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13Posted byu/cryptocam26
146 days ago
154
16The Smartest Guys in the Room eerily describes Tesla
17I just finished reading the smartest guys in the room and couldn't believe how many parallels Enron's story has with Elon's. Obviously some of these are immaterial and just coincidences, but I think some of them get to the heart of how the companies got away with so much.
18
19For the record I'm not saying that Tesla is a fraud like Enron was. The accounting rules that were put in place after Enron's bankruptcy make accounting fraud a lot less likely these days. I'm just calling attention to the company culture and some of the bad behaviors it causes.
20
21I tried to cut the content as much as possible but there's so much here that it's difficult.
22
23Everything below other than the headings is a direct quote from the book, written in 2003 with a few quotes from the 2013 update. Again, the parallels are impressive.
24
25Outside Investors
26Blaming the shorts and the media
27In Internet chat rooms, individual investors flamed analysts who downgraded their favorite stocks. Even sophisticated institutional investors—the analysts’ primary clients—often became angry at research analysts who turned bearish on stocks they held. It didn’t matter if the analyst’s insight was correct or perceptive; all that mattered was that he or she had hurt the stock.
28
29Enron, he told the jury, was “a wonderful company—a shining star.” Its failure had resulted not from fraud but from an irrational panic (the “run-on-the-bank” theory) triggered by irresponsible media stories (especially those Wall Street Journal articles) written by reporters in cahoots with short sellers bent on destroying the company.
30
31Banks and analysts complicit
32Analysts who worked for Wall Street banks later claimed that they had been deceived by Enron. But if they were indeed victims, they were willing ones. “For any analyst to say there were no warning signs in the public filings, they could not have read the same public filings that I did,” Howard Schilit, an independent analyst who is the president of the Center for Financial Research and Analysis, later told Congress.
33
34But analysts got to be rich and famous only if they were bullish. That’s what got them appearances on CNBC, not to mention loving profiles in The New Yorker,
35
36What if an analyst tried to get beyond Enron’s pat explanation of its business? Executives would imply that they were slow and stupid, and most of the other analysts would agree with that assessment.
37
38For the analysts, there was a final reason they needed to keep their buy ratings on Enron: the ugliest and most powerful reason of all. There was simply too much investment-banking business at stake not to have a screaming buy on the stock.
39
40Aggressive fan boys against the shorts
41Over at Kynikos, Jim Chanos was in hysterics. He had never heard the CEO of a Fortune 500 company lose it like that. After listening to the conference call, Chanos was more convinced than ever that Enron was hiding serious problems. Even owners of Enron stock thought Grubman’s questions were perfectly valid—and if they hadn’t been, Skilling should have dealt with them more adeptly. “Any CEO should be able to handle the hardest of questions from the most aggressive of shorts,” says analyst Meade.
42
43Large investors started dumping shares
44Instead, in private deliberations in sequestered boardrooms, major institutions were beginning to reevaluate their position on Enron. Unlike the public buy recommendations from the equity analysts, though, these private decisions never came to the attention of the small investor. Between March and the end of June, four large holders—Janus, Fidelity, American Express, and American Century—sold a total of 21.3 million shares, according to an internal Enron document. One major Wall Street firm that traded with Enron began to watch its exposure more carefully and ever so slowly cut back the amount of money it would allow Enron to owe at any point. “We thought Enron was a very funky animal that kept getting funkier and funkier,” says a credit officer there.
45
46Shorts leading the way with information
47It was short sellers who first asked tough questions about Enron. Their interest was sparked by the tremendous run-up in the stock, which can suggest that a company is overvalued. It was fueled by the hype about broadband and the collapse of Azurix.
48
49Though most of the mainstream business press was unaware of Roberts’ report, it was widely circulated among hedge-fund managers and other large institutional investors. A reporter named Peter Eavis, who wrote for the popular online financial site, TheStreet.com, followed up on Roberts’s research and began writing a string of negative stories about Enron. Slowly, the heat was being turned up.
50
51All the information was public
52The circle of people who knew—or should have known—that Enron’s glittering surface masked a different reality was surprisingly large. Much of what Enron did—such as generating billions in off-balance-sheet debt—was out in the open. Many of the analysts knew full well that the company’s earnings far outstripped the cash coming in the door. The bankers and investment bankers, who worked for the same firms as the analysts, certainly understood what Enron was doing; indeed, they made Fastow’s deals possible. The credit-rating agencies knew a lot. The business press, which could have looked more closely at Enron’s financial statements, couldn’t be bothered; the media was utterly captivated by the company’s transformation from stodgy pipeline to new economy powerhouse. And of course there were any number of Enron’s own employees who could see for themselves how the company was making its numbers. And yet, they all chose not to make the logical leap, to see where it was inevitably headed. Instead, they all chose to believe. Everyone loved Enron.
53
54Company Leadership
55Nepotism, the company is mine
56His top executives were also dismayed at the way he and his family openly fed at the Enron trough. “If you’re the CEO of a public company, it isn’t yours,” says a former executive, but Lay seemed oblivious of such distinctions. Over the years, he seemed to have cultivated a powerful sense of personal entitlement. Not only did he use the company’s fleet of airplanes for his private use; so did his children. Enron employees called the planes the Lay family taxi, so frequently did family members use them. Linda Lay used an Enron plane to visit her daughter Robyn in France. Another time an Enron jet was dispatched to Monaco to deliver Robyn’s bed.
57
58The CEO was a visionary genius
59When people describe Skilling they don’t just use the word “smart”; they use phrases like “incandescently brilliant” or “the smartest person I ever met.”
60
61“What Skilling did so well was to motivate other people to his vision,” says a former Enron trader. “I still believe in a lot of the things he said.” Several of the traders did think that some of Skilling’s personal habits, such as hanging out in Houston dive bars until the wee hours, were strange. But they liked that in a way, too. “Enron people, who cares about normal?” asks another former trader. “We don’t like normal. People at Enron didn’t want a typical CEO.” And in a way, Skilling was just like them.
62
63Skilling and Lay found themselves mentioned in the same breath as GE’s Jack Welch, Microsoft’s Bill Gates, Apple’s Steve Jobs, and the very small handful of other celebrity businessmen.
64
65By all appearances, Skilling was on top of the world. BusinessWeek celebrated his new position with a worshipful cover story, featuring Skilling precisely as he wanted the world to see him, dressed in ultracool black, electricity sizzling through his body. Worth magazine described him as “hypersmart” and “hyperconfident”—and named him America’s second-best CEO
66
67The fans became disillusioned with CEO
68And suddenly, Skilling was no longer infallible. Always before, when Skilling said the stock would go up, it went up. But not this time; now, his insistence that the stock was worth $126 a share had the scent of desperation. Skilling now hated riding in the elevator with employees.
69
70Unstable CEO, harassing employees
71A few years earlier, when he was still COO, he gave the finger to an employee who had almost run into his car during the morning parking rush. It was hardly the sort of gesture one expected from a big-time corporate executive. But Skilling blew off complaints about the incident, word of which spread like wildfire. “I’m an entrepreneur, not a politician,” he said.
72
73As for Skilling’s mood, it seemed to oscillate between depression, righteous indignation, and manic excitement about the next big enchilada.
74
75Margin calls
76Lay’s finances, however, were built around the belief that Enron’s stock would never go down. During most of the 1990s, Lay had most of his net worth in Enron stock. In 1999, his advisers began pestering him to diversify. But he did so in a manner that wound up, in effect, doubling his bet on the stock. Here’s what he did: Lay pledged almost all of his portfolio of liquid assets—primarily Enron stock—as collateral for bank and brokerage loans.
77
78Genuinely believed in their work
79For all of Skilling’s public bravado about how great everything was at Enron, he spent most of his time dealing with a host of serious problems, the part of the job he had always despised. Part of him was caught up in maintaining the illusion that Enron was, indeed, the World’s Leading Company. But it seems likely that another part of him was being forced to confront the darker reality. Holding those two conflicting notions in his head at the same time—at a minimum, it had to be exhausting.
80
81Pushover board
82And here’s the most amazing denial of all: Even Enron’s board of directors—the people formally entrusted with serving as a check on management and with guarding the interests of the shareholders—disclaimed any responsibility.
83
84Lehman Brothers was so shocked that the Enron board would approve such an arrangement that it insisted on receiving a certified copy of the board resolution approving Fastow’s conflict. Then it signed on for $10 million.
85
86Insider selling
87Pai had continued unloading his shares. Just between May 18 and May 25, 2001, he sold almost a million shares. When he had finally parted with his last share, Pai had sold over $250 million worth of Enron stock—more than anybody else at the company.
88
89Skilling also took care of his own finances. Since May 2000, he had sold over 450,000 shares of Enron worth some $33 million. In mid-September, he sold another 500,000 shares, bringing his total proceeds to over $70 million.
90
91Lay, of course, didn’t reveal that in the previous two months, he had secretly cashed in $20 million of his own stock by drawing down his company credit line, then repaying it with Enron shares—part of the $78 million Lay had pocketed this way over the previous 12 months.
92
93The Company
94The company was good for humanity and disrupting dinosaurs
95Just as he had when Enron was riding high, Skilling labeled ExxonMobil a “dinosaur”—as though it didn’t matter that the oil giant was thriving while Enron was nearly extinct. “We were doing something special. Magical.” The money wasn’t what really mattered to him, insisted Skilling, who had banked $70 million from Enron stock. “It wasn’t a job—it was a mission,” he liked to say. “We were changing the world. We were doing God’s work.”
96
97He was openly scornful of steady, asset-based businesses that grew slowly but generated cash—then swept them away to make room for a series of ever-bigger, ever-riskier bets that brought in almost no cash at all.
98
99According to their view, what the Enron executives had done was nothing worse than what dozens of CEOs had done in Silicon Valley, where people who worked for companies with far less to offer than Enron had fed Internet hype, cashed out, and walked away unscathed. A more extreme version of this thinking was that Enron’s sins were not incompetence and fraud but rather innovation and free-spiritedness. Enron’s dwindling collection of defenders made the same argument as Michael Milken’s defenders had in the 1980s: They were being prosecuted because they were a threat to staid, old corporate America. “You can always tell who the pioneers are, because they’re the ones with arrows in their backs,” became their refrain.
100
101Telling the market what they want to hear, pointing forward
102Besides, the Enron story, when Skilling told it, sounded so good; otherwise intelligent people were reduced to nodding their heads in agreement. Skilling listened to what the market wanted and sold Enron that way.
103
104Always before, Skilling was able to come with a new big enchilada to drive the business—and the stock price. That was the part of being a businessman that he loved. But he was out of big ideas. Righting Enron required lowering everyone’s expectations—something he could not bring himself to do—and fixing problems, which he hated. “It was getting hard,” says a former executive, “and Jeff doesn’t do hard.”
105
106All the appearances of success
107“Enron is literally unbeatable at what they do,” raved David Fleischer, a securities analyst at Goldman Sachs. “The industry standard for excellence,” chimed in Deutsche Bank’s Edward Tirello. “Enron is the one to emulate,” wrote the Financial Times.
108
109That Skilling himself sometimes seemed unable to give a coherent explanation of Enron’s business—at times, he got by with saying “We’re a cool company”—bothered no one. All that mattered was that the stock was going up. Because the stock was rising, Enron’s executives were seen as brilliant.
110
111It was so easy to believe, for signs of success were everywhere. Enron was building a flashy 40-story skyscraper, designed by the architectural superstar Cesar Pelli, at a cost of about $200 million—complete with a $1 million, hand-etched relief map of the world that hung from the atrium ceiling on 18-foot glass panels. Lay told employees that the building “may become kind of the landmark for downtown Houston.” (It was still under construction when Enron collapsed; the building was sold for $102 million in 2002.) In London, Enron’s expensive new offices overlooked Buckingham Palace. “You walked through the offices every day and thought, ‘Someone is paying for this,’ ” says a former Enron Europe employee. “We all had faith based on empirical observations.”
112
113Good ideas but unrealistic
114Skilling also had a tendency to oversimplify, and he largely disregarded—indeed, he had an active distaste for—the messy details involved in executing a plan. What thrilled Skilling, always, was the intellectual purity of an idea, not the translation of that idea into reality. “Jeff Skilling is a designer of ditches, not a digger of ditches,” an Enron executive said years later. He was often too slow—even unwilling—to recognize when the reality didn’t match the theory.
115
116Most executives believed Lay’s makeup included an unhealthy capacity for self-delusion: he tended to deceive himself about harsh truths he didn’t want to face. “He invents his own reality,” says one.
117
118In many ways, broadband stands as the logical evolution of the accumulating problems that ultimately brought down Enron. What Enron was trying to accomplish was bold, even inspirational. It looked dazzling in a hotel ballroom, presented to analysts by Skilling on PowerPoint slides. But in the real world, it ran headlong into the reality of a thousand technical, economic, competitive, and logistical roadblocks that keep any business plan—especially one so exceedingly ambitious—from unfolding perfectly.
119
120Attempting even one of these plans would have been an enormous undertaking for any company, requiring a tremendous commitment of resources, time, and talent. To try to do them all at once, without any previous experience, virtually overnight? It was crazy.
121
122While EBS was never what Enron claimed, certainly much of the work being done was real. Teams of engineers were struggling with the technology, trying to crack the code on the networking problems, testing video-streaming, spending hundreds of millions on hardware, and cobbling together the promised 15,000-mile fiber network, which Enron had pledged to extend to Europe (where it was putting yet another hundred employees). The traders were developing standard contracts, trying to drum up trading partners, and courting the phone companies. EBS’s mergers-and-acquisitions team gobbled up software companies that might help the business along. Broadband even had its own venture-capital division, investing in start-ups and public tech stocks. Considerable effort was also devoted to giving Wall Street the impression of rapid and dramatic progress.
123
124Energy trading, which Enron pioneered, is very real today, as is video on demand—which was supposed to be part of Enron’s broadband business. Corporate energy-efficiency retrofitting—the intended business of EES—is all the rage today. Compare all that to the making of loans to people who couldn’t pay them back and the packaging of those loans into securities to be sold to clueless investors. The former was genuinely creative; the latter was simply opportunistic and destructive. Or to put it a different way, there was so much possibility in Enron, and there could have been a different ending. There was never going to be anything but a bad ending to the inflation of home prices. By some measures, maybe the Enron guys really were the smartest guys in the room.
125
126Fake it till you make it
127It was also a veritable sham. The war room had been rapidly fitted out explicitly to impress the analysts. Though EES was then just gearing up, Skilling and Pai had staged it all to convince their visitors that things were already hopping. On the day the analysts arrived, the room was filled with Enron employees. Many of them, though, didn’t even work on the sixth floor. They were secretaries, EES staff from other locations, and non-EES employees who had been drafted for the occasion and coached on the importance of appearing busy. One, an administrative assistant named Kim Garcia, recalls being told to bring her personal photos to make it look as if she actually worked at the desk where she was sitting; she spent most of the time talking to her girlfriends on the phone. After getting the all-clear signal, Garcia packed up her belongings and returned to her real desk on the ninth floor. The analysts had no clue they’d been hoodwinked.
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129When the executives talked about the Enron Intelligent Network, they made it sound as if it were working already. “This software layer, is this a pipedream, is this something that we’re going to get done in the next five years?” asked Joe Hirko, co-CEO of the business. “No, this is something that exists today.”
130
131At the time, Enron had portrayed this network as “lit, tested, and ready.” In fact, it wasn’t close to operating on a commercial scale, and much of the promised technology never made it out of the lab.
132
133Top executives Ken Rice, Kevin Hannon, and Joe Hirko, as well as two others, were charged with fraud and insider trading, accused of lying to the investing public about EBS’s technological capabilities to inflate market valuations of the business while collectively selling more than $150 million of stock.
134
135Thought they were a startup
136Everybody talked about moving at Internet speed. Much of what Skilling was selling had the effect of positioning Enron as a company that had more in common with the dot-coms than with an old energy giant like Exxon. Of course it also helped that no one suspended disbelief more than Skilling himself: he seems to have truly thought the culture he was establishing would give Enron a huge competitive advantage in the new age.
137
138Obscure reporting metrics
139“It was a PR message embedded in a financial disclosure,” says one former divisional EES accountant. “That even made Rick Causey cringe.” It served the same purpose as the dot-com metrics: it gave Wall Street something to focus on besides profits.
140
141Slippery Slope
142There have been accounting frauds over the years where companies created receivables out of whole cloth or shipped bricks at the end of a quarter instead of products. In such cases, someone at a company has to consciously consider the fact that he or she is about to commit a crime—and then commit it. But for the most part, the Enron scandal wasn’t like that. The Enron scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control.
143
144Employees
145Using employees
146But even inside Enron, the old Skilling magic wasn’t working anymore. The questions were skeptical. How’d we make our numbers this quarter? Why are you selling so much of your own stock? And finally, from Margaret Ceconi: “You say we’re going to make half a billion a year, Jeff. How in the world are we going to do that? What’s your strategy?” “Well, that’s what you guys are for,” Skilling responded. “You guys are the creative ones—you’ve got to figure it out.” That afternoon, EES laid off three hundred people, including Ceconi.
147
148Trusting the experts
149the vast majority of people who worked for Enron simply assumed that the Global Finance team and Enron’s accountants at Arthur Andersen—not to mention the stock analysts and credit analysts—knew what they were doing and that there was nothing for them to worry about.
150
151Performance tied to stock price
152For Skilling himself, says a former aide, “the stock price was his report card.” When it rose, he was exultant; when it dropped, he was glum. Whenever he was on the road, Skilling would call several times a day just to check on how the stock was performing. Lots of corporate executives were fixated on their companies’ stock price during the bull market of the 1990s, but Skilling’s obsession went beyond most of them. As a businessman, his thought process revolved almost entirely around the stock, to the point where he began to believe that Enron’s market capitalization—that is, the total value of the company’s stock—was the only measure the company should be concerned with. Eventually, he would justify business decisions entirely on the basis of what it would mean to Enron’s valuation.
153
154Lying about layoffs
155Two days later, CBS MarketWatch, another online financial site, quoted Skilling as saying that the rumors of broadband job cuts were “absolutely not true”; Enron’s PR department said the redeployments were “standard daily practice” and went so far as to say there were sixty job openings in broadband.
156
157Expert in everything
158Enron was promising to run the cooling and heating systems, hire the energy-maintenance staff, change the lightbulbs, and pay the bills. Enron had never shown that it could manage that sort of operation.
159
160Finance
161Financial manipulations at end of Quarter
162In fact, it was anything but effortless; there was nothing at Enron that required more effort, more cleverness, more deceit—more everything—than hitting its quarterly earnings targets. As out of control as Enron was on a day-to-day basis, the place went practically bonkers when the end of the quarter grew closer. For this, Skilling deserves the lion’s share of the blame.
163
164Unwilling to raise capital
165Although Enron clearly needed capital—it had by then billions in debt and was preparing to spend billions on new business ventures—Skilling and Lay were cool to the idea. Skilling, in particular, was opposed to anything that might hurt the stock price, even temporarily. That’s always the danger when new shares flood the market: the new supply can outstrip the demand for the stock and push the price down. Additional shares also make it harder to hit an earnings-per-share number because there are more shares outstanding. As they say on Wall Street, existing shareholders are diluted.
166
167Rumors had been floating in recent days that Enron would need to do an equity offering to raise money; Skilling went out of his way to flatten the rumor. “From a credit standpoint, there is absolutely no need to issue additional equity, either this year or for the foreseeable future,” he said. “So overall, I have no understanding of why [our] stock price is in the $53, $54—that’s just crazy.”
168
169Bad Credit rating
170But to get an A rating would have meant, at the very least, cutting debt, controlling costs, and funding fewer big enchiladas, and that Enron was not willing to do. The highest rating Enron achieved was BBB+, just a few notches above junk-bond status
171
172Risk of credit
173Why would investors be willing to buy the Marlin debt? Because once again, Enron promised that if Azurix couldn’t pay it would make up the difference by issuing stock or buying back the debt itself. As was the case with Osprey, investors got extra protection: if Enron’s debt rating fell below investment grade and its stock fell below $37.84, the company would be obliged to pay off all the Marlin debt at once.
174
175Refinancing Debt
176Once again, Enron’s enablers came to the rescue, allowing Enron to refinance the Marlin debt. In a CSFB-led deal, Enron raised a fresh $1 billion to pay off old investors and extend the terms of the debt for another two years. This new deal contained the same provisions as the old one: all the debt came due at once if Enron lost its investment-grade rating status—and if its stock fell below $34.13.
177
178Desperate raises
179Still, by November 1, Enron was able to announce that it had secured another $1 billion in financing. But as it turned out, $250 million of the package was merely the refinancing of an existing loan from Citi that was expiring at year-end. It improved the bank’s collateral position but gave Enron no new cash. Even after hocking its pipelines, Enron had generated only $750 million more, which wasn’t going to last long.
180
181Cash problems
182While Enron’s reported earnings were growing smoothly, the business didn’t seem to be generating much cash—and you can’t run a business without cash. In fact, Enron had negative cash from its operations in the first nine months of 2000.
183
184Bonus coincidences
185Used a hair growth drug
186He later started using a hair-growth drug to recarpet his balding scalp. At the age of 43, he’d never looked better.
187
188Young inexperienced CFO
189Lay told Enron’s board that he felt the best candidate was an internal one: rising star Andy Fastow. In March 1998, Fastow, just 36 years old, was named CFO of Enron. Once again, Enron had installed the wrong man in the wrong job for the wrong reason.
190
191He lacked something else: the knowledge that being a CFO demanded. Fastow knew so little about accounting that one person who knows him wasn’t even sure he could dissect a balance sheet.
192
193Backdating documents
194For a price, LJM2 made all sorts of accommodations to Enron, even backdating documents.
195
196Customer deposits boosting cash balance
197In 2000, Enron reported an unprecedented $4.8 billion in operating cash flow. Roberts noted that almost $2 billion of it was from customer deposits—because energy prices were so high, Enron’s counterparties had to provide more collateral. But this money didn’t really belong to Enron. If prices fell, it would have to be returned to the counterparties.
198
199Ross Gerber lookalike
200Launer was a longtime, well-respected natural-gas analyst. But by the late 1990s, his career had become a perfect example of the rewards an analyst could reap by playing the game according to the new rules. In his reports, he didn’t seem to have any particularly deep insights into Enron’s business. His understanding of the business was such that he told at least one investor that Enron was “a ‘trust-me’ story.” Some at the company didn’t think much of him. “He loved going to lunch with Skilling and Lay,” recalls one former top executive. “He was never into the numbers. And he didn’t understand the trading business even after we spent years explaining it to him.” But he pounded the table for a soaring stock.
201
20270 billion valuation
203On August 23, 2000, Enron’s stock closed at $90—its all-time high—giving Enron a market valuation approaching $70 billion.
204
205Larry Ellison
206What outsiders would buy into this arrangement? Friendly ones. In the first step of the transaction, the broadband division formed a joint venture, called EBS Content Systems, with two partners. One was a vendor involved in the Blockbuster trial called nCube—a tiny video-on-demand equipment company privately owned by Oracle CEO Larry Ellison.
207
208Jim Chanos
209After Chanos saw Jonathan Weil’s story in the fall of 2000, he flipped open Enron’s 1999 10-K. He read: “The market prices used to value these transactions reflect management’s best estimates.” He thought: “A license to print money.” He began talking to Enron’s competitors, Wall Street analysts, and virtually anyone else he thought might have information on the company—though not to the company itself, which he viewed as a waste of time. (“You can call the analysts and get the company party line,” he says.) The more Chanos poked around, the more he felt that the Enron story didn’t make sense. Chanos had made a fortune researching—then shorting—telecom stocks. He knew how much trouble they were in. How could Enron’s broad-band unit be doing so well when the rest of the industry was on life support? “We know telecom cold,” he says. “And here’s Enron bleating about this great opportunity.” Enron’s return on invested capital was abysmally low, around 7 percent—and that figure didn’t even include the billions upon billions of off-balance-sheet debt. “They were chewing up capital,” says Chanos. He was struck by a three-paragraph disclosure in Enron’s third-quarter 2000 filing about its dealings with a related party. No matter how many times he read it, he still couldn’t understand what it said. He showed it to derivatives specialists, corporate lawyers, and other experts; they couldn’t figure it out either. Chanos thought: “They must be trying to hide something.” And then there were the insider sales. Lay was consistently selling about 2,500 shares a day. Skilling was also selling in big chunks. Chanos and the others who shorted Enron’s stock didn’t have any special information that wasn’t available to the bulls. “As soon as anyone looked, they could see the stuff we saw,” says Chanos today. At first, he adds, “We didn’t think it was some great hidden fraud. We just thought it was a bad business.” By November 2000, he had begun taking a big short position in Enron stock.
210
211Billion dollar payment
212The debt, which amounted to almost $1 billion, was due at the end of 2001, and just as the short sellers had long suspected, Azurix wasn’t worth nearly enough to pay it back. Which meant, of course, that Enron itself was on the hook for the money. Back when Marlin was set up, in 1998, Enron promised to issue stock if the assets backing Marlin proved insufficient to repay the debt. But now that the moment was arriving, Enron was adamant about not wanting to issue new stock. Given the questions that were swirling around the company, that was the last thing Enron wanted to do.
213
214Attacking the WSJ
215“WSJ investigative reporter is doing an expose on LJM-Enron. Obviously, we’ve done everything we’re supposed to, plus some, but they are going to do a character assassination on me based on hearsay from unnamed sources. Major hack job. I probably fired one too many people this year. You may not want to be seen at the pub with me.”
216
2172 billion doesn't last long
218Despite the $2 billion that had arrived on November 13, Enron had only $1.2 billion left. Counting the money it had in hand before getting the $2 billion, that meant Enron had burned through at least a billion dollars in six days and $2 billion in less than a month. Clearly Enron no longer had ample liquidity.
219
220Aimed to be the largest company
221“When we talk about becoming the ‘World’s Leading Company,’ the target I think we all ought to have in mind is how do we become the company with the highest market value of any company in the world,” he said. At that time, those honors belonged to General Electric, which had a market value of $400 billion—almost six times larger than Enron’s.
222
223Failed massive partnership, blamed the partner for supply problems
224Enron announced it was ending its 20-year deal with Blockbuster. Enron publicly blamed Blockbuster, saying the video giant had failed to provide the “quantity and quality” of movies the project needed. Here’s the most amazing part, though: Enron’s spin machine, which had shamelessly hyped the Blockbuster deal to the analysts, now labored to dismiss the significance of its implosion—and the analysts bought it!
225
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239level 1
240NooStringsAttached
24141 points
242·
2436 days ago
244Thank you for taking the time to write this up. I was there three and a half years and the feelings of oh wow we are part of something huge then one day I realized I had been a blind fanboy (fanwoman?) the whole time.
245
246I know it sounds dumb but I was sad and disappointed and had to leave, I just couldn’t keep going there, morale was in the shitter, customers treated like shit, them giving it back to us (I understood their frustrations but couldn’t do anything about it), ugh I was so starry eyed when I walked in there. I still look back on the first three years pretty fondly, the last six months I was there was pretty rough.
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253level 2
254asifinperson
25523 points
256·
2576 days ago
258I really respect that you figured out the emperor had no clothes, from within the citadel, no less. It takes a shit ton of critical thinking skills and independence of thought to be able to figure something like that out while surrounded by true believers.
259
260I hope you are proud of figuring that out despite the sadness. Sorry you had to go through all that.
261
262Share
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265
266
267level 3
268NooStringsAttached
26913 points
270·
2716 days ago
272Thanks for your thoughtful reply. Yeah I struggled a lot to make the decision to leave. I only told my boss I was leaving and one coworker. I loved working with most of them and it was really hard. I met some really great people both coworkers and Tesla owners over the years that made it seem like family for the first few years. Then things went to shit. My last day was the announcement of sales closures so in a way it made my decision seem like the right one. The whole time after I gave notice I still struggled with decision. That solidified it.
273
274I have a few good friends still there but most are actively planning exit.
275
276Share
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279
280
281level 4
282asifinperson
28311 points
284·
2856 days ago
286This is the thing, Tesla enthusiasts are my people, my friends, people I always identified with. One of my closest friends is completely nuts about them and we can barely have a reasonable discussion anymore. It's crazy.
287
288All the more reason it was so impressive you were able to leave.
289
290Share
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293
294
295level 5
296NooStringsAttached
29711 points
298·
2996 days ago
300I will say even toward the end of my time there, the only starry eyed ones were basically kids. 19-22 year olds who still drank the kool aid and thought they were doing good. The rest of us slowly came around and it was a very tough pill to swallow.
301
302I never thought I’d leave and I was the one like your friends so obsessed. But every single person I know that worked there a long time (a few years there is considered a long time honestly) and has left is so so much happier. They have a life outside of work now, no more 80-90 or more weeks of just eating shit from customers all the time, knowing we were porking them (not us personally but the company), going through delivery hell and service shit, all for what? To make $ for someone jetting around whilst having us convince people they hated the environment if they weren’t going to spend $100k on a car.
303
304I getting fired up it’s still fresh wounds :(
305
306Share
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309
310
311level 6
312asifinperson
3132 points
314·
3155 days ago
316Glad you got out. It really does have a lot of the hallmarks of a cult! And I think what you say about making money for Elon while he's selling climate change porn is the very reason I take such offense. He's co-opting good causes. For what? To sell cars. Smh
317
318Share
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321
322
323level 7
324NooStringsAttached
3253 points
326·
3274 days ago
328Oh cult no doubt about it. Like really seriously.
329
330Yeah I’m sitting there part of a team busting ass to convince why someone should buy a hundred thousand dollar car, and put a roughly $30k solar system on their house because omg the environment how could we go to a gas station the HORROR! While he’s fucking jetting around like that, fuck off. And miss me with the oh he’s so busy bullshit. He’s not the ceo of like a pharmaceutical company where we expect douchey behavior, he’s touting climate this and climate that while fucking it over with the jet. No sir.
331
332Thanks for replying.
333
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337level 6
338Comment deleted by user
3396 days ago
340
341
342level 7
343NooStringsAttached
3445 points
345·
3466 days ago
347No, I gave notice, was asked to stay, but I finished my two weeks and left. Not fired. How did I give that impression? Just curious.
348
349Share
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352
353
354level 8
355cronin1024
3562 points
357·
3586 days ago
359I misread “I getting fired up it’s still fresh wounds :(” as “I ended up getting fired it’s still fresh wounds :(”
360
361Share
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364
365
366level 9
367NooStringsAttached
3682 points
369·
3706 days ago
371Ohh ok sorry I can see now reading that line fast could be interpreted that way.
372
373No it’s just like I didn’t leave all that long ago and I’m still adjusting. That sounds stupid but I can’t explain it any other way. Like it’s nothing like when I left any other job. I’ve only left a few, but the others I threw up deuces and never looked back. This one got into me.
374
375Share
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378
379
380level 10
381frudi
3824 points
383·
3845 days ago
385There was an article posted here a few months ago, in which several former and then current Tesla employees talked about what it's like working there. One of them, in a manner that seemed to say "I'm joking, but not really", said that everyone working at Tesla was basically in an abusive relationship with Elon Musk. Perhaps it was meant as primarily a joke, but it really stood out to me because I've been thinking the very same thing for a long time, from reading what people that worked there have had to say over time.
386
387I bring this up because everything you've described in this thread sounds so eerily similar to what leaving an abusive relationship feels like. It's honestly uncanny, even unsettling, how familiar your feelings and thoughts feel like. From feeling the high of the initial honeymoon period when you think you have the best thing ever going on, to the gradual realisation that you're being expected to sacrifice so much of yourself, of your time, of your energy, of your morals and principles, only to be treated like dirt in return. From the naive rookies with their rose-colored glasses still firmly on their noses, thinking they got it all figured out, to the weary veterans that have either long since resigned themselves to the miserable fate or are have zoned out and are just biding their time until they can finally leave. From feeling like despite all the hardships, you're fulfilling some sort of destiny or great mission, to seeing everyone that has gotten out of your exact same situation finally thriving and remembering what being happy actually feels like.
388
389But it was especially your last post that struck really close to home, about how much harder it is to leave and then deal with the loss compared to any other job/relationship before. I can even understand the frustration of not being able to explain that to other people; like you finally feel free and relieved, like a tremendous weight has been lifted off your shoulder, yet at the same time there's the feeling of unfathomable loss and pain, which you feel stupid for feeling, since rationally you should be overjoyed to finally be out and free. And you feel like nobody could possibly understand how you feel, because it doesn't even make sense to you.
390
391Thank you for posting your story. You did the right thing to leave. I know the wounds are still feel fresh right now, but it does get easier, then it gets better and then you're eventually fine again :).
392
393Share
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395Save
396Continue this thread
397 
398
399
400level 4
401Inconceivable76
4023 points
403·
4045 days ago
405<I have a few good friends still there but most are actively planning exit
406
407This is parallel to Enron as well. A ton of people jumped ship with less than a year before bankruptcy.
408
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412
413
414level 5
415NooStringsAttached
4164 points
417·
4185 days ago
419Yeah anyone with a shred of experience is outta there
420
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424
425
426level 4
427karpodiem
4281 point
429·
4304 days ago
431Can you correlate that moment when things turned sour with respect to the product/operational goals Tesla was trying to execute?
432
433My guess is that it pertains to the Model 3 launch - it's going to end up sinking the company.
434
435Share
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438
439
440level 5
441NooStringsAttached
4423 points
443·
4444 days ago
445I can tell you 100% that the customer service died when Jon MacNeill left.
446
447Product stuff/ operational goals I am not totally sure but it was definitely the nonsense surrounding the “35k Tesla” that I spent two years getting shit on for why we weren’t making it. And what a bait and switch etc. that was I think when it really got horrible. Because unlike most of the issues I’d be presented with that I actually had an answer or fix to, this one I couldn’t defend. I had no real answer besides yeah you got fucked. Shrug, right?!
448
449And edit to say that personally when I started to lift out of the fog of idolizing him was the whole pedo thing, and the nutty twitter posts.
450
451Thanks for your reply.
452
453Share
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456
457
458level 2
459Sinai
4602 points
461·
4625 days ago
463I always know I have no faith in "the mission" anymore when I feel embarrassed telling new hires the company line.
464
465Share
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468
469
470level 3
471NooStringsAttached
4721 point
473·
4744 days ago
475At Tesla or somewhere else? But yeah I get it either way. Thx.
476
477Share
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480
481
482level 2
483manInTheWoods
4840 points
485·
4866 days ago
487What did you feel was so great about Enron? I've never looked much into it.
488
489Share
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492
493
494level 3
495NooStringsAttached
49614 points
497·
4986 days ago
499Sorry, thought due to the sub this was in it would be clear I wasn’t employed by Enron, but something tells me you’re being willfully obtuse here.
500
501Share
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504
505
506level 4
507manInTheWoods
5085 points
509·
5106 days ago
511Sorry, totally misunderstood you there.
512
513Share
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516
517
518level 5
519NooStringsAttached
5202 points
521·
5226 days ago
523No problem!
524
525Share
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528
529
530level 4
531manInTheWoods
5322 points
533·
5346 days ago
535Yes, I was unclear. You said you felt you were part of something huge, and I wonder what it was they were good at? I've only heard briefly about Enron.
536
537Share
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540
541
542level 5
543PolybiusChampion
54411 points
545·
5466 days ago
547I have a very good friend who was at Enron, it was a very similar situation, their main products were flashy and promised to transform the energy sector.....the CEO was a cultish figure who was very charismatic and could charm a snake out of its skin.....and every was convinced that the company was successfully making a positive change to the world.....until it wasn’t. I tried to convince her to diversify her holdings, and by the time the magic wore off she’d lost almost $5,000,000 dollars.
548
549Share
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552
553
554level 6
555manInTheWoods
5565 points
557·
5586 days ago
559$5,000,000 dollars
560
561That's... a lot of money.
562
563Share
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566
567
568level 7
569PolybiusChampion
5704 points
571·
5726 days ago
573Yup, not only did she continue to hold shares she’d been vested, she believed so much that she converted other assets to Enron stock. Untimely she’s recovered to a degree, but was just able to retire last year at age 66. After the collapse she landed at a Fortune 100 and used a much more prudent strategy for handling her money.
574
575Share
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578
579
580level 7
581Engunnear
5822 points
583·
5845 days ago
585Square dollars, no less.
586
587Share
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590
591
592level 6
593Inconceivable76
5943 points
595·
5965 days ago
597Really? I always heard Skilling was a dick.
598
599Hey, I’m sure she got some of that back. People were still getting settlement checks almost 10 years later. 😄 Seriously, it sucks how much money employees lost. The best thing that came out of the Enron bankruptcy was forcing companies to stop forcing employees to buy company stock. To this day, I own next to no stock of the company I work for.
600
601Share
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604
605
606level 7
607PolybiusChampion
6084 points
609·
6105 days ago
611Musk is a dick too. But a charismatic one. And, no she got nothing back. And, BTW if you are an officer you are still required to own stock. Some of the accounting changes post Enron have been a benefit, but there is still a ton of wiggle room. With Tesla, it’s evident the SEC isn’t really interested in enforcement as a current operation, only a retroactive one.
612
613Share
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616
617
618level 8
619Inconceivable76
6202 points
621·
6225 days ago
623She should have gotten something out of the 401k settlement, even if it was 10c on the dollar. True, some folks have to keep company stock, but it stopped the 401k shenanigans of awarding the company match in stock and restricting movement of it.
624
625Delicate house of cards, this economy of ours. SEC would rather have fraud and hope the market takes care of it, rather than risk be the Lehman of 2019.
626
627Share
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630
631
632level 7
633FineHook
6341 point
635·
6364 days ago
637The cultish CEO was Ken Lay. Skilling was only CEO for 6 months before he resigned unexpectedly. At the end, the role of CEO at Enron was like a game of hot potato. Lay convinced Skilling to take the job, and then Skilling tried to get Lay to come back, which he did after Skilling quit.
638
639Lay's response after his criminal conviction is pretty infamous. It's on youtube. He continued to claim he'd done nothing wrong, and sounded perfectly normal and held together. As it turns out, it was exactly this "I've done nothing wrong" demeanor that allowed Enron to follow the wrong path. Everyone trusted things were under control because he seemed so under control himself.
640
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644
645
646level 5
647grottoreader
6487 points
649·
6506 days ago
651They were a Tesla employee.
652
653Share
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656
657
658level 6
659manInTheWoods
6605 points
661·
6626 days ago
663Oh shit, do I feel stupid now.
664
665Share
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668
669
670level 7
671grottoreader
6724 points
673·
6746 days ago
675don't feel too bad, it was a funny exchange to read.
676
677Share
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680
681
682level 1
683NyashaT
68432 points
685·
6866 days ago
687Wow it's like a carbon copy of Tesla and Musk
688
689Share
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692
693
694level 2
695anon79285
69612 points
697·
6985 days ago
699·
700edited 5 days ago
701If only there was a way we could save all the small Tesla investers who are over represented in Tesla from the coming storm and possible dryup of venture capital and non zero possibility of bankrupcy. Tesla probably won't go bankrupt, but they'll realize their niche luxury sports car is totally saturated and they're caught with their pants down, building new factories to service customers that won't ever exist. Charisma is nice, but it doesn't make payroll. When you owe billions and your income is millions, all the hype in the world doesn't save you.
702
703I suppose the very least we can do is spread this document, and awareness, and let people know that they are invested in a fraudulent company. then when they're defrauded later, at the very least we can say that we had warned them to sell while the stock still had some value in it. All we can do is try to do the right thing by spreading this sentiment. At the very least this sub will gain credibility for telling it like it is.
704
705Share
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708
709
710level 3
711patb2015
7122 points
713·
7145 days ago
715Tesla needs a re-org.
716
717Write the stock down, bring in some serious ops managers, kick Elon to visionary,
718
719Restructure the debt and bring in some new investors
720
721Share
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724
725
726level 1
727stockbroker
728dude who spends too much time on Tesla Reddit
72931 points
730·
7316 days ago
732The names change, but the patterns never do. This should be stickied.
733
734Share
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737
738
739level 2
740CrvenaZvezdaXX
74111 points
742·
7436 days ago
744Read books or see documenteries about different cults and see how Tesla fit right in. It is funne how patterns, as you say, tends to repeat them selves. And still people fall into the same trap over and over again.
745
746Share
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749
750
751level 1
752PolybiusChampion
75330 points
754·
7556 days ago
756Thanks for a great post. There are people over at teslainvestorsclub with pretty charts showing an imminent bounce and talking about removing their stop losses because they don’t want to miss the coming bounce!
757
758One day there will be some forensic accounting done at TSLA, and I can’t wait.
759
760Share
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763
764
765level 2
766skyspydude1
76716 points
768·
7696 days ago
770That TA chart showing it just absolutely mooning on Monday was absolutely hilarious. It's really hard for me to take TA very seriously when people draw 2 lines on a chart based on a couple of data points, then show how it'll moon. It reminds me of a lot of graphs I saw when BTC popped
771
772Share
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775
776
777level 3
778ILOVENOGGERS
77910 points
780·
7816 days ago
782It reminds me of a lot of graphs I saw when BTC popped
783
784That's exactly what I thought of xd. The Ethereum time traveller was more reliable lmao.
785
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789
790
791level 3
792Inconceivable76
7935 points
794·
7955 days ago
796Crap. I had to go look at it, and I feel dumber now for having looked at it. It’s like someone drew stuff until they found something that fit their thesis.
797
798Share
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801
802
803level 4
804Tje199
805Service (and handjob) Expert
8065 points
807·
8085 days ago
809Welcome to the world of TA, where the analysis is made up and the data points don't matter!
810
811Share
812Report
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814
815
816level 5
817ILOVENOGGERS
8183 points
819·
8205 days ago
821Hello,
822
823TA is dogshit.
824
825Thank you for listening and goodbye.
826
827Share
828Report
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830
831
832level 5
833Inconceivable76
8342 points
835·
8365 days ago
837I don’t hate on TA. I find it very useful. But the only thing technical about this analysis is that there’s a price chart with candlesticks on it.
838
839Share
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842
843
844level 2
845Sinai
8464 points
847·
8485 days ago
849That person talking about removing their stop loss because they had already lost too much was the biggest SMH I've had in awhile.
850
851Some people only learn by being punched in the face repeatedly.
852
853Share
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856
857
858level 1
859Hypx
86053 points
861·
8626 days ago
863You're not the first to notice, but probably you've laid out the similarities in the most detail. Yes, Tesla and Enron are remarkably similar. Probably, the main actors in both stories have similar motivations and were caught up in similar situations. What's surprising is how the management in both cases are reacting in the same way, almost beat for beat, to the events presented to them, suggesting human vanity can be very predictable at times.
864
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868
869
870level 2
871available_username2
8721 point
873·
8746 days ago
875Elon isn't selling stock though right?
876
877Share
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880
881
882level 3
883ImperiumAedificator
8847 points
885·
8865 days ago
887With the way the Tesla story is set up by him, him selling a single share would single handedly kill the stock. I don't even think I'm exaggerating.
888
889Share
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892
893level 2
894onesagestudent
895-41 points
896·
8976 days ago
898(More than 28 children)
899
900level 2
901enslaved_robot_boy
902-5 points
903·
9046 days ago
905(0 children)
906
907
908level 1
909asifinperson
91024 points
911·
9126 days ago
913Fantastic write-up that benefits from really well-written and well-researched source material. You've done a great job of pulling out the most relevant similarities between Enron and Tesla.
914
915At least Enron had a rising stock price to point to when people questioned Ken Lay, and the apologists could almost be forgiven for helping keep the party going since a key market indicator agreed with their assessment that Enron was doing just fine. But in Tesla's case, the evidence is clear for anyone to see that the market is tired of Elon's shit and gaining clarity about its imminent insolvency.
916
917And yet, despite a tanking stock price, the typical Tesla Fanboi still defends his master.
918
919I didn't think it was possible, but Tesla supporters are even STUPIDER than Enron apologists!
920
921My god, its going to be shit show over in r/TeslaMotors and r/ElonMusk when it all goes south.
922
923I'm long popcorn.
924
925Share
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928
929
930level 2
931daestar
93222 points
933·
9346 days ago
935Tesla is even more like a cult than Enron which has the effect of dumbing its believers. Skilling had a lot of employees and outsiders trusting him but nothing even remotely similar to the church of Musk the visionary engineer.
936
937Share
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940
941level 3
942onesagestudent
943-23 points
944·
9456 days ago
946(More than 16 children)
947
948
949level 1
950Ter551
95115 points
952·
9536 days ago
954·
955edited 6 days ago
956Next: Parallels to Theranos. (Lidarless FSD)
957
958Share
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961
962
963level 2
964daestar
9656 points
966·
9676 days ago
968I wanted to write something like this against Theranos and there are so man similarities but OP did such a great job that I don’t think I can match it.
969
970Share
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973
974
975level 2
976m0llusk
9771 point
978·
9794 hours ago
980That doesn't make any sense. Theranos was selling a technology that it was never able to successfully develop. Tesla has been selling electric cars that people like for quite some years now. The driving automation feature is an option that no one has to turn on in order to use their car.
981
982There is a big difference between two companies running into hard times and two companies being the same and having walked the same path. Do you just not care at all? The boost you get from calling out Tesla gives you such a rush that any angle on things no matter how detached from reality will do?
983
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987
988
989level 1
990mingy
99116 points
992·
9936 days ago
994You are right, except about accounting rules. Accounting fraud continues, it just morphs as the rules change. So post-Enron accounting changes mean it is harder (not impossible) to have Enron style fraud but that just means they use other means to cook the books.
995
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999
1000
1001level 2
1002carlivar
10033 points
1004·
10056 days ago
1006Doesn't Tesla have weird "related party" disclaimers?
1007
1008Share
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1011
1012
1013level 3
1014mingy
10156 points
1016·
10176 days ago
101810Ks and prospectuses are loaded with all sorts of disclaimers whether they apply or not.
1019
1020Share
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1023
1024
1025level 1
1026Trades46
102711 points
1028·
10296 days ago
1030As the old saying goes, "Those who don’t know history are destined to repeat it."
1031
1032Excellent writeup OP. Tesla has more red flags than a USSR parade in Red Square yet nobody makes a sound. The collapse of Tesla would as a grandiose as its rise.
1033
1034Share
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1037
1038
1039level 1
1040Jeroen_Jrn
104120 points
1042·
10436 days ago
1044Fuck loled at the hair drug
1045
1046Share
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1049
1050
1051level 1
1052billbixbyakahulk
105311 points
1054·
10556 days ago
1056Wow! Epic post, and I agree with everything I've read so far.
1057
1058One thing about this:
1059
1060Unlike the public buy recommendations from the equity analysts, though, these private decisions never came to the attention of the small investor.
1061
1062Just to add some historical context, Enron, like everyone else, benefited from the dotcom effect which was also when online trading first went mainstream. Dumb retail money poured in. Every analyst at the time gave companies glowing ratings. Cisco was rated a Buy or Strong Buy at >$60 (went down to around $12 after the bubble popped). Retail basically had no one on their side.
1063
1064Most analyst ratings are trash, but at the least there are analyst rating sites and more honest critique of some of the obvious whore analysts out there.
1065
1066One of the sayings in the Housing bubble a few years later was "Real Estate is a better investment than stocks because you can't live in a stock." Meaning property was something that was "real", and bubble or not, you'll still have something tangible and worth something, not like worthless paper dotcom stocks.
1067
1068The same basic argument is made with Tesla. "How can it be a fraud? They're actually making cars! You can buy them and drive them." Sure, and Enron actually delivered energy to customers. It doesn't mean the company can't be ridiculously over-valued or fraudulent.
1069
1070Share
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1073
1074
1075level 1
1076SourceHouston
107710 points
1078·
10796 days ago
1080Enron had a ton of awesome businesses, they basically came up with Netfliix before Netflix was a thing. The fact that people at tesla investors club have NO clue about the history of Enron and the similarities, very well explained here, will make it that much easier to separate them from their money
1081
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1085
1086
1087level 1
1088PolybiusChampion
10899 points
1090·
10915 days ago
1092I shared this on the investor sub....it stayed up all day.....and elicited some good comments, but in the end they banned me. They don’t ban people with cool charts showing a bounce Monday.....but questioning the stock is too much I guess.
1093
1094You have been temporarily banned from participating in r/teslainvestorsclub. This ban will last for 14 days. You can still view and subscribe to r/teslainvestorsclub, but you won't be able to post or comment. Note from the moderators: Enron posts are BS. Don't do it again here. If you have a question regarding your ban, you can contact the moderator team for r/teslainvestorsclub by replying to this message. Reminder from the Reddit staff: If you use another account to circumvent this subreddit ban, that will be considered a violation of the Content Policy and can result in your account being suspended from the site as a whole. permalinkdeletereportblock subredditmark unreadreply re: You've been temporarily banned from participating in r/teslainvestorsclub to /r/teslainvestorsclub sent just now
1095
1096So, you’ll approve posts with sketchy charts purporting to show the stock is about to jump, frankly encouraging people to buy anticipating a bounce, but a post that shows some interesting parallels to a stock that went to zero is a bridge too far?
1097
1098Share
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1101
1102
1103level 2
1104Wynardtage
11056 points
1106·
11075 days ago
1108Honestly the state of that sub is appalling. I never thought I'd say this but in comparison /r/teslamotors is actually super level headed. It's going to get even worse as Tesla continues the descent.
1109
1110Share
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1113
1114
1115level 3
1116PolybiusChampion
11175 points
1118·
11195 days ago
1120Yes it is. It’s pretty crazy there.
1121
1122Share
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1125
1126
1127level 3
1128ILOVENOGGERS
11295 points
1130·
11315 days ago
1132Reminds me of /r/bitcoin banning everyone disagreeing with the certified mod opinion.
1133
1134/r/btc is where the real homies at btw
1135
1136Share
1137Report
1138Save
1139
1140
1141level 2
1142cryptocam26
11433 points
1144·
11455 days ago
1146You're brave to post it there.
1147
1148Share
1149Report
1150Save
1151
1152
1153level 3
1154PolybiusChampion
11552 points
1156·
11575 days ago
1158I was shocked it lasted about 8 hours.
1159
1160Share
1161Report
1162Save
1163
1164
1165level 2
1166BeepBeepImaJeep3
11672 points
1168·
11695 days ago
1170I received the same ban last night.
1171
1172Share
1173Report
1174Save
1175
1176
1177level 3
1178PolybiusChampion
11791 point
1180·
11815 days ago
1182Welcome to the r/bannedfor14daysfromtheinvestersclubclub.
1183
1184Share
1185Report
1186Save
1187
1188
1189level 1
1190Zetbo1
119114 points
1192·
11936 days ago
1194Please post this to the /r/wallstreetbets! I want to see if those autist can read all of it! Great write up!
1195
1196Share
1197Report
1198Save
1199
1200
1201level 1
1202coinaday
1203I identify as a barnacle
120412 points
1205·
12066 days ago
1207Absolutely brilliant write-up. Thank you for this!
1208
1209Share
1210Report
1211Save
1212
1213
1214level 1
1215elonssubmarine
12166 points
1217·
12186 days ago
1219Very impressive comparison. Well done
1220
1221Share
1222Report
1223Save
1224
1225
1226level 1
1227hamboy315
12286 points
1229·
12306 days ago
1231This is the quality post I come to reddit for. Thank you for that. Idc about the Tesla bit, I’ve just really never known the extend of the Enron scandal. Thank you for summarizing, this was super informative and well written.
1232
1233Share
1234Report
1235Save
1236
1237
1238level 1
1239BeepBeepImaJeep3
12406 points
1241·
12425 days ago
1243Well put. If you want another, closer comparison, read about Ivan Kruger from back in the 30s. There is a wonderful book called 'The Match King' that tells his tale.
1244
1245Building off the OP, I want to share an observation about the company silencing critics. We know how Elon aggressively pursues former employees, but did you know he has gone after small but vocal shorts? There are a couple examples from SeekingAlpha that are particularly troubling. I did not necessarily agree with all of their conclusions, but it is incredible to see a company legally arbitrage small critics. That's never good, full stop.
1246
1247Warning, the following is conjecture: additionally, I want to share an experience that may have confirmed a long standing suspicion of mine. I recently started posting to the teslamotor and teslainvestorclub subs to get a first hand experience of those who monitor the sub. Those who have read my previous posts know how I speak and share my opinions. After making about ten or so critical comments about the company, particularly to users trying to speak in hyperbole or outright factually misrepresenting things, I found myself banned within 48 hours of my first post.
1248
1249I highlight this because I have suspected something fishy about what content is allowed on those subs. A market requires a buyer and a seller, so it is vital to know your counterparty in a trade. I've noticed and now experienced first hand those subs masquerade as a place to engage in discussions and seem to be geared towards keeping subscribers within a loop.
1250
1251This is especially important right now. More than anytime in recent history, retail investors directly and indirectly own more of the company. There is an added incentive to keep these retail investors in a loop and fed one line of thought to keep them buying. Again, a properly functioning company should not need this mentality among investors to survive.
1252
1253I contend the mods there may have an affiliation to Tesla beyond being fans of the company and its products. Given Tesla's previous practices with silencing critics on retail-centered investing mediums, I suspect they may be controlling information flow to those subs.
1254
1255Share
1256Report
1257Save
1258
1259
1260level 1
1261CrvenaZvezdaXX
12625 points
1263·
12646 days ago
1265Nice read! I am just sitting and waiting for the CH11 at Tesla. Tesla can do what ever they like. As long as the Model 3 is not selling as hot cackes Tesla will go under. To many promises Elon, to many lies Elon.
1266
1267Share
1268Report
1269Save
1270
1271
1272level 1
1273FistEnergy
12744 points
1275·
12766 days ago
1277Great great, great job!
1278
1279Share
1280Report
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1282
1283
1284level 1
1285TotesMessenger
12865 points
1287·
12886 days ago
1289·
1290edited 6 days ago
1291I'm a bot, bleep, bloop. Someone has linked to this thread from another place on reddit:
1292
1293[/r/enoughmuskspam] The Smartest Guys in the Room eerily describes Tesla
1294
1295[/r/teslainvestorsclub] The Smartest Guys in the Room eerily describes Tesla
1296
1297 If you follow any of the above links, please respect the rules of reddit and don't vote in the other threads. (Info / ^Contact)
1298
1299Share
1300Report
1301Save
1302
1303
1304level 1
1305grottoreader
13064 points
1307·
13086 days ago
1309This post is fucking amazing, thanks for compiling it.
1310
1311Share
1312Report
1313Save
1314
1315
1316level 1
1317carlivar
13185 points
1319·
13206 days ago
1321A recording of Musk was recently played to all Tesla employees, asking them not to sell their stock. At least according to Twitter.
1322
1323https://www.latimes.com/archives/la-xpm-2002-jan-19-mn-23640-story.html
1324
1325Share
1326Report
1327Save
1328
1329
1330level 1
1331llluminate
13325 points
1333·
13346 days ago
1335Great compilation, thanks for posting it. I'm torn because I really do believe that it's important for the world to transition to EVs, but the signs of corporate malfeasance are too strong to ignore.
1336
1337
1338
1339Some of the quotes mention "Robert's report" and "Robert's research" - do you know what that is referring to?
1340
1341Share
1342Report
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1344
1345
1346level 2
1347daestar
13482 points
1349·
13505 days ago
1351I wonder if it's Mark Roberts?
1352
1353Share
1354Report
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1356
1357
1358level 3
1359cryptocam26
13602 points
1361·
13625 days ago
1363It is Mark Roberts. Quote from the book:
1364
1365On May 6, Enron’s “mindnumbingly complex” financial disclosures became one of the subjects of a skeptical report written by Mark Roberts, a well-respected short seller and researcher who runs a firm called Off Wall Street Consulting.
1366
1367Roberts dug deeply into Enron’s financial report for 2000, which had been released in late March. He noted Enron’s increased reliance on trading and the seeming cluelessness of the Street analysts who were recommending the stock. He scrutinized the related-party transactions and noted that none of the “numerous industry experts and analysts” he asked were able to explain the footnotes to him. He also noted other oddities revealed in that filing, such as the information that Enron had received $2.4 billion in proceeds from securitizations, and that Enron, by using swaps, appeared to be retaining an unknowable amount of risk. “These are, in effect, sales with recourse to Enron,” Roberts wrote.
1368
1369One of Roberts’s most devastating revelations had to do with Enron’s cash flow. In 2000, Enron reported an unprecedented $4.8 billion in operating cash flow. Roberts noted that almost $2 billion of it was from customer deposits—because energy prices were so high, Enron’s counterparties had to provide more collateral. But this money didn’t really belong to Enron. If prices fell, it would have to be returned to the counterparties. Roberts also noted that another $1 billion in cash flow had come from a onetime sale of inventory. (Although Roberts didn’t know it, another $1.5 billion in cash flow was the result of prepay transactions.) In other words, much of the $4.8 billion in cash flow wasn’t cash flow at all. It was merely the illusion of cash flow.
1370
1371Share
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1374
1375
1376level 1
1377ozziegt
13784 points
1379·
13806 days ago
1381That's a long damn post. A for effort
1382
1383Share
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1386
1387
1388level 1
1389CaliforniaExplorer
13904 points
1391·
13926 days ago
1393This is probably exactly what we'd see if we were inside the head of Jim Chanos.
1394
1395Share
1396Report
1397Save
1398
1399
1400level 1
1401cryptocam26
14023 points
1403·
14045 days ago
1405Wow thanks for the gold and the sticky, glad to see other people find this interesting too. Not gonna lie I'm also pretty excited about getting tweeted by MachinePlanet.
1406
1407It's easy to draw parallels between any 2 things, but the volume of similarities here goes beyond that. I reread Bad Blood recently and didn't see nearly this much overlap. The main takeaway is that both Enron and Tesla started out with good intentions but their arrogance wouldn't allow them to admit when things needed to change.
1408
1409Anyone interested in this type of thing should definitely check out The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron. Here's a few other recommendations that cover business failures. And of course if you haven't read Bad Blood yet do that as soon as possible, can't recommend it highly enough.
1410
1411
1412
1413Billion Dollar Whale: How an opportunist stole 2 billion dollars from Malaysia's government and blew the money on parties with Leo DiCaprio
1414
1415https://www.amazon.com/Billion-Dollar-Whale-Fooled-Hollywood/dp/1478947993
1416
1417
1418
1419House of Cards: A Tale of Hubris and Wretched Excess on Wall Street: The rise and fall of Bear Stearns
1420
1421https://www.amazon.com/House-Cards-Hubris-Wretched-Excess/dp/0767930894
1422
1423
1424
1425When Genius Failed: The Rise and Fall of Long-Term Capital Management: How a hedge fund run by geniuses, including 2 Nobel prize winners, lost 4 billion of capital in just a few years.
1426
1427https://www.amazon.com/When-Genius-Failed-Long-Term-Management/dp/0375758259
1428
1429
1430
1431Fatal Risk: A Cautionary Tale of AIG's Corporate Suicide: How AIG ended up needing an $85 billion bailout during the housing crisis
1432
1433https://www.amazon.com/Fatal-Risk-Cautionary-Corporate-Suicide/dp/0470889802
1434
1435Share
1436Report
1437Save
1438
1439
1440level 2
1441PolybiusChampion
14422 points
1443·
14445 days ago
1445Thanks again for a great post and the books you’ve listed here.
1446
1447A non business tale that you might enjoy is The Billionaire's Vinegar: The Mystery of the World's Most Expensive Bottle of Wine by Benjamin Wallace. While not a business failure, an very interesting look at momentum selling and the customers and fraudsters it attracts.
1448
1449Share
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1452
1453
1454level 2
1455depleteduraniumftw
14561 point
1457·
14586 hours ago
1459If you like Tesla you should try Alibaba.
1460
1461Share
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1464
1465
1466level 1
1467fossilnews
1468Flufferbot
14691 point
1470·
14716 days ago
1472How did the backdating apply to Tesla?
1473
1474Share
1475Report
1476Save
1477
1478
1479level 2
1480cryptocam26
14815 points
1482·
14835 days ago
1484Some customers have reportedly been pressured to sign back dated documents.
1485
1486Share
1487Report
1488Save
1489
1490
1491level 3
1492fossilnews
1493Flufferbot
14941 point
1495·
14965 days ago
1497Ah, right. Thanks!
1498
1499Share
1500Report
1501Save
1502
1503
1504level 1
1505Papatechy
15061 point
1507·
15086 days ago
1509Brilliant!
1510
1511Yes this is another Enron.
1512
1513Share
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1516
1517
1518level 1
1519sinfulsummers
15201 point
1521·
15224 days ago
1523Absolutely brilliant! Couldn't have said it better myself. Wonderful post and thanks for such a great effort.
1524
1525Share
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1528
1529
1530level 1
1531m0llusk
15321 point
1533·
15344 hours ago
1535I don't see it. Elon Musk has been saying Tesla stock was overpriced for a while now. There are certainly issues with processes and profitability, but Tesla cars perform well and are selling well. Sure, Tesla stock went far higher than it should have and is coming down, but the company really does have hit products that generate impressive cash flow. This is all very different from Enron which didn't have great projects and where the leadership pumped up the stock instead of complaining that it was being bid up too high.
1536
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1540
1541
1542level 1
1543zerobjj
15441 point
1545·
15463 hours ago
1547There’s one extremely large difference. Elon has an amazing track record, and is currently running another undeniably successfully company at the same time.
1548
1549Share
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1552
1553
1554level 1
1555dmode123
15561 point
1557·
15581 hour ago
1559This is a dumb post. You can replace Tesla with Apple in 2000 and could have roughly have the same narrative
1560
1561Share
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1564
1565level 1
1566agnata001
1567-11 points
1568·
15696 days ago
1570(6 children)
1571
1572level 1
1573agnata001
1574-11 points
1575·
15766 days ago
1577(3 children)
1578
1579level 1
1580Comment removed by moderator
15816 days ago
1582(0 children)
1583More posts from the RealTesla community
1584
1585145
1586
1587Model 3 insurance jumped 30%
1588Posted byu/nabuhabu
15894 days ago
1590
1591
159291 Comments
1593Share
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1596
159797
1598
1599Tesla CEO Elon Musk launches new ‘hardcore’ cost-cutting effort, will review all expenses
1600Posted byu/jimmyvegas29
16018 days ago
1602
1603194 Comments
1604Share
1605
1606Save
1607
160899
1609
1610Tesla's Navigate on Autopilot Requires Significant Driver Interventionconsumerreports.org/autono...
1611Posted byu/jordanmc109
16122 days ago
1613155 Comments
1614Share
1615
1616Save
1617
161878
1619
1620FECAL FRIDAY
1621RING....RING.....RING.......RING......
1622Posted byu/cliffordcat
16237 days ago
1624
1625138 Comments
1626Share
1627
1628Save
1629
163078
1631
1632FECAL FRIDAY
1633realtesla vs real Teslai.redd.it/5jl369...
1634Posted byu/Mod74
16357 days ago
1636
163728 Comments
1638Share
1639
1640Save
1641
164274
1643
1644Tesla’s Autopilot was engaged when Model 3 crashed into truck, report statestheverge.com/2019/5...
1645Posted byu/fricken
16468 days ago
164782 Comments
1648Share
1649
1650Save
1651
165275
1653
1654TSLA-Morgan Stanley call-5-22-19.MP3dropbox.com/s/p4xy...
1655Posted byu/p001n100
16562 days ago
1657136 Comments
1658Share
1659
1660Save
1661
166265
1663
1664Tesla engineer accuses company of trying to 'silence' employees as she sues for defamationtelegraph.co.uk/techno...
1665Posted byu/whatisthisnowwhat1
16666 days ago
166732 Comments
1668Share
1669
1670Save
1671
167275
1673
1674DING DING DING! Closed below 200!! 🕺🏻🕺🏻🕺🏻🕺🏻🕺🏻🕺🏻
1675Posted byu/upstreamin
16762 days ago
1677
1678122 Comments
1679Share
1680
1681Save
1682
168360
1684
1685Below is partial audio from the Tesla bank call held on May 2 in which @elonmusk pitched investors on the new debt/equity raise.twitter.com/Paul_M...
1686Posted byu/jordanmc109
16876 days ago
168845 Comments
1689Share
1690
1691Save
1692
169359
1694
1695MORGAN STANLEY: lowers its “bear case” on $TSLA to $10
1696Posted byu/Pomodoro5
16973 days ago
1698
1699102 Comments
1700Share
1701
1702Save
1703
170458
1705
1706Elon: Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great.mobile.twitter.com/elonmu...
1707Posted byu/nycman123
17085 days ago
170961 Comments
1710Share
1711
1712Save
1713
171458
1715
1716Nothing Elon Musk has done has stopped the bleeding at Tesla — and things look like they're going to get worsebusinessinsider.com/tesla-...
1717Posted byu/whatisthisnowwhat1
17183 days ago
171919 Comments
1720Share
1721
1722Save
1723
172456
1725
1726Tesla reduces prices on Models S and X amid stock slumpseattlepi.com/busine...
1727Posted byu/RandomCollection
17282 days ago
172921 Comments
1730Share
1731
1732Save
1733
173455
1735
1736YES
1737Should I be worried about Tesla getting bankrupt? [r/teslamotors]reddit.com/r/tesl...
1738Posted byu/hitssquad
17394 days ago
1740152 Comments
1741Share
1742
1743Save
1744
174555
1746
1747Tesla didn’t fix an Autopilot problem for three years, and now another person is deadtheverge.com/2019/5...
1748Posted byu/YouHaveTakenItTooFar
17496 days ago
175044 Comments
1751Share
1752
1753Save
1754
175551
1756
1757TeslaCharts @TeslaCharts 2/ I have obtained the police report from the incident in question. Here is the initial description of the incident by the police.mobile.twitter.com/TeslaC...
1758Posted byu/PortAltepa
17595 days ago
176049 Comments
1761Share
1762
1763Save
1764
176550
1766
1767Motor Mouth: These days, Tesla’s biggest problem is its fan club | The real impediment to growing sales of electric vehicles is the intransigence of the clienteledriving.ca/tesla/...
1768Posted byu/RandomCollection
17692 days ago
177032 Comments
1771Share
1772
1773Save
1774
177550
1776
1777Read the email Elon Musk sent to Tesla employees calling for ‘hardcore’ control of expensescnbc.com/2019/0...
1778Posted byu/flufferbot01
17797 days ago
178063 Comments
1781Share
1782
1783Save
1784
178549
1786
1787Autopilot Is NOT Just Another Word for “Asleep at the Wheel” | As a recent fatal accident in Florida shows, even sober, attentive drivers often put too much trust into Tesla’s Autopilot system, with disastrous resultsmindmatters.ai/2019/0...
1788Posted byu/RandomCollection
17893 days ago
179030 Comments
1791Share
1792
1793Save
1794
179547
1796
1797We found your car, unfortunately it is in Chinatwitter.com/Trumpe...
1798Posted byu/Gobias_Industries
17992 days ago
180034 Comments
1801Share
1802
1803Save
1804
180548
1806
1807Tesla brings back Free Unlimited Supercharging again to sell inventory carselectrek.co/2019/0...
1808Posted byu/lovely_sombrero
18092 days ago
181028 Comments
1811Share
1812
1813Save
1814
181547
1816
1817National Transportation Safety Board | PRELIMINARY REPORT HIGHWAY HWY19FH008 [ed. note: Truck Decapitation Crash]ntsb.gov/invest...
1818Posted byu/PortAltepa
18198 days ago
182056 Comments
1821Share
1822
1823Save
1824
182546
1826
1827Tesla Falls as Analyst Says Company Facing ‘Code-Red Situation’bloomberg.com/news/a...
1828Posted byu/RandomCollection
18294 days ago
183030 Comments
1831Share
1832
1833Save
1834Continue browsing in r/RealTesla
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