? How much money did it make off of that? Like they really want to see this full history, and it takes weeks, if not months. And banks really don't like it when people pay cash for a house.

SPEAKER_05 1:04:14

Yeah.

SPEAKER_01 1:04:15

Because cash is untraceable.

SPEAKER_05 1:04:17

Cash, then they don't make anything off of it, it's just evens devens, no interest.

SPEAKER_01 1:04:23

There, there is that, and two, where did that cash come from? Right? This is how they stop drug dealers from you know buying stuff is or this is how they can catch them, right? So you want to put in, you know, a half a million dollars down payment on this home, but you have had no work history in the past 15 years. So tell me, where did this money come from?

SPEAKER_05 1:04:48

You know, honestly, I kind of understand where they're coming from with that.

SPEAKER_01 1:04:52

Yes, because if if they do loan that they give the money or the loan out to that guy who got his down payment illegally, then the f when the government comes down on that dude, now they're gonna take his money, they're also gonna take the house, and now the bank is out everything. Yeah, uh and and believe it or not, like the taxes. This is one of the reasons why the tax system is convoluted and crazy as it is, it is set up to stop like an Al Capone. Yeah, because remember, Al Capone didn't go to jail for all the crimes that he committed, he went to a maximum security prison because he had committed tax fraud.

SPEAKER_05 1:05:33

Yes.

SPEAKER_01 1:05:35

Because he couldn't verify where his money was coming from, he couldn't pay taxes on it. If he did, like, oh yeah, I made this money by killing a whole bunch of people and bootlegging alcohol and outrunning the cops, then he would have gone to jail for all those things rather than a uh white collar crime.

SPEAKER_05 1:05:52

Yeah, there was yeah.

SPEAKER_01 1:05:54

Don't know, go ahead.

SPEAKER_05 1:05:55

There's more evidence on the tax fraud on paper that they could get as opposed to all of Murder and the bootlegging, and oh yeah so they they embellished the um sentencing. Oh it was much more uh strict than it should have been for tax fraud.

SPEAKER_01 1:06:12

Uh yeah, like if you and I get busted for tax fraud, we're going to jail for a few years. This is like the one time where celebrities really can't get out of it, right? You've seen it before where celebrities they commit murder and they're like, yeah, six months in jail and then you're fine. And that's just because they have the money to throw it at super expensive lawyers and this and that. But man, when it comes to taxes, that's a different story. And somehow Al Capone ended up in Alcatraz for the rest of his life for tax evasion.

SPEAKER_05 1:06:44

Like embellished uh sentencing, but yeah.

SPEAKER_01 1:06:52

Yeah, they they sent a statement with that. That was yeah, it was it was rougher poor out. So basically, it was this mark-to-market approach, is what made Enron its its billions of dollars. They were taking money from the banks with the promise that hey, in 20, 30, 40, 50 years, it'll be worth this much. So therefore, we are worth that much now. So, yeah, like we are worth, say, 250 million dollars, but in 20 years' time, we that'll be a half a billion dollars. So give us a loan under the premise that we are worth a half a billion dollars now, and that is how they made their money. And even to this day, that is still legal. That but the mark-to-market approach is really designed to like figure out what is what is the initial investment, like based upon like okay, if it's supposed to grow this much in so many years, then it locks in that initial investment of how much whatever it is that you're trying to invest into is worth. And and so like there's a textbook approach that there's a it's a tool that is used for legitimate reasons, it's just that the skilling guy found a way to really use that mark-to-market approach and in an unintended way, and that's how it got approved. So now we have a company that is making billions of dollars on paper, they are so unbelievably profitable, but then like eventually after so many years, the question's got to be asked like, what are we selling? Like, what are we what are we doing? Like, I'm coming to work and I'm filling up these reports and I'm doing all this stuff, but what is actually going on? And so that brings us to part four, right? And this is the this is what I'm talking about earlier. Like, you see this dumpster on fire, and you're like, huh, I wonder how that started. Whereas before we have an empty dumpster and then we throw stuff into it, and then at the end of the episode, we light it on fire, right? Uh here, like we see the fire, and now we're like, man, kind of like my dad wearing the lepre skin speedos when I was a little kid watching the the dumpster on fire from the coals that he put into it, right? And then he's standing up there at like two o'clock in the morning when the fire department's putting out this raging inferno, and he's out there like, ah, who's the idiot to put the hot coals in the in the uh dumpster? Way to go, Dad. Way to go. This is what I get to compare myself to as a man when I'm in my 40s.

SPEAKER_05 1:09:40

The billion dollar company or the guy in the speedo?

SPEAKER_01 1:09:43

The guy in the speedo.

SPEAKER_05 1:09:44

Got it.

SPEAKER_01 1:09:46

Yeah, even even the billion dollar company, because I like to think of Enron is like an ultra, ultra wealthy crack addict.

SPEAKER_05 1:09:57

Okay.

SPEAKER_01 1:09:58

And so, like, there's a street over by where I work where this street is it is national crack geographic. Everybody on this street is homeless, and everybody is just strong out on everything from fentanyl to horse tank to crack to you you name it. So, like, Enron is a crack addict that will eventually lose everything and end up like that homeless guy on that street by where I work. And then you drive down that street and you're like, man, I'm I'm glad I made the choices that I made in my life. Because I'm not ending up like that. The same way that my financial decisions that I've made in my lifetime have come nowhere near the amount of devastation that Enron's did.

SPEAKER_05 1:10:47

There was a lot to unpack there.

unknown 1:10:52

So yeah.

SPEAKER_01 1:10:54

All I know is that if I look at a homeless dude and I'm driving my car, going to and from work, I got a family and a house and all that kind of stuff. Hey, I've done pretty good, all things considered. Got it. I haven't run myself into the streets yet. Whereas, like at this point in the early, like late 90s, early 2000s, Enron was fast on its way to ending up as like a homeless bum on the side of the street.

SPEAKER_05 1:11:24

Okay, now I see the analogy.

SPEAKER_01 1:11:26

Where people can look at it and be like, Man, I'm glad I didn't f up that bad. Gotcha. Okay, I'm here. And you you make a choice to smoke crack. The same way that Skilling made a choice to do these business decisions, and Fast O made the choice to cover it up the way he did. And the way that Ken Lay let it all happen. Like they all chose to let this happen the way that it did. So don't smoke crack kids because you don't want to lose tens of billions of dollars and end up as a homeless dude in the middle of Phoenix.

SPEAKER_05 1:12:02

How this this turned into a dare commercial. What was happening?

SPEAKER_01 1:12:10

Well, let's let's keep going here with part four. So uh remember the OR thing uh I mentioned earlier, right? Operating cost divided by the revenue, or vice versa, or whatever, right? Lower the percent the better. Okay, right, right, right. Um well, what do you do if you made an investment into a company that was like a 100% wrong bet and it was losing money hand over fist?

SPEAKER_05 1:12:39

Okay.

SPEAKER_01 1:12:40

That's this is what Enron got into is instead of just dealing with natural gas and power plants and whatnot, they started to branch out into all sorts of areas. So by the mid-90s, Enron moved from moved on from just natural gas to a company uh that got into all sorts of weird investments. So, like broadband internet, right? Now bear in mind broadband internet wasn't around, it was an idea, it was a theory. There was a couple of people that had it back then, but even still, it was like 10, 15 kilobits per second. I remember downloading songs from Napster, I mean backing up archive copies of music off the internet uh from Napster, and I was downloading it like one to two kilobits per second. Like that is like I would start a download for a three-minute song, go to school, come back, and it would be like halfway done.

SPEAKER_05 1:13:42

Yeah.

SPEAKER_01 1:13:44

And then I went to my friend's house who was older, who had uh like DSL, and he I would I remember I was downloading, I mean, I was making archive copies of music on the internet for posterity's sake at like 50 kilobits per second. Nice. And I could archive a song in less than a minute. I'm like, this just this should be illegal. This is so fast. And now I checked my internet connection before I logged on, and I and I am hitting about 923 megabits per second.

SPEAKER_05 1:14:26

Right now we get mad when the YouTube video doesn't stop buffering for like five seconds.

SPEAKER_01 1:14:31

Uh yeah, or it comes up and it's like ah, 480p, we meet again. Right? Like, or like we're sitting on the toilet trying to watch like an like a YouTube short and it doesn't load immediately. We're like, something's broken, internet's broken. Did we get nuked? Is it World War III? Oh my god, are we all gonna die? Like that's what we've kind of turned into.

SPEAKER_05 1:14:56

Also, there's a South Park episode if you're old enough to watch it, where they lose internet and it's like the end of the world.

SPEAKER_01 1:15:05

That is such a uh South Park thing.

SPEAKER_05 1:15:08

Yeah, it's fantastic.

SPEAKER_01 1:15:10

Nothing beats the World of Warcraft episode.

SPEAKER_05 1:15:12

Oh god.

SPEAKER_01 1:15:13

Anyway, classic.

SPEAKER_05 1:15:15

Anyway, so yeah, they got involved with Broadband and run Roman Empire themselves.

SPEAKER_01 1:15:20

Uh yes. Okay, yes. Uh except for they weren't doing like hostile takeovers and enslaving everybody, they were just investing in it. Um so they tried to turn like Blockbuster video into like a Netflix uh like a movie on demand thing. This was actually ahead of the time. Like, if Blockbuster wasn't stupid, and if Enron wasn't stupid, and like they played their cards right, we all want to have a Netflix account. We would all have a Blockbuster account.

SPEAKER_05 1:15:54

Oh, Blockbuster.

SPEAKER_01 1:15:56

Yep. Yeah, but we'll we'll talk about that one here in a minute because it's the blockbuster investment that kinda did Enron in. They got involved with international projects, especially like in India. They really focused on third world developing nations because uh let's just say they were uh really lax on their paperwork. Nice. So yeah, they got involved in derivatives such as like paper, steel, plastics. Um, so they invested in all that, right? Because you have all these producers of paper, steel, and plastics, and then you would have buyers, and then Enron would negotiate the rates and and all that kind of stuff. So they even invested in the weather. I have no idea what that looks like, but basically, like you would give Enron a certain amount of money to guarantee a weather forecast.

SPEAKER_05 1:16:54

Wait, okay, so you would give Enron money and they'd be like, all right, cool, watch the news at 8 a.m. tomorrow and you'll know what's up.

SPEAKER_01 1:17:03

Maybe like, hey, I need it to be I need I need it to be 70 degrees for the next four days. And Enron, I think what Enron would do is like, okay, we can guarantee for the next five days, because you gave us X millions of dollars, we guarantee that it will be with uh it'll be 10 degrees above zero to 110 degrees above zero for the next four days. We'll we guarantee it'll be somewhere in between all that.

SPEAKER_05 1:17:32

It's in that range.

SPEAKER_01 1:17:33

Yeah, so tomorrow's temperature could be cold or hot, it could be dry or raining.

SPEAKER_05 1:17:41

That's weird.

SPEAKER_01 1:17:42

All right, yeah. Admittedly, the whole weather thing was at the end of like this is when Enron was starting to get in trouble and they were just trying to find anything.

SPEAKER_05 1:17:52

Okay, so that is desperation.

SPEAKER_01 1:17:54

Yeah, this is their this is their desperate phase, right?

SPEAKER_05 1:17:58

Okay, because that's their drawing straws.

SPEAKER_01 1:18:00

Uh yes. So some of these investments weren't all that bad. So hopefully, if I did this right, listen to Enron's vision for their Enron online that they were trying to put together.

SPEAKER_06 1:18:23

I can't see what's going on. If you want to do business, you push the vision that we're trying to change the world.

SPEAKER_01 1:19:14

That was our motto, it's why why. So basically, the idea was that dial-up took forever because it was so dang slow, and it got really like the bigger the company, like the worse the internet was because you're taking this one internet feed and dividing it up like already a slow speed and dividing that up by like thousands. So, like Enron's idea, and that was skilling there. He's like, Okay, let's just have it set so that like the computer is always on the internet, right? And the internet is just a button push away, and it's fast, and you can get whatever information you needed. That's why he was making the the statement that oh yeah, like the information I needed was hidden. No, it was just slow, okay. It wasn't hidden.

SPEAKER_05 1:20:00

I did like the dark blind line. Yeah. Very dramatic.

SPEAKER_01 1:20:06

But I mean, it was ahead of its time. Like, I I do applaud this. The problem was is that like high-speed fiber optic networks and all that kind of stuff, or even the coaxle networks, they weren't there. It wasn't sustainable, it wasn't scalable, it wasn't mature enough. Like, it wouldn't be for like another 10-15 years before we start seeing reliable higher speed internet coming out. But hey man, go for it. If just don't run yourself into the ground and just really try to lock in that Enron online thing, yeah. Like you could be insanely profitable by today's standards. So they got involved with the whole blockbuster thing and like the whole video on demand thing, which again, I'm gonna I'm gonna touch on that here in a few minutes because that was like the match that lit the fire. And it was literally like once this whole blockbuster thing went down, Enron collapsed in a few months. Like, that's how how insane it was. So that's okay though. If if if a if a uh investment enterprise failed horrifically, Intrafastile had a way to make those failures disappear. Because remember, if you invest money into something and it starts losing money, that makes you OR go up. That makes it so that your company isn't as profitable, that makes you look really, really bad. And so then the banks will be like, I'm not giving you anything because you're losing all this money. So what Fast Dog came up with is a special purpose entity or an SPE. And these are companies that were established so that the debt from the failed businesses or whatever could be funneled into and then just hidden from public trading. So basically, they just stuffed their debt into envelopes and hid it.

SPEAKER_05 1:22:01

Yeah, like little ghost companies.

SPEAKER_01 1:22:03

Yeah. Uh like these were literally like businesses that he would set up that he could like, hey, Enron is doing fantastic. We have like no debt. In fact, we're making billions of dollars, and that's because this other company that has nothing to do with Enron is sitting on hundreds of millions of dollars of debt. But since it's not tied to Enron, that's fine. They can just funnel all that over there. And there was people that would work for these companies, these were there were people that got hired on that thought they were working for a legitimate company, not realizing that they were just there to make it look like a valid company, and they would lose everything.

SPEAKER_05 1:22:47

That's messed up.

SPEAKER_01 1:22:49

Uh-huh. Yep.

SPEAKER_05 1:22:50

Because that that means that there's intention.

SPEAKER_01 1:22:53

Yes.

SPEAKER_05 1:22:54

Like there was an intention there to purposely screw somebody over to make sure that oh yeah. You're okay.

SPEAKER_01 1:23:01

By 97 to 2001, it it is very apparent that Lei, Skilling, and Fast Ow were knowingly destroying people's lives. Because now they they kind of built the deception up so much that they had to do this now to keep the company afloat. And I think there was a point, especially for Skilling, there was a point where he's like, This is now hit the breaking point. I knew this was gonna happen, and he just bails. He just takes his millions and then just goes away.

SPEAKER_05 1:23:37

Nice, lovely.

SPEAKER_01 1:23:39

Yeah, so yeah, these entities could be dissolved, staff let go, and everything shredded a moment's notice to essentially uh wash poorly performing assets down the drain so they couldn't affect Enron's financial stability. Fastile would also sell products to other investment firms like Merrill Lynch and a lot of other really big financial companies that are still around today, and they would be like, Okay, we're gonna sell you all this stuff, and then after like a couple of months, sell it back to us. So, what they would do is sell a whole bunch of assets to like Merrill Lynch right before there was a big bank deal that was gonna go down. So, like Enron could then go to the bank and be, hey, look at all the stuff we sold. This is amazing. Like, we just made tens of millions of dollars, and then the the bank would be like, All right, cool, yeah, here's your 150 million dollars as requested, and then they would buy those assets back months later when the bank's forgotten all about it. Very, very shady business practice, super shady, yeah.

SPEAKER_05 1:24:42

And at that point, you're just being slimy, yeah.

SPEAKER_01 1:24:45

At this point, they're just doing whatever they could to like just maintain what they had going on, and like skilling. If you look at pictures of him during this time, I mean, he's got a beard, he's got bags under his eyes, probably from I'm assuming there was drugs going around and whatnot, but like towards the end, you could see it was weighing on him a lot. Of like, you are now having to set up a scam to scam a scammer to get money so that you could set up another scam to scam more scammers to get more money from a bank. Nice, and it's just like layer upon layer of poo. So, probably the biggest blunder was California, and you know how I'm kind of critical of California and like why is half of this strip mall out of electricity and the other half is on, and then you have to alternate. And I'm like, really, California? You you guys can't figure this out. Well, I think I figured out why it's this way to this day. So, what Enron did is California was having issues of like random blackouts, brownouts, power outages, all that kind of stuff. And it's been that way since like the 80s. So Enron came in and went up to that PGE company, which is their main power supply company, and they're like, okay, we're gonna buy you out. So now you have these assets, and we'll make you profitable, and all that kind of stuff. So they merged with PGE and they did. Now, now because like Enron did own like a crap ton of power plants and and all that kind of stuff. Uh, that's like they're they're they're their dealings with natural gas and power plants. That was like the only honest thing they had going on that I think was the closest thing they had that that you know was working from the beginning. Um but that all fell apart here. So what Enron would do is now California had like twice the electrical capacity, and then what they were doing is they were funding electricity into California, but then they would funnel that outside of California, thus increasing the demand for electricity in California, and then they could skyrocket the prices.

SPEAKER_05 1:27:14

That's stupid, that doesn't even make sense.

SPEAKER_01 1:27:18

Well, the idea is that like you've got so many wealthy people living in California that they'll pay whatever is necessary to keep the lights on, so you entice PGE with assets and power plants, they come aboard, so now Enron has an in to California, and then they funnel as promised on paper, like, hey, we're gonna funnel all this electricity in, but then they funnel it right back out again. So, like the power outages, the brownouts, and all that stuff still kept going on. And then Enron now is like, okay, even after dumping all this extra electricity in here, we still have all these problems. Problems in order to fix it, we have to increase the rates.

SPEAKER_05 1:28:03

Well, that's jacked up too.

SPEAKER_01 1:28:05

Yes, they knew exactly what they were doing.

SPEAKER_05 1:28:09

Now they have the whole state in a stranglehold for no reason except for money.

SPEAKER_01 1:28:14

Yeah. That that whole thing cost California over$30 billion. And eventually, like the California went to the president, who is George W. Bush. And George W. Bush is like, yeah, it's best that I don't get involved with this. Um, you know, you guys work it out with Enron. Well, that's because President George W. Bush was really, really, really good friends with Jeff Lay. And there was no way Bush was gonna get involved with this because Enron had a thing going on, and Lay partnered up with enough people in Congress to the point where even when Congress was legitimately like, okay, Enron, what is going on here? We're gonna hand this over to um our commission that oversees all of the uh uh what what is it? The federal agency regulator or the federal energy regulatory commission. They were they were gonna do an investigation to figure out why this all all this stuff was going on. And uh yeah, the guy who was in charge of that whole commission was in Jeff Leigh's back pocket and he just let it all go on, and that cost California$30 billion that could have been used to build like legit power plants that could have been used to fix infrastructure that all through the 90s and early 2000s. So like now when California dang near burns down because power lines are falling apart, it's because they legitimately don't have the money that they should have they should have used to fix decades ago, but they lost all that during this whole thing, and so yeah, like to this day California is struggling because of Enron and um yeah.

SPEAKER_05 1:30:10

Well, that's just lovely.

SPEAKER_01 1:30:12

So yeah, that that that's what um Fastile was really known for was his ability to kind of like cover up all these debts and whatnot. And then like you got the whole matter with the power plants um or the California power issues and everything like that, how Enron was supposed to come in and fix it, and they really didn't. And and that that was like when the original governor was kind of voted out, they brought in Arnold Schwarzenegger, and Schwarzenegger he was a vastly different governor, he was the kind of person that was like, okay, Enron, what did you do exactly to help the situation? And then Enron was notorious for equivocation. They could go on for a 30-minute explanation and not say a single thing. They would use business babble like the best of them. Oh, we're a non-high asset liquidation company focused on profit margin surrounding brokerage investment deals and contracts. Uh you know, they just go on and on and on. And then Arnie would be like, okay, so I just got one other question for you. And Enron would be like, What's that? Can you answer my first question?

SPEAKER_05 1:31:36

How infuriating.

SPEAKER_01 1:31:38

Uh, yeah, yep. So, like, yeah, and Schwarzenegger, like, he's he's the one that really kind of opened the lights up, like, hey, this Enron thing really didn't do any good, and it cost California's taxpayers like$30 billion. Money that is completely unaccounted for, just poof, like magic, gone. But perhaps my favorite thing is the blockbuster issue. So let's combine the Enrun Online with Blockbuster. And what they wanted to do was basically they they bought Blockbuster, and they wanted to set Blockbuster up to sell uh like a like a Netflix type of plan to people. Yeah, pay us so much amount of money, and then you can stream movies today. Hey, you got HBO, you've got Peacock, you've got Netflix, you've got all these like streaming capabilities, right? YouTube, cool, but in 2000 and 2001, the internet was not there to support all that, and I think Enron knew that. But what Enron did, and they and they kind of jumped the shark a little bit, they kind of screwed up. They're like, Enron was telling the banks and the media, like, hey, this this blockbuster thing is going great. In fact, we made a hundred and ten million dollit off of Blockbuster because of this new direction we want to go in. And then, like, right after that, Blockbuster's like, um, we're not sure where they got the 110 million dollars from, but we're shutting down hundreds of stores, laying off all these people, and uh, we're shorting our inventory, and then it wasn't long after that that they're like, Yeah, we have no money, we're going out of business.

SPEAKER_05 1:33:31

RAP blockbuster.

SPEAKER_01 1:33:33

Yeah. And that was because Enron did that market-to-market thing, and I think they figured out a way to siphon out a hundred million dollars from them, and then that this railroaded blockbuster into the ground. When in reality, if they if Enron had given them like a half a billion dollars, which they probably realistically didn't have at this time, but they were just trying to get money anywhere they could, if they gave Blockbuster the money to start to put together like a Netflix model, because remember, Netflix started by like mailing you a DVD and then you could return it and then you could get another one. Right? That is something that Blockbuster wanted to get into, but they just didn't have the capital to do it. But if they had that, they could have been a direct competitor to Netflix, and they very well could still be around today. But Enron ran that in the ground, and this was very public. I remember when this happened, and it was this Blockbuster debacle that started a shift from Enron being one of the most innovative companies in America to how in the hell is Enron actually making money to begin with? Part five the wheels on the bus fall off. And I assure you, we're gonna run out of wheels. They're not going round and round, no, they're more going like side to side in a wobbly fashion.

SPEAKER_05 1:34:56

Oh and that doesn't flow as well like in the children's song.

SPEAKER_01 1:35:01

We're actually gonna leave the children out of this.

SPEAKER_05 1:35:03

That's good.

SPEAKER_01 1:35:05

They don't need they don't need all this nonsense because their bus is gonna crash and nobody's gonna die.

SPEAKER_05 1:35:09

Oh no! Not the buzz.

SPEAKER_01 1:35:15

Yeah, we're not that we're not that kind of show, guys. Okay, so part five. We now enter into March 5th, 2001. Journalist Bethany McLean publishes a very famous article, is in run overpriced in Fortune magazine.

SPEAKER_05 1:35:31

Is this our awesome lady of the episode?

SPEAKER_01 1:35:34

Uh one of two.

SPEAKER_05 1:35:36

All right.

SPEAKER_01 1:35:37

Yep. Uh another lady is the one that actually brings the whole company down.

SPEAKER_05 1:35:44

Amazing.

SPEAKER_01 1:35:44

Yeah, and it was one letter that amazing.

SPEAKER_05 1:35:48

I love I love an awesome lady. Let's do it.

SPEAKER_01 1:35:50

Yes. She feels kind of bad because she feels like it was her doing what she did that got like 80,000 people laid off.

SPEAKER_02 1:36:02

Oh.

SPEAKER_01 1:36:02

So yeah, it's a complicated thing, but it really didn't need to be done. It yeah, Enron was a cancer at this point.

SPEAKER_05 1:36:10

Yeah, like this is really bad.

SPEAKER_01 1:36:12

Yeah, like it like it gets worse. Um, of course it does. Okay, so uh Bethany McLean writes this article in the same magazine that gave Enron like six consecutive like companies of the year or most innovative company, one of those made-up awards that we were talking about earlier.

SPEAKER_05 1:36:33

Right, right.

SPEAKER_01 1:36:34

This article was the first time someone publicly mentions that no one, especially the investors, really understands how Enron makes its money or what they sell? Skilling even met with reporters shortly after this article coming out. He met with reporters and was asked the same question. Like, how do you guys make money? And he's like, I have no idea. I'm not an accountant. How are you? At this time he was actually CEO of Enron. How are you the main leader of this company, and you have no idea how you make money?

SPEAKER_05 1:37:13

If that's not a red flag, I don't know what is.

SPEAKER_01 1:37:16

Well, and I think like at this point, he was going downhill fast. He was on a on an earnings call, like every quarter, companies have those earning calls, and there was one person on that call, that conference call, that um skilling just openly called him an asshole in front of everybody.

SPEAKER_05 1:37:38

Nice.

SPEAKER_01 1:37:39

And for a innovative, one of the top most innovative companies in America, that's probably not the best way to handle the situation, but that really shows you kind of like how unhinged he was getting. So he calls in Fastow and his accounting team, and they come in and they talk to the reporters and they go on and on and on for hours of this business babble. And, you know, they they leave the meeting, and Fastel tells the journalists, like, I don't care what you write about us, just don't make us look bad. So August 14th, 2001, Skilling resigned from Enron just out of the blue, right? He took his tens of millions of dollars, he was out, he was no longer CEO. That that made it so that this um Lei guy would come back, and he was now CEO to run things completely alone, right? Before he was relying on Skilling to do everything, and now Lei was in there, and it's just like, uh, wait, what's going on? I'm so confused. Uh, this was probably done on purpose. No one really knows exactly why Skilling resigned, but it's pretty easy to guess once you see what happened here, literally in the next few months. There was no way Lei could run things on his own, because he was kind of out of the loop at this point. Um, not that anybody could keep up with it, anyways. Uh, the marketing and business operations of Enron got so convoluted and complicated that no one person could sort things out, and Lei was kind of getting up there in age. Like he was in his 60s, and he was probably looking to retire, and then all of a sudden his golden boy just quit. And Lei knew what was going on was illegal, but I don't think he fully understood. So this would be the first wheel flying off the bus. A day later, on April 15th, the vice president of development, Sharon Watkins, this is the hero lady. Uh she sends an anonymous letter to Leigh bringing up some concerns she had about how the company was operating, and then she kind of left off the end like Enron will implode in a wave of accounting scandals. Cool. So I think Lei was fully aware that this was a rat's nest of uh accounting issues. So on August 22nd, Watkins met uh with Lei personally and gave him a six-page letter detailing the problems with Enron's accounting practices. Leigh, being the CEO type, promised to take her concerns to the company's law firm. So they actually had bought a law firm, uh Vincent and Ellis, and I'm pretty sure it died there. Lovely. So, like, nothing was gonna come of it. In fact, they probably did everything in their power to like get rid of Watkins. It wouldn't surprise me if they maybe offered her a bonus to retire or whatever. Uh, she actually ends up eventually testifying to Congress, and um, but yeah, Watkins actions would be the second wheel flying off the bus.

SPEAKER_05 1:40:48

Okay.

SPEAKER_01 1:40:49

So now we have our school bus doing a wheelie down the road. However, by the third quarter of 2001, Enron's firm grip on continuing success was starting to fall apart as more and more details leaked out, shedding light on the many shady business dealings Enron was engaged in. Now, and I remember watching this on the news, like every single night, the news would talk about how many murders there were in the city, car accidents, drug deals, you know, trouble in the Middle East, because there was always trouble in the Middle East. And then they every night there was like a segment on Enron because it was changing and developing every day. A really good movie to see that was inspired by this was Fun with Dick and Jane. It was a Jim Carrey movie, and where Jim Carrey's character was set up to purposely like run a company into the ground, but Jim Carrey's character had no idea that's what he was doing. And it cost like everybody their jobs, cost them his job, and like they even give like special recognition to Enron in the ending credits. Like, thanks, Enron, for supplying for being the creative consultant for this movie.

SPEAKER_05 1:42:00

It's been a long time since I've watched that.

SPEAKER_01 1:42:02

But yeah, like by this time it was all over the news. By October 16th, Enron announced that it was going to restate earnings from 1997 to 2000. Remember, that was the time of the most amount of growth in Enron's history. This would mark the true beginning of the investor exodus that would result in Enron's collapse. Think about it. Let's say you made tens of millions of dollars in dividends from 1997 to 2000. If Enron goes back and restates that, oh yeah, we misplaced a decimal point, or there was a slight issue amounting to billions of dollars, uh, those people that had those dividends would have to pay that back.

SPEAKER_02 1:42:45

Yeah.

SPEAKER_01 1:42:46

And so, like, everybody and that probably the hundreds of thousands of investors were probably like, okay, this is bad. Yeah. We're we're we're dipping. So correcting all the earnings Enron made for three years meant that all the dividends that paid out during those years, all those employees um that had dumped their life savings, their bonuses, and everything they had into that Enron 401k program would have to be re-evaluated, and tens of thousands of employees were potentially going to have to pay all that back. On October 22nd, Enron's border uh board discovers that FASTA set up a side business to shed Enron's debts, and from that he made more than$30 million from that side hustle. So not only was he hiding Enron's debts in these fake companies that were actually legitimately employing people that now lost everything, he was siphoning millions of dollars out of that into his own checking account.

SPEAKER_05 1:43:44

Oh goodness.

SPEAKER_01 1:43:45

This is where the third wheel of the bus goes flying off. But it gets better. Word got out um about Fast O's actions and what he did to hide uh the lost money and subsequent firing. So yeah, uh by October 24th, he got canned uh by the board of directors, which I'm assuming the board of directors had to know what was going on to some extent.

SPEAKER_05 1:44:12

Yes, something.

SPEAKER_01 1:44:13

Yeah, and a lot of them did get busted and put to trial. And there were so many of them I couldn't keep track of them. So we're just gonna focus on lay skilling and FASTO. Um, by October 24th, Enron's stock dropped by 20% when the SEC, so remember the SEC, the Securities Exchange Commission, was the first ones to approve that mark-to-marketing or mark-to-market scheme that Enron used to make money, and really had high hopes for Enron. They they were like, Yeah, you know what? We're gonna do a formal investigation into Enron's dealings. Meanwhile, Lei is telling all the employees to keep investing in Enron, keep dumping your money into that 401k program. Um, this was probably an attempt to stave off the plummeting decline in stock values. Because if you're an employee and you're investing in a 401k that the company is in charge of, and you're seeing your, you know, your$200,000 nest egg drop by 20%, drop by another 10%, drop by another 20%, and you just see it dropping, uh, you're gonna get really concerned. And Lei was telling the employees, like, don't worry about it, we're okay, keep investing into it. And by doing that, he was hoping that that would stop the plummet of the stock values, not because he was trying to protect the employees, yeah, but because Lei was in the process of selling 918,000 shares of Enron stock, and he was trying to shed that stock, get the money so he could bail. And before he would lose any more money on it, uh he was telling the employees keep investing in it because that will stop the decline. And he could care less about the employees at this point. It's like, okay, how many millions of dollars can I squeeze out of this so I can leave the country and you know, live my life in luxury? So that part kind of pissed me off a little bit. So with SEC now investigating and the stock plummeting, right? That's the fourth wheel flying off the bus. So we're out of wheels.

SPEAKER_05 1:46:36

We're out of wheels.

SPEAKER_01 1:46:37

Now we gotta get creative.

SPEAKER_05 1:46:39

And just in FYI, the SEC is the same organization, government organization that looked into the um original hero of Black Thursday who was caught embezzling later in like 1937 or 8 or something like that.

SPEAKER_01 1:46:57

Oh wow, yeah. Yeah, yeah, it's just it's the irony of it.

SPEAKER_04 1:47:05

Yeah.

SPEAKER_01 1:47:06

Okay, you may you may make the argument that history can't repeat itself identically, but history is full of irony.

SPEAKER_05 1:47:13

Oh yeah. Irony, I'll take.

SPEAKER_01 1:47:16

Yeah. So um I can't remember if I put it in here, but Fastow's wife, I think her name was Leia Fastou. Fastow, um, she got busted for tax evasion. So this was a husband and wife, like, man, talk about a match made, like they were perfect for each other.

SPEAKER_04 1:47:40

These people. These people.

SPEAKER_01 1:47:47

So even though you've never been a part of a like a Fortune 50 company, um, just take pride, Kara and our beautiful listeners, that you haven't made any of these types of choices.

SPEAKER_05 1:47:59

That's fair.

SPEAKER_01 1:48:00

Take that with you, right? So at the end of October 2001, Enron's uh credit rating plummets even more. Um, and I can't imagine why.

SPEAKER_05 1:48:12

That's weird. It makes no sense.

SPEAKER_01 1:48:13

Yeah, it's just like random plummeting.

SPEAKER_05 1:48:16

Yeah.

SPEAKER_01 1:48:17

Um, at this point, Enron is in a free fall with bankruptcy waiting on the ground to stave off bankruptcy. Enron offers to sell itself to a competitor called Dynergy. Dynargy was probably a company that was in good standing, and it was not gonna touch Enron with a 10-foot pole.

SPEAKER_05 1:48:35

Can't blame him.

SPEAKER_01 1:48:36

No, I don't blame him one bit. In a few short months, Enron went from being the handsome man that every girl wanted to date to a homeless bum covered in syphilitic push tools.

SPEAKER_05 1:48:47

Nasty.

SPEAKER_01 1:48:48

Yeah. Oh, but financially, that's what it that's how bad it was. It was just like, ew. Yeah, stay away from me and my kind, because you guys are a bad deal. On December 2nd, 2001, Enron filed for chapter 11 with this filing. So, um, oh, let me back up. Um, this whole bankruptcy thing now, we now have to find another wheel to go flying off the bus. So now we're throwing the spare tire out.

SPEAKER_05 1:49:20

Oh, okay, okay.

SPEAKER_01 1:49:21

All four wheels and the spare tire gone. When Enron filed chapter 11, this this is like the nail in the coffin with this filing. Tens of thousands of employees witness their life savings, retirement plans, their careers, livelihoods evaporate into nothingness. The executives pilfer assets and sell off what they can. So they walk away with millions upon millions of dollars. They got like villas out of the whole thing, uh, fancy cars, uh, penthouses. Um, they made a grip of money off of all of This. This was on top of everything they made prior. So that's this is on top of the tens of millions of dollars they made during the heyday of Enron. So hey, at least they did okay, right? At least they they didn't lose everything. So there's a silver lining in all this.

SPEAKER_05 1:50:20

No, what about no? I don't like that.

SPEAKER_01 1:50:26

So it was right around this time the skilling tells the New York Times that I had no idea the company was in anything but excellent shape. So, like, yeah, this is just blatant BSery at its finest. Um on January 23rd, 2002, Leigh resigns um as Enrons chairman and CEO. But honestly, who cares? Like the company in three or four months lost like 99.9% of its value, like, and then suddenly the CEO is out of a job. Whoopee.

SPEAKER_05 1:51:06

Right? Woo.

SPEAKER_01 1:51:08

Yeah. Poor him. Well, actually, he gets what's coming to him, I guess. Um well, I don't know. Uh uh, it's a sensitive subject. He he ends up dying. Oh, I don't know if this merits a man dying, but he does die. Uh, there was another executive that uh took his own life when everything came down. He's just like, I'm out. And uh, you know, and it that's that's sad. That's sad. Yeah, it's a suicide thing, and you know, it is like today it's a very touchy subject, so I kind of like left that out of the story just because obviously the dude's family's still around and they lost like a husband and a dad and all that kind of stuff.

SPEAKER_05 1:51:52

So like they they lost the family member to money, essentially. That's really sad.

SPEAKER_01 1:51:57

Yeah, because they would probably be willing to give up every penny to get him back. Yeah, so um at one point in time the federal government didn't want to interfere with Enron's success, but now it was like super involved and started to conduct hearings. Also, we are approaching midterms, so like now suddenly Congress is like, oh, oh, we need to really dig into this and make it look like I'm doing my job. After these same politicians did everything in their power to try to uh stop the whole issue with California and all that, and yeah, politicians are they're just they're fascinating aspects of the human race. Politicians, so yeah, they they start conducting hearings and they bring in skilling, and he's like, I plead the fifth. So try not to sound any more guilty than you already are, right? Like I plead the fifth. At this point, if I was skilling, I would be like, I'm coming clean. Like, there's well, one, I would never let myself get to this point. Oh, but that's a lot. If I had to be like quantum leap and then I just ended up in Skilling's body at this time, I would have been like, All right, guys, I'm gonna lay it all out. Um if you're able to cut my jail time down some or whatever, like cool. Uh let's lay it out so that we have an accurate, at least put an accurate um reference frame in the history textbooks.

SPEAKER_02 1:53:35

Makes sense.

SPEAKER_01 1:53:36

And you can you can kind of save grace that way. Um, you might as well, but we'll we'll get to him and how he ends up in a little bit. Now we turn our attention to accounting firm Arthur Anderson. Um Arthur Anderson was one of five accounting companies that were like the original five, right? All the major companies used one of these five uh accounting companies to do all their audits, um, all their financial quarterly earnings, all that stuff. Arthur Anderson was the one that worked very closely with Enron. And Arthur Anderson was also like been around since like America's founding, and they were also the ones that tried to shed every single record it had with Enron, especially the juicy parts about all the corrupt deals and shady practices. Oh, yeah, yeah, of course. They were literally destroying thousands of pounds of documents like every day, so that when the FBI actually showed up, there was just shredded paper everywhere. Oh my goodness. And it's just like one of those things like, can you not look any more guilty? Right. Like, what's with all the shredded paper? Oh, we're having a party. But yeah, I guess like the FBI literally walked in while there was a bunch of dudes there that were actively shredding papers that had like Enron written all over it.

SPEAKER_05 1:55:08

That's so bad.

SPEAKER_01 1:55:09

And the FBI, it's like, oh guys. At this point, burn the building down and collect an insurance payment. It was too little too late, right? You can only destroy so much paper and hard drives in a day before it it's it's just not going to be enough. Federal agents raided Arthur Anderson and found enough information to thoroughly incriminate the accounting firm. Between October and November of 2001, FBI agents raided the Enron 50-story headquarters and for nine days pulled out 400 boxes of details surrounding all the chicanery Enron was up to, which closely tied them to Arthur Anderson. So Arthur Anderson and Enron, they were two Ps in a pod here. Like they're both going down hard. In January of 2002, Arthur Anderson was convicted of obstruction of justice and it was required to hand over its CPA license for an accounting company that has been around since the founding of America to lose its CPA license is devastating.

SPEAKER_05 1:56:19

Yeah, that's that's really bad.

SPEAKER_01 1:56:22

That's like that. You are a CPA company. That this is what you do is accounting, and you can no longer practice that. This resulted in over 85,000 employees losing their jobs, even if they had nothing to do with the Enron case. And I found out that if any employee was working there while they were getting or working towards their CPA, or if Arthur Anderson invested in an employee to get their CPA, they lost their credentials too.

SPEAKER_05 1:56:54

Oh my goodness.

SPEAKER_01 1:56:56

So, like now the splash damage is truly screwing over innocent people.

SPEAKER_05 1:57:02

Yeah.

SPEAKER_01 1:57:03

These are people that just wanted to go to work, save up for a good life, retire, they put in honest work, and now I mean, now you're nothing more than a Walmart door greeter.

SPEAKER_05 1:57:16

That's awful.

SPEAKER_01 1:57:17

Because that's literally the only qualification you have left at this point.

SPEAKER_05 1:57:20

Awful.

SPEAKER_01 1:57:22

That that bothers me. This is what was so frustrating with this whole dumpster fire. It's still hundreds of thousands or hundred plus thousands of innocent, hardworking people that felt that they were a part of the future of commerce who literally lost everything, including retirement. Some folks had been around for like over 20 years. They were there in the beginning, and they were so close to retirement, and now they have to work for the rest of their lives just to make ends meet because Social Security wasn't gonna be enough.

SPEAKER_03 1:57:54

Yeah.

SPEAKER_01 1:57:55

Right. One of the reasons why their social security was going to be so low is because they invested so much into Enron that their pension from Enron was gonna supersede what Social Security was gonna do, so they could actually start pulling from that earlier. And now they could now they're like they're relying on Social Security, they're in their 60s, and they're maybe getting like two three hundred dollars a month to live off of.

SPEAKER_00 1:58:25

Awful, yeah.

SPEAKER_01 1:58:27

And like these guys, these these folks didn't do anything wrong, they they weren't trying to scam anybody, they were just living their lives. So at this point, our school bus. Uh, there's nothing round or wheel shape left on the bus to go flying off. So any passenger inside who has a fidget spinner or something that spins, they need to throw it out the window.

SPEAKER_02 1:58:49

Okay.

SPEAKER_01 1:58:49

We lost all our tires, we lost our spare, we lost our steering wheel, now we lost our fidget spinners from this bus. That's unfortunate. Yes. October 31st, 2003 rolls around. Andy Fastou is indicted on 78 counts of fraudulent conduct. On May 1st, 2003, there we go. Leia Fastou, Andy Fastou's wife was charged with conspiracy and tax evasion. So, yeah, I wonder what those date what those two discussed when they went on a date. Like, you know what? I bet they never argued what they're gonna have for dinner.

SPEAKER_05 1:59:23

Everybody argues about what they have for dinner.

SPEAKER_01 1:59:26

Not when you are in the process of committing hundreds of millions of dollars worth of conspiracy and tax evasion.

SPEAKER_05 1:59:32

I feel like if you have that much money to blow and you need to blow it, you're gonna argue about what expensive restaurant you're going to go to.

SPEAKER_01 1:59:42

I just feel like they had more on their plate, especially towards the end there. Like that's true. Let's not worry about dinner. We can get nuggies anytime. Um, we need to figure out what we're gonna do with this$50 million that is totally unaccounted for.

SPEAKER_05 1:59:58

That's a fair point. Good argument.

SPEAKER_01 2:00:02

So on January 14th, 2004, Andy Fast Out enters into a plea agreement and promises to cooperate the prosecution and the prosecution of the other Enron executives. This this would result in Skilling and Lay now getting like bully, locked into their accounts and into serious trouble. Like Fastow was the thing that he was what like I was talking about earlier. At what point do you just open up and be like, okay, guys, I'm I'm gonna lay it all out? Like, if you can reduce my sentence, I'm gonna lay it all out, save people a ton of time, a lot of tax dollars, and um, so then maybe I can pick up eventually with my life and move on, which is exactly what Fast Dodd does. He actually, I actually want to mind meeting this guy. It would be really cool to get him on the show. If there's anybody that's got firsthand experience of a uh really, really bad dumpster fighter, it's gonna be this guy. Um, on February 18th, Jeff Skilling is indicted on 35 counts of fraud, insider trading, and conspiracy. On July 7th, Ken Leigh is indicted on 11 accounts of fire fraud, securities fraud, bank fraud, and conspiracy. And the next day he surrendered himself to the FBI, which would begin the trial of a century. And it does, it goes on, I think for like two years. It is one of the biggest trials in American history. I'm not gonna dive into that.

SPEAKER_05 2:01:25

That's like another episode altogether, and it's just court hearings, which can be very interesting, but also time-consuming and research heavy.

SPEAKER_01 2:01:35

Yes, and uh yeah, you know, as opposed to but it's like a murder trial, those can be a little more salacious, there can be more drama on it. I remember seeing these court hearings, and it was so it was literally watching C-SPAN in a courtroom.

SPEAKER_05 2:01:52

Well, you know, it is just a counting fraud. Yeah, which considering how many people were affected, sounds really arbitrary, but yeah. So it's it's a counting fraud.

SPEAKER_01 2:02:02

Woo-hoo, that's exciting. That makes for great television. At least the OJ Simpson case was a bit more exciting. Um, that would actually be a good episode too. Um, part six, the aftermath. I feel like the last three episodes, my last parts have all been the aftermath, but you know it's tradition at this time. Yeah, it is tradition at this point. Um, I don't know, given how awful this was, maybe it'd be part six, the afterbirth.

SPEAKER_05 2:02:27

No, I don't like that.

SPEAKER_01 2:02:28

Because it started off with the birth. Yeah, but so this would be the afterbirth.

SPEAKER_05 2:02:32

I don't like that.

SPEAKER_01 2:02:33

Yeah, I I I I know just a giant puddle of blood and placenta on the ground.

SPEAKER_05 2:02:38

Yeah, it's too much biology for me.

unknown 2:02:40

Okay.

SPEAKER_01 2:02:42

And like, and the reason why I'm not having kids because I don't need all that coming out of me. Ew, uh anyways, uh May 25th, 2006, uh Ken Lay is convicted on all six accounts of fraud. Uh, shortly before he was to be sentenced, I think it was like a month or so. Um, and he could have and he was up for like 44 years of federal prison. But like a month before he was gonna get sentenced, uh, while staying in a cabin in Colorado with his wife, he had a massive heart attack, killed over, dead. He was 64 years old. So I have mixed feelings about that. Like a part of me is like good, he got what he deserved because he ruined or played a massive part in ruining so many people's lives. But it's also like, is uh do I have the right to think that somebody should die for glorified clerical reasons? I don't know.

SPEAKER_05 2:03:43

It to me, I think better justice would have been the years in prison, yeah.

SPEAKER_01 2:03:48

You know, yeah, like he lived out the rest of his lives and the rest of his life in prison. Yeah, because that that would be, I think, something worse than death. Because here he got to live his life and he got to make all this money and live a very, very high-end life. And then right before his life was gonna hit the fan, he kicks the bucket.

SPEAKER_05 2:04:08

Yeah, that's one way to look at it.

SPEAKER_01 2:04:10

So I don't know. Yeah. I as I gotten older, like if I was in my 20s, I'd be like, good, serves them right, that cheating piece of crap. But then, like, I I don't know, man. I'm as I've gotten older, I've kind of looked at life a little differently in terms of like, yeah, yes, he did commit all this fraud and everything, but should a person be should karma kill him for it? I don't know. That's one of those things that hey, everybody could have their take on it. Uh, I would I would be curious to hear your takes on it. Yeah, you know, email us at the daysome fire gmail.com for your your thoughts on that. I think it I would be fascinated by it, but um, I'm not gonna pass judgment or anything like that. It's just split conversation among friends. Uh September 26, 2006, Andy Fastow was sentenced to six years in federal prison, followed by a two-year probation. On 2011, he was uh released, and then he got a job doing public speaking on business ethics and principles to corporate executives. They corporate executives, auditors, law students, and gray area decisions. So I think that's what he still does today is he gives lectures, lessons, and uh, you know, public speaking opportunities on I think a lot of his background and how to navigate gray area decisions and how to do things ethically correct. Uh, because if you have an imagination and you have access to a lot of resources, you can make some really, really bad decisions. And um, I think that's what he did. And now that he's on the other side of it, he kind of paid his debt to society. Now he is, I think he's trying to make up for it, which okay, I respect. He's not he's he's not capitalizing on other people's losses, so to speak.

SPEAKER_05 2:06:02

Sounds like he's trying to turn the corner.

SPEAKER_01 2:06:04

Yeah. So I I I have respect for him. That's why I like I wouldn't mind actually talking to him. Because, you know, I've had bad days in my time, I've made stupid decisions, nothing on this this level. Yeah, this is quite the scale, but but I would be curious, like, how do you like pick yourself up after something like this? And I think that would be a fascinating conversation to have. Now, Jeff Skilling. So we go back to May 25th, 2006. I think Leigh and Skilling, they were convicted on the same day. Uh Skilling was convicted of 19 to 28 counts filed against him. So uh, I'm sorry, 19 of 28 counts filed against him. Uh he's sentenced to 24 years in federal prison and had to pay a$45 million fine. He ultimately served 12 years because of like the whole like time serve plus the good behavior thing. I mean, it was a minimum security prison. Uh, I I don't think I don't think he had a super hard time in prison versus like if he was in a max security asylum type of thing. Um, so yeah, he he got out after his 12 years. Today he keeps a very, very low profile for obvious reasons, but he has been reported to be seeking out former Enron employees and executives. He's trying to get a gas supply, natural gas slash power business off the ground again, kind of like what Enron started off with, uh, called VELD LLC. And I like how you put LLC in there because it's a limited liability corporation. So if it all goes sideways, it can only affect the corporation and not him personally. That's probably a wise choice. Yeah, he's been trying to get this off the ground. Uh, I guess he's gotten some money. Um, but technically speaking, he as long as because his conviction specified that he could not be an officer in a publicly traded company. But as long as the company is privately owned, he can do whatever he wants.

SPEAKER_05 2:08:08

Got it.

SPEAKER_01 2:08:09

And so who knows what's going on there? I did look up his net worth, and it is like$500,000, which sounds like a lot of money, but when you're like 70, I think he's like 74, 75 years old. Um, that's not a lot to live off of. Yeah. So that there is the dumpster fire that is Enron. And I really hope I made it a little bit more interesting than just two and a half hours of accounting fraud.

SPEAKER_05 2:08:40

Yes.

SPEAKER_01 2:08:42

Well, you you I saw that delay.

SPEAKER_05 2:08:45

You're like, uh no, it was definitely better than just a bunch of numbers and babble that I don't care for.

SPEAKER_01 2:08:57

Yeah, and I tried to leave a lot of that out. I just tried to tell the story of what was going on and educate people on like how is it that even in today's day and age, with all the rules and regulations and laws and oversight committees and all these all these entities that keep an eye on ethics and all that kind of stuff, how something like this can still go down is amazing. Like the creativity that it takes to see the world that way, to be like, let's capitalize on our ability to not give a crap about the law and not really give a crap about individual, like normal working folks, and let's really work the system to our advantage.

SPEAKER_05 2:09:43

Yeah.

SPEAKER_01 2:09:44

And it's one of those things is it's like, dudes, if you had taken that intelligence and just applied it to an honest methodology, I'm sure they'd be pretty successful. Like this episode of the podcast would never exist.

SPEAKER_05 2:09:59

Yeah.

SPEAKER_01 2:09:59

And the other thing too is like, imagine, imagine that sitting on your shoulders for the rest of your life. Like, this is what you are going to be known for.

SPEAKER_05 2:10:07

Well, lucky for me, I don't put a value on money as much as these people do.

SPEAKER_01 2:10:13

Yeah, and I and I I I'm right there with you. I'm the kind of person, um, like, don't get me wrong, I wouldn't mind making really good money. I really, you know, I I wouldn't mind somehow amassing a few million dollars and living comfortably and stuff like that. Um, but I would rather keep doing what I'm doing now and actually have my wife and daughters and not have to worry about potential jail time.

SPEAKER_05 2:10:39

Yeah. Or like ruining people's lives in the process. Because that's messed up.

SPEAKER_01 2:10:45

Well, and I've and I've I've seen people that, you know, they put in all these hours for their company, and now they've got like a multi-million dollar house and a guest house out back and everything, but they haven't seen their their children in like 15, 20 years. Yeah. There was one guy, he had no idea that his son was actually living in his guest house for like five years.

SPEAKER_05 2:11:10

That's so sad.

SPEAKER_01 2:11:12

Yeah. So, and it's all because the this guy he built a life uh uh so you know, to his credit, he built a company from the ground up. He started working when he was 14 years old, digging holes for a construction company, and he's now very, very wealthy. But man, at what cost? You know, for every dollar that you have, like that's gotta be something taken away from the meaning of your life. So the more money you have, what's left of any sort of value? Because when you die, you're not taking any of that with you. Nope. But your children are certainly gonna have their memories of you that will reside for the rest of their lives, yeah, or any loved one. Yeah, so yeah, like money, money is not. Like I I'm the first to admit that money can't buy happiness, but it does help.

SPEAKER_05 2:12:04

Yeah.

SPEAKER_01 2:12:04

But it can also cause a lot of problems.

SPEAKER_05 2:12:07

Yeah.

SPEAKER_01 2:12:08

Look at this. Enron, right?

SPEAKER_05 2:12:10

That's rough.

SPEAKER_01 2:12:11

So the moral of the story is don't smoke crack and don't become some homeless guy. Right.

SPEAKER_05 2:12:16

Don't do all those things. Also, one more uh fun Simpsons episode. They had an episode where there was a an amusement park, I think. Yeah, it was an amusement park, and the roller coaster was like Enron roller coaster of life or something like that.

SPEAKER_00 2:12:33

Oh, was it just like a straight drop down?

SPEAKER_05 2:12:35

It was like a full-on roller coaster, but then then there's like conversation in the line and stuff, but they named a roller coaster after it. Yeah. Wow. I love The Simpsons.

SPEAKER_01 2:12:47

Um, the uh, you know that Theranos, that genetic company that where that lady like she railroaded her company into the ground just recently. I think she got jail time for like billions of dollars of fraud. Um, that's another famous one out there, and that's a very, very recent thing. But I can't remember that CEO's name. It was a lady, but her father, what's that?

SPEAKER_05 2:13:12

It was a lady.

SPEAKER_01 2:13:14

Yeah, yeah. She was like the founder of Theranos. And Theranos was gonna be like this genetics company where you could send in like a blood sample. Oh, and they would run the yeah, the genome on it.

SPEAKER_05 2:13:24

And there's a documentary on like HBO or Netflix or something about that.

SPEAKER_01 2:13:29

Well, her father was an Enron executive. Okay, so that should tell you everything.

SPEAKER_05 2:13:35

Yeah, it says a lot.

SPEAKER_01 2:13:37

So yeah, uh, it's a longer one. Uh hope you guys take something with you about this. Uh, do us all a favor and uh spread the word. Uh, we are um we're kind of in the process of doing some expansion and some upgrades and all that kind of stuff. So uh episodes should only be getting better and better. Uh, we do have some stuff in the works that we'll be rolling out here in the subsequent weeks. But yeah, uh do us a favor, find a relative, find a friend, find even a complete stranger, and you know, show them the website, thedays dumpsterfier.com. Uh, show them where they can where, you know, they can find us on, you know, we're on Amazon, Apple, we are uh what Google Podcasts, we uh are on Spotify, wherever you get your podcast. Yeah, yeah, we're we're pretty much everywhere. So yeah, try to find like a couple of people this next week, spread the word. Um be sure to send us an email if you have any ideas or uh we said something contradictory to to what you know. So uh that's the days dumpster fire gmail.com. And uh Kara, what do you have coming up? I know you're doing a medieval thing.

SPEAKER_05 2:14:57

Yes, I'm doing a medieval thing. I'm very excited about it because I really need to go back in time a little bit further than the year 2000.

SPEAKER_01 2:15:05

Kind of like how we needed to get out of the past a little bit and do something more recent. Now we want to go back.

SPEAKER_05 2:15:10

Yeah, now I'd really like to go back. So we're gonna go back. And I'm very excited about it. So I have that in the works. I have a couple other ideas for episodes that I want to get started. Um, just for the reminder, I am in school now, so my episodes may be a little more like one-shots instead of campaigns, but it's fine.

SPEAKER_00 2:15:30

Yeah.

SPEAKER_05 2:15:31

So yeah, hopefully um this next episode will be my medieval France fire.

SPEAKER_01 2:15:39

Medieval France fire.

SPEAKER_05 2:15:41

Yes.

SPEAKER_01 2:15:41

Yeah, I've I've been kicking around the idea of doing um like we did Chicago burning down. I wouldn't mind actually doing like a city fire.

SPEAKER_05 2:15:49

London. That's the next big one.

SPEAKER_01 2:15:51

Yeah, London or Rome.

SPEAKER_05 2:15:53

Yeah, there's the Rome one as well.

SPEAKER_01 2:15:55

Going up in flames, that would be a good one. You know, just a good old-fashioned like disaster that doesn't involve human ineptitude or humans intentionally trying to screw over.

SPEAKER_05 2:16:08

More like a natural disaster.

SPEAKER_01 2:16:10

Yeah, yeah. Sometimes those make the best dumpster fires because it's true. Because we do as humans, we try to we try to protect ourselves from every possible thing, and then a frickin' cloud wipes out everything.

SPEAKER_05 2:16:21

Yeah. I know a story like that.

SPEAKER_01 2:16:27

Yeah, yeah, we all do. So oh.

SPEAKER_05 2:16:31

That's a good idea for the next like five-parter when I actually have time again.

SPEAKER_01 2:16:35

Oh goodness.

SPEAKER_05 2:16:36

It's a hundred years war.

unknown 2:16:38

Okay.

SPEAKER_01 2:16:40

So yeah, that will that'll bring us up to episode what 275.

SPEAKER_05 2:16:49

An hour a year.

SPEAKER_01 2:16:51

Yeah.

SPEAKER_05 2:16:53

All right, friends. We will see you next time.

SPEAKER_01 2:16:55

Yep. Thanks for uh sitting in and uh yeah, keep it hot, miss.

unknown 2:17:00

Bye.

SPEAKER_01 2:17:04

Who's basically another brainwashed um Enron chick?

SPEAKER_08 2:17:07

It's best for Enron. They give us stock, and essentially we are buying a part of the company.

SPEAKER_01 2:17:14

Oh. That's not the right one.

SPEAKER_05 2:17:16

I was gonna say, it sounds a lot like the lady before.

SPEAKER_01 2:17:19

Let's try this one.

SPEAKER_05 2:17:21

Nope. Oh no! They're the same! It's the same lady. Oh no, oh, there's two of them. Oh gosh. They're multiplying.

SPEAKER_01 2:17:36

True. Alright, I'll be back in a few minutes. Now it'd be a good time for you to pee if you need.