ANATOMY of GREED
The Unshredded Truth from an Enron Insider
By Brian Cruver
Carroll & Graf Publishers Welcome to the Death Star
Copyright © 2002 Brian Cruver.
All rights reserved.
"Where wealth accumulates, men decay."
MondayMarch 26, 2001 ENE opening price: $61.00 ENE closing price: $61.48 ENE trading volume: 4,112,900
I wasn't dreaming.
On my first day as a new Enron employee, I could approach 1400 Smith Street as if I really belonged there. Just as you would expect from the epicenter of gas and power trading, the air and the streets were filled with high energy. The type of energy that made you walk faster. As I fell in line with the streams of Enronians heading into the main building, I suddenly realized I was marching double-time. This was it. The pace had been set, and it fit my stride perfectly.
I was built to work at Enron.
Like anyone from Houston and anyone who went to business school in Texas, I had always known that Enron was the ultimate launching pad for a business career. Highly respected, bitterly admiredif you were craving the fast track, you dreamed of working atEnron. Everyone knew it, and everybody talked about it: the people of Enron were simply "the best and the brightest" ... and now, I was finally one of them. On that first day, in a time that seems so long ago now, I remember trying to project the image of brilliance, sophistication, and self-control. But inside Enron's newest manager was a kid, and he was ready to scream, "This place is bad-ass!"
The excitement was mixed with a wave of relief. Finally, I would get instant respect from family, friends, business associates, and complete strangers. Finally I could just say "Enron" and not have to explain where I worked. Everyone would be impressed.
I had taken a couple of risks after B-school.
First I joined a small, babyish trading firm on the other side of downtown Houston. Even though the firm was owned by Shell, it simply couldn't compete (with Enron, that is) and quickly fell apart.
Then I wasted a year of my life creating www.startup-without-money. com. No explanation needed on that one.
With Enron, I finally felt like my days of high risk were over. It was time to get back on track and reap steady rewards from the dues I had paidthe time and money I put toward getting an M.B.A., the years of grinding away at Excel spreadsheets. Finally, I was ready to sprint down the path to my success. I had just hit the jackpot in the form of a safe, secure job at the seventh biggest company in America.
My fat head and I walked up the steps to Enron Center Northfifty stories of mirrored glass, in a shape not unlike a Speed Stick deodorant container. The mirrored glass was part of the planwe could all glance to see how smart and successful we were as we entered our building.
The first thing I noticed when I entered Enron headquarters was the space-age environment. The lobby was surprisingly small, with simple curves and a dramatic absence of color. Only the red, green, and blue of Enron logos or the images on massive video screens distracted me from the clean, chromed shapes all around. And if it wasn't glass or chrome, it was a soft, gray marbleimported from some distant galaxy.
Security was tight, if not intense. The checkpoints created a pair of bottlenecks, each allowing one Enronian at a time to enter the main lobby. I had heard many times that Enron Corporate Security was ex-CIA, common for large corporations with such a heavy stake in intellectual capital. I wondered if the security guards already knew me. Perhaps they had studied my picture at their last briefing. Perhaps they knew what I had eaten for breakfast that morning.
As a new employee, I was told to go wait in a special area referred to as the New Employee Waiting Area. Wow. A company growing so fast and hiring so many people that they had designated a special area for new employees. About forty of them were already gathered there on that Monday morning.
As I strolled confidently past the checkpoints, I had a telepathic exchange with one of the security guards.
He sent me a message I interpreted as, "Go ahead, buddy. Just try it."
I quickly beamed my own thoughts back at him, "Oh, I have access.... I'm just not quite ready to use it."
I looked up and saw a banner the size of a mobile home: From The World's Leading Energy CompanyTo The World's Leading Company. The banner hadn't been there a week earlier during my interviews. The company was removing the word Energy from its mission, and the banner was declaring it to the world. Enron was now ready to take over everything.
For about two seconds, I wondered if they had changed it just for me.
As I reached the mass of new hires, I was almost clobbered by an enormous, three-dimensional "E" logo as it rotated with flashing lights. Very nice! A bit disco, but very nice.
I looked around at my new company, eating it all up as fast as I could chew and swallow. It was a constant flow of impressive people; casually dressed, moderately stressed. They all had very serious looks on their faces, but it was more of an "intellectual serious" than a "concerned serious." They were changing the world, creating new markets, and rising to the topthey had every right to be serious.
Next thing I knewI had turned serious. I cleared my glazed look and tightened my upper lip.
"Cruver!" The voice was familiar.
I turned to see John Weston, an old friend from the M.B.A. program at the University of Texas. He was waiting in the same area as the other new initiates. Today was John's first day at Enron, tooour career paths had just collided.
Ordinarily, this would just be a funny coincidence, but it was more than that. You see, John had an undergraduate degree from Harvard, and he was the guy in our B-school that set the curve. Everyone thought of him as being ten times smarter than the second-smartest person they knew. Now he and I were exactly equalin time and placewith our careers. Perhaps this meant that people would think of me as being ten times smarter than the second-smartest person they knew, unless they knew us both, in which case ...
A woman with a clipboard interrupted my analysis by announcing directions on how to get to the orientation room. We were all given our first access, albeit temporary, and we formed a line.
This was the moment. I smiled at my new friend the security guard and passed through to the other side: the Enron world.
I distinctly remember my first elevator ride as an Enron employee. I had two thoughts.
Thought one: "I think it would be beneficial to my career if I could stay at Enron for at least three years."
Thought two: "I made it."
Again, I felt the energy. This time, it was flowing through my veins. We reached the orientation room to find a massive table of pastry, fruit, and other breakfast treats. The theme that day was caffeine and sugar, and we were going to need every bit of itwe had eight hours of the Human Resources department ahead of us.
"Blah" describes the day perfectly. Aside from an almost amusing introduction by an Elvis impersonator, the orientation session was pure tedium. My eyes rolled back into my head as the HR department began sucking the life right out of me. I wanted to skip it. I wanted to go upstairs to the trading floor. I wanted to start working on deals.
Handout after handout, speaker after speaker, I was being sold on the Enron values. These "core values" were being drummed into my head: Respect, Integrity, Communication, Excellence.
"Sure," I thought. "Sounds good to me."
Then something really got my attention. We were handed the Enron 401(k) Plan Details. Page four talked about the company matching 50 percent of whatever I put in my 401(k)wow! Free money! At the top of that same page was a decorative headline quote: "'Lack of money is the root of all evil'George Bernard Shaw." Okay, now we're talkin'.
After a few hours of paperwork and staring at my watch, it was time for our lunch break. All the new employees went off to grab pizza and mingle with one another, but not me. My boss showed upwas he here to rescue me from this administrative nightmare and take me up to the trading floor? No such luck.
I soon discovered that Greg McLainey was a very likeable guy, even when he wanted to rip my face off. He had a very creative business mind and a background in engineering. Everything in his brain translated to a diagram on a wall-mounted drawing board. His hands told a story of someone who had worked extremely hard all his lifeand there was no doubt he expected the same from me. He was a bit older than the average Enronian, with graying hair and a cautious smile. His personality was difficult to read, except for a constant message to the world that time was running out. Was it running out for him? Was it running out for him at Enron? I couldn't tell.
In any case, this guy was not about filler. No bullshit allowed. He would cut to the chase before you even knew he was standing over you.
He had come down during my orientation break to tell me some things before I went upstairs to join our group. McLainey disguised the meeting as "Hey, let's grab lunch," but I could sense it was more than that.
I had been hired by McLainey into one of Enron's newest start-up businesses. After some no-bullshit interviews with him and the head of the group, I was given an offer ... and it was a great offer. A fat salary, plenty of Enron stock options, and the promise of a year-end bonus had all been handed to me; I would have taken much less to work at Enron.
The group I was joining was just a couple of years old, and its focus was on buying and selling credit risk as a commodity. The big challenge for the group was selling derivatives to customers who needed protection against third-party bankruptcies.
The concepts, products, and markets for bankruptcy protection were relatively new to the corporate world. I had been hired to join McLainey and a few others on the development team, which meant we would be responsible for polishing those concepts, creating those products, and lubricating those markets. In other words, the long-term future of this fledgling business (and the hundred or so people that worked in it) was in our hands.
They had hired me because I had started businesses before, and because I had a strategic eye for designing products and creating alliances in the market. I was young, but so was everyone else at Enron. And I had an M.B.A. I was ripe for the job.
And I was overflowing with confidence when McLainey showed up for our surprise lunch meeting.
I thought there had to be something real juicy to tell me, and I knew he wanted to just lay it on me. Instead, he began the conversation with some courtesy small talk. Then the exchange went as follows:
McLAINEY: "There's something I need to tell you about. I'm telling you because I don't want you to be caught off guard."
ME: "All right."
McLAINEY: "There was a slight mix-up in the hiring process."
ME (frozen stare): "This is a joke, right?"
ME: "Uhhh ..."
McLAINEY: "It's no big deal. We're going to keep you. I just wanted you to know because some people aren't real happy that you're here. I want you prepared because they'll probably say something to you."
ME: "Are you telling me you didn't want to hire me?"
McLAINEY: "No, I wanted to hire you. It's just that the group really hadn't agreed to hire you."
McLAINEY: "Just think of it like you're adopted."
At that moment I heard a "pop"the sound of my bubble bursting. I was thinking that April Fool's Day was not for another week.
The subject quickly changed, but our conversation really didn't seem too enjoyable after that. I was stunned, to say the least. Fortunately I had more orientation that afternoon, which gave me a few hours to simmer down.
Was this guy for real? I just kept thinking it had to be a test. One of those classic "new kid" mind games to see how thick my skin was.
It just didn't make sense. How could Enron be named the "most innovative" company seven years in a row, and then hire someone by mistake? My skin was thick, but not that thick.
Was I on thin ice already? If there wasn't any room for me on the payroll, would they be looking for a way to clear me off?. Shit! My Enron career was four hours old and I was already losing my edge.
The afternoon was a blur; I could think about nothing but my conversation with McLainey. When the time came to head upstairs to my new desk and my new career at Enron, I had a whole new type of energy. It wasn't the "I made it" energy from before, but more of an "I'm pissed" energy. All I could do was bite my tongue and act professional.
One of the best business skills I have is the ability to hide my emotions and what I am really thinking. So when I finally met with the people in my group, I was able to smile and say "Hello," "Hi," and "Nice to meet you"while in my head I was greeting them with "Bite me."
One of the people McLainey introduced me to that afternoon was Vic Lazarri. He was known as Vic "The Prick," a term I decided never to use. He was a deal man. More specifically, he tried to shove a variety of risk-management products down the customers' throats, whether they made financial sense or not. Lazarri was having a tough yearsince his customers weren't convinced that bankruptcy risk was anything they needed to worry about.
He barely gave me a quick nod upon introduction, and then was back on the phones. Two phones, one in each hand, with six flat-screen monitors mounted in front of his face. The screens were filled with Bloomberg charts, news wires, and video feeds of other people like him from around the world. Lazarri was only about one millisecond behind every event that took place on planet Earth. Sometimes it even seemed like he got ahead of it.
Lazarri had the bushiest eyebrows I'd ever seen, and leathery skin like he went to the Caribbean four times a year. He was a bit on the midget side, barely taller than his stacked computer screens. You could actually watch him burn calories just standing there on the phonesas he constantly rearranged himself, and blinked his eyelids like a madman.
Vic was the market adviser to everyone on the trading floor, and ultimately to me as well, although oddly enough he avoided commenting on any specific stocks, with one exception: he was always following ENE (Enron's ticker symbol on the New York Stock Exchange). He seemed to know exactly where it was headed.
I relaxed at my new desk for about half a second when the phone rang.
"Cruver! Welcome to the Crooked E!" It was another friend from business school who was calling from fifteen floors above. Ron Middleton was working in the Enron group called Risk Assessment and Control, more commonly known as RAC.
The Crooked E? It was true: the Enron logo was the letter E tilted at forty-five degrees, though the tilt was not exactly what he was referring to. That was the first time I had heard the expression, and it made me laugh.
Soon my first e-mail arrived, from a friend at an Enron competitor across the street. He had learned the news of my Enron arrival, and figured out my new e-mail address:
So, another Jedi goes over to the dark side ...
While the "Crooked E" nickname was new to me, I had heard the many StarWars references used to describe Enron. In my days at the Shell trading firm, we often discussed Enron using these metaphors, and of course they made perfect sense. For example:
Enron was the Dark Side or the Empire, the dominant force in the energy universe, taking control of everything in its path, relentlessly gobbling up other companies and assets. The Dark Side could manipulate anythingfrom politicians, to suppliers, to regulators, to entire commodity markets. Other companies were simply helpless against the sheer size and strength of Enron's wicked force.
Excerpted from ANATOMY of GREED by Brian Cruver. Copyright © 2002 by Brian Cruver. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.