Jeff Skilling and Me

Remember Jeff Skilling? He was the CEO of Enron Corporation which collapsed in December 2001. Skilling had resigned in August 2001. He was later convicted of multiple federal felony charges relating to Enron's financial collapse, and is currently serving a 24-year, 4-month prison sentence at the Federal Correctional Institution, Englewood in Lakewood, Colorado. I wrote this after his resignation and while Enron was in its final throes.

Jeff Skilling and I have a few things in common. We were both born and raised near Pittsburgh around the same time. We both attended southern private universities and then Harvard Business School. We both worked in the energy industry. I met Jeff Skilling on an elevator in the Houstonian a number of years ago at a Harvard Business School Global Alumni Conference on Energy. I thought he was quite charming. Just the two of us on the elevator, he spoke to me -- very enthusiastic, almost bubbly, and gregarious. He wasn’t hitting on me. He was just a friendly guy. He was interested in understanding what area of the energy industry I was working in -- energy efficiency -- and eager to share his ideas about its value as well as his business card in case my company ever required financing to build an energy efficiency project. I found his card the other day in my pile of stuff and wondered but realized very quickly that the card had no value as a collectible. Millions of people must have Jeff’s business card.

I probably should have realized then and there that something was wrong with Jeff. I admired Jeff and Enron. They were trying to be the different energy company. But they failed and I should have known they would. In the first place, when I did eventually call him a few months later albeit for a different purpose -- help on a consulting project -- his secretary was instructed to help me. That is the one and only time I have ever gotten such assistance from the head of a major energy company. Just the other day I called to follow up on a letter I had sent to the head of a utility on the east coast, a fellow Duke alumni, to whom I had been referred by a mutual acquaintance and that I had contacted in advance by letter. Not only did this guy’s secretary tell me that he had no interest in talking to me but she proceeded to tell me while chuckling that she had been instructed not to throw away my letter but to file it in case he may someday be interested in talking to me. Was Jeff expecting to compete with the likes of this guy? I should mention that I have received plenty of help from other utility company executives though none at the CEO level. Perhaps they should take note if they are aspiring to the highest level in their organization.

I ended getting help from Enron on my consulting project, help that served to effectively launch a new and at times profitable business for me in the energy industry. The Enron execs that I spoke to pointed out to me the value of energy efficiency in a market where energy was traded. Though the trading markets have yet to seriously deal in energy efficiency credits, the industry at that time started its drive towards a competitive deregulated marketplace in which many players sought to sell energy solutions and remake themselves to a great extent on the model of an energy services company. This launched quite a few new careers for those of us who had some background in the energy services industry, moving our fortunes from those who performed work primarily as result of government regulation to moving to the forefront of a drive to better know and understand energy customers and sell them all sorts of stuff.

Many benefited especially when the internet and E-COMMERCE (see neon lights flashing) came on -- consultants, software companies, investment bankers, trading houses, lawyers. As these people saw Enron’s vision of the industry with all the possible money to be made, the mantra of competition and deregulation grew fast and furious. Rather than focus on what the options were for improving the industry as a whole and investigating those options, rather than considering the impact of deregulation on other domestic issues such as energy security, and perhaps in the absence of true national energy policy (and in the presence of Enron-driven and like minded corporate donor driven energy policy) we all greedily embraced the promise of a deregulated energy industry as the source of wealth and happiness. I dare say that none of us created wealth from it to the degree that Jeff Skilling and his associates did. They spread their largesse widely and in fact another Harvard MBA benefited from it in his quest for the US presidency. That would be George W. Bush.

Do I think that Jeff knowingly defrauded thousands of employees and stockholders of their savings? That he duped Ken Lay and the rest of the Enron employees, the lawyers at Vinson and Elkins, the accountants at Anderson, and countless others? He is the guy who left very suddenly resigned his position as CEO of Enron to start his own company called Veld Interests that is purported to have made lots of money from shorting companies like AES and Calpine that would be hurt by the downfall of Enron. I know that veld means grassy plain or something like that but I see it as a veiled way of calling a company Veiled Interests, a clever play on words, but maybe too cute. It’s a name for me that invites suspicion, like the Star Wars names of the questionable Enron partnerships seem to have raised the suspicions of the US Congress when they began their investigations into Enron’s downfall.

Jeff had a sort of Aw Shucks Midwestern way about him and big brown eyes that make me think he is deeply distraught about what has happened. (But I am prone to think the best about everyone. The occasions when I toyed with working for Enron, my friends warned me that I was much too nice to work there.) I don’t think he ever expected that the structures he created could have fallen so quickly. I also know though that he is a very smart guy and believe that at the very least he had to have intuited that there was a major structural problem at Enron when he left -- causing him to leave. He appears to be a guy who has lots of ideas -- I can relate to that -- and the fortune or misfortune to have had someone who was willing to bankroll those ideas. Someone like Ken Lay who seems to have taken on an almost fatherly relationship with Jeff and Rebecca Mark, cultivating a sort of sibling rivalry and encouraging their every idea. The result was a lot of deals that PERHAPS when viewed on an individual basis may seem risky but worthwhile for any variety of reasons but looked at in totality as an overall system made for an extraordinarily unstable system -- a house of cards, another Tacoma Narrows bridge.

Should Jeff have seen that? At times I wonder if that is like knowing whether one of your employees has a drug problem or is a wife beater or that your kid is one of those one-out-of-every-six-high-school-students-is-a-binge-drinker kids. But the fact of the matter is that he was doing the deals that made the company and taking pride as the visionary and leader, the guy that is sometimes referred to as the Big Swinging Dick. And he made the big bucks.

Why? Remember those Enron commercials with the metallic ladies voice asking “Why?” in an electronic tinny whine? It is said that the Enron guys liked their ladies and perhaps this is the idealized version of how they would sound. Now of course those commercials are prophetic.