Enron: The Smartest Guys in the Room Page #4

with Enron.

He proclaimed, at one point,'

I am Enron'.

The other thing

about people at Enron is,

a lot of them were former nerds

and including Jeff Skilling.

He had been paunchy.

He had big glasses.

He was losing his hair.

And Jeff Skilling

one day kinda woke up

and decided to change himself.

And he started working out,

lost a lot of weight.

But he really did

remake himself

through sheer will

and force of personality.

When Jeff got Lasik on his eyes,

everybody at Enron got Lasik,

so nobody was wearing glasses.

I think Jeff Skilling

is really a tragic figure,

in a classic sense of the word.

He's a guy that people describe

as incandescently brilliant.

But he's also a guy who

is radically different

than he at times

portrays himself.

He's portrayed himself

as somebody who has

very tightly-monitored risk.

In reality, he's a gambler.

He gambled away huge sums of

money before he was 20 years old,

by making wild bets

on the market.

To Jeff Skilling,

risk was glamorous.

He was a huge risk taker.

He actually talked about

wanting to go on trips that

were so perilous that

someone could actually die.

This manifested itself

in trips that Jeff Skilling led

for a small group of friends

and customers.

A core cadre of

Enron guys used to go on

these wild adventures:

Andy Fastow would go;

Ken Rice would go.

The trips were legend.

You know, we can sit and think

about what strange insecurities

they were trying to overcome.

But it made them

feel good as men.

And they took a particularly

memorable trip to the Baja

twelve hundred miles of

very rugged terrain in Mexico.

This is a trip where

people crashed bikes.

Ken Rice was on the trip,

and he busted a lip and

required a bunch of stitches.

People broke bones.

One guy flipped a jeep

and almost got killed.

Those sorts of stories

at Enron became legend.

And it fed the whole macho

culture of the place.

Jeff Skilling had a way of

describing people that he liked.

He said,

'I like guys with spikes. '

He liked somebody with

something extreme about them.

Ken Rice was one of

the Men with Spikes.

He was the salesman

of the group.

Very amiable, fun, man's man.

And was the guy out selling

deals to energy companies.

In the case of Cliff Baxter,

the company's chief dealmaker

he was extraordinarily talented

at just doing a deal.

But he was a manic depressive.

Baxter was a very bright guy,

very blunt would

tell Skilling whatever

he thought was closest

to Skilling, personally,

than anyone else

in the company.

There was a guy named Lou Pai,

who was a key

Skilling lieutenant;

helped build the trading

business in the early years;

went on to run Enron's doomed

effort called

Enron Energy Services.

What was the job of EES,

as you ran it?

Ah, it was to sell energy

services to end users,

industrial end users.

Lou Pai is

the guy that Skilling

tapped to run the EES business.

Because this was,

this was so important

to the company,

and to Skilling's future.

He called Lou Pai 'my ICBM.'

And Lou Pai dispatched

his enemies

with incredible skill.

And if that meant leaving

bodies behind him,

Skilling was certainly

fine about that.

I'm not feeling anything.

Lou Pai was kind of

a mysterious figure.

He was kind of like

the invisible CEO.

For awhile he was located

on the 7th floor.

And there's a long office.

And it was all glass-enclosed,

and you would walk by there,

and it was just almost

all the time it was empty.

Details didn't

interest Lou Pai.

Only two things seemed

to motivate Pai

money and a peculiar

fascination with strippers.

For Pai,

it was all about the numbers.

He was there

every night after work

and he usually brought some of

the traders along with him.

He spent quite a lot of

money there as well.

Much of it charged to

the Enron expense accounts.

There were rumors that

he brought strippers up

to the trading floor.

Almost everyone knew the story.

The story is that

because he's kind of a mild,

soft-spoken,

almost meek individual

that maybe these...

these strippers didn't even

believe he was the CEO.

So he took them up

to his office.

And I guess they,

they put on

a little show for him there.

One night he was at a club.

And one of the guys said,

you know, Lou,

all the rest of us are single.

You know,

we don't have any problem.

But how do you keep your wife

from smelling

the strippers' perfume on you?

And Lou said,

'oh, I've got a secret'.

He said, 'I stop in at a gas

station on the way home.

And I spill a little

gasoline on myself

and it kills the scent. '

So the other guy shot back,

he said, 'but Lou,

doesn't your wife then think

you're f***ing

the gas station attendant? '

In the context of Lou Pai,

everyone was horrified,

a pall fell over the table.

Because Lou Pai was

not a man to trifle with.

Two days later,

the guy who told the joke,

as Enron legend... has it,

was dispatched to Calgary,

Canada.

Lou Pai lost all interest

in running EES

as soon as the numbers

got high enough.

I netted approximately

a hundred million dollars.

I don't know

if that number is accurate,

plus or minus 20 million.

He actually left Enron

with more money than anybody,

250 million dollars,

because he sold

all his stock in Enron

after he got

a divorce from his wife,

in order to marry

his stripper girlfriend,

who had had his child.

His exit from Enron was as

mysterious as his presence there.

Just sort of one day,

we all learned that Lou Pai

was no longer the CEO of EES.

Though Lou Pai

flew away from Enron

with 250 million dollars,

the divisions he left behind

lost a total of

nearly $1 billion.

But Enron managed to

disguise that fact.

Lou Pai became the second

largest landowner in Colorado.

It was the number.

It was always making

those numbers,

and looking, you know,

it was, to me,

the real mythology is

high school mythology.

That, you know,

you wanted to be the most

popular guy on Wall Street,

and you were gonna do whatever

you had to do to stay there.

And Jeff understood

those rules better than,

I think, anyone else.

Americans are making

a lot of money in stocks.

The stock market soared to

near record highs yesterday.

The stock market continued

its bull run Thursday.

The Dow rose nearly 61 points.

Even the person with

very little disposable income

all of a sudden began to play

in the stock market,

because nobody could fail.

Because stock prices were

just going up and up and up.

Another day, another record.

And the internet

technology stocks,

just going wild.

Gained more than 100 points

to close at 7895.81,

the highest finish ever.

It was a time where

we had the biggest bull market

in the history of the world.

Ken Lay was right there,

acting as a cheerleader.

Obviously our stock has

been doing very well.

I think there's

a fairly good chance

we could see the

stock price double

again over the next year

to eighteen months.

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