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Movie Review: Enron - The Smartest Guys in the Room

Posted on August 21, 2006

EnronHaving been in undergraduate business school at Bentley College during the Enron scandal meant that I heard a lot about it inside and outside of my classes. In the classroom, more and more emphasis was being places on ethics which was a great thing. However, with all that I heard about the scandal I still never felt that I knew the whole story. There had to me more to it. It couldn’t just be a simple numbers issue. Time passed and I began to think less about Enron. The trials began and ended. The appeals were filed. Then, one day while I was on netflix I ran across the Enron documentary by Alex Gibney and placed it in my queue.

I thought the movie would be dry but would also be very interesting since it would reveal the story behind the story. Boy was I in for a surprise. The movie, and the scandal as well, turned out to be a high stakes drama focusing on people rather than numbers. In fact, throughout the movie one of the co-authors of the book the documentary was based on, Bethany McLean, continually refers to the Enron scandal as a human tragedy rather than a story about numbers. Those words ring true as the film progresses.

Director Alex Gibney does an incredible job of allowing the viewer to get to know the people involved and how the top people at Enron created a dog eat dog corporate culture that spawned corruption from the top to the bottom of the company. In fact, the moments that really hit me were the audio segments from the Enron traders. It was obvious that a lot of the folks at Enron had lost touch with reality toward the end.

The other thing that struck me was the fact that Enron accounted for income at the onset of an idea. Andrew Skilling, Enron President and COO, believed that the idea was what was worth something and you should be able to book future profits from the idea immediately. I wonder how this could have ever made sense to people. Any entrepreneur will tell you that the idea is obviously important and necessary but the execution of the idea is where businesses and money are made.

This is a great movie and I highly recommend it. If you aren’t into business you will love the gripping human drama and if you are into business it will teach you valuable lessons and make you think more while at work or while running your own company. If any of you have already seen this documentary I would love to read your comments. Perhaps we can even take a more entrepreneurial bend to the comments and discuss how the Enron scandal has affected the start-up world. I’ll start!

The Enron scandal led to the creation of Sarbanes-Oxley. Sarb-Ox brings a lot of cost into the mix for public companies (I think I heard $3mm per year on average at one point). The extra costs mean that companies need more revenue in order to go public and some companies that went public pre-sarb-ox are now being bought by private equity firms who are taking them private in order to cut out sarb-ox costs making the companies instantly more profitable.

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1 Comment so far
  1. Fraser August 21, 2006 9:00 pm

    Great review. I caught this in the theatre and the thing that still jolts me wasn’t how brilliantly corrupt they were, or anything along those lines…

    What shocked me was just how simple and ridiculously stupid the scheme was. I’m with you - I can’t believe anyone bought it for any amount of time. The Blockbuster partnership? Hilarious.

    I agree and second Eric’s recommendation - see this movie.