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enron :: discover the power of WHY (2001)

enroncorp.com

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Re: enron :: discover the power of WHY (2001)

#61

After the dotcom crash I looked for some safe haven outside of the industry, and found a landing place at a global fiber optics networking division of an energy trading company called Dynegy. Sounded safe! A month after joining they backed out of their planned buyout of their largest competitor Enron. Apparently this Enron thing was cooking their books. Enron sued Dynegy, Dynegy countersued, and started laying people…

Enron wasn't just cooking their books a little.

Enron created a "bandwidth marketplace", that is, a commodity market like there is for energy where providers can bid for data transit between locations. Then they estimated all the value of all the future trades on that market based on some very optimistic assumptions, estimated all their own future profit as the market maker using even more optimistic assumptions, and marked all that hypothetical profit to market and immediately recognized it as profit on their books.

It was tens of billions of dollars. Despite the fact that a "bandwidth marketplace" doesn't actually make sense (data transfer is a lot less fungible than energy, and there are usually only very few possible competitors for any route), and even if it had made sense, they couldn't have hoped to secure anywhere near the cut they assumed, and even if they had, the bottom was going to fall out of the market because people kept coming up with new and exiting ways to move more data on the same fiber, leading to massive overcapacity.

Re: enron :: discover the power of WHY (2001)

#62

For those who don’t know ENRON’s design still lives on in the Texas grid (serious). The Texas energy market was designed by ENRON. https://www.kut.org/energy-environment/2021-07-23/heres-how-...

Works great: https://markets.businessinsider.com/news/commodities/texas-p...

A system is what it does.

This system is extremely efficient at transferring wealth from Texans to corporations while killing them.

Re: enron :: discover the power of WHY (2001)

#63

This site was made back when companies unironically used meaningless marketing speak and no one seemed to notice they were completely full of shit. People defaulted to believing that these companies were just transcendent. “What they do is just beyond my feeble understanding.” A lot of companies still do this, but more people can see through it now.

[deleted]

Re: enron :: discover the power of WHY (2001)

#64

After the dotcom crash I looked for some safe haven outside of the industry, and found a landing place at a global fiber optics networking division of an energy trading company called Dynegy. Sounded safe! A month after joining they backed out of their planned buyout of their largest competitor Enron. Apparently this Enron thing was cooking their books. Enron sued Dynegy, Dynegy countersued, and started laying people…

Enron wasn't just cooking their books a little. Enron created a "bandwidth marketplace", that is, a commodity market like there is for energy where providers can bid for data transit between locations. Then they estimated all the value of all the future trades on that market based on some very optimistic assumptions, estimated all their own future profit as the market maker using even more optimistic assumptions, and…

That takes wishful thinking to dizzying new heights!

Feels like those subprime mortgage risk markets in the mid 2000s: financial "instruments" that are incredibly complex and seem to offer amazing returns. Stated simply like that, we might wonder why so many people jumped on board, but in reality it wasn't introduced in such a straightforward way.

Re: enron :: discover the power of WHY (2001)

#65

Corporate implosions of the dot-com era are fantastic reads. I was a part of the Northwestern Corporation, Expanets, Lucent fiasco. It was crazy the decisions that were made. I spec'ed a million dollar Sun Hardware purchase, my boss turned it into a $25 million 5 year, rental at a Quest DC in Denver. We also had an entire floor of an Arthur Andersen building in Jersey where we were writing our new app. There was anot…

Yes, those are great stories... we were a small VC funded startup that had maybe five customers. We needed a network monitoring solution, so I built out a Big Brother network monitoring system (for nostalgia, check out the demo site: https://web.archive.org/web/20010124042600/http://bb4.com/bb...). I was told under no uncertain terms that Big Brother was not professional enough for our purposes and we needed to build out an entire NOC with HP OpenView. To monitor about 20 servers at the time, maybe growing to 100. At a cost of about $2m for the hardware, training, and facility buildout.

There was also the $1m/month rental of the EMC Symmetrix storage array (again, for five customers). When things went belly up and we needed to cut costs, we just moved data centers in the middle of the night, abandoning the Symmetrix storage array at the old facility (since the lease was covered in our colo payments).

Ahhhh those were the days... I did enjoy driving 26' rental trucks full of mission critical datacenter racks around the area as a 21yo. Fun fact: it's easier to rent a box truck as a 21yo than a regular car (at least it was at the time).

Re: enron :: discover the power of WHY (2001)

#66

Who do you think next "Enron" would be? Tesla? [1] Others? [1] https://www.reddit.com/r/RealTesla/comments/bq06lc/the_smart...

Theranos

Let us never forget that Elizabeth Holmes’ father was a VP at Enron.

https://www.masterresource.org/enron-legacy/chris-holmes-enr...

Re: enron :: discover the power of WHY (2001)

#67

Earlier quoted context omitted.

Works great: https://markets.businessinsider.com/news/commodities/texas-p...

A system is what it does. This system is extremely efficient at transferring wealth from Texans to corporations while killing them.

POSIWOD: The purpose of a system is what it does.

-- Stafford Beer

https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...>

Re: enron :: discover the power of WHY (2001)

#68

Enron... sigh . I went to college near Houston (Texas A&M) and interviewed with Enron in early-mid November, 2001 prior to December graduation. Given the timing, I believe it may have been the very last interview loop they did. For a soon-to-graduated Comp Sci student, Enron put on an amazing presentation. The interview was onsite at Enron headquarters. They took the candidates to dinner one evening, put us up in a n…

So did you take the PowerBuilder job or the Fortran job?

(Nice story, BTW, thanks.)

Re: enron :: discover the power of WHY (2001)

#69
post #68

Enron... sigh . I went to college near Houston (Texas A&M) and interviewed with Enron in early-mid November, 2001 prior to December graduation. Given the timing, I believe it may have been the very last interview loop they did. For a soon-to-graduated Comp Sci student, Enron put on an amazing presentation. The interview was onsite at Enron headquarters. They took the candidates to dinner one evening, put us up in a n…

So did you take the PowerBuilder job or the Fortran job? (Nice story, BTW, thanks.)

I took a job at a small-town consulting firm writing C++ and Java near where I grew up (I had worked for them a couple of summers in college). It turned out to be an outstanding first post-college job. I learned a lot, was challenged, and provided useful experience upon which I was able to build a career.

So in sum, it all worked out. But there was definitely a stretch were I chewed my fingernails down to the quick.

Re: enron :: discover the power of WHY (2001)

#70

Who do you think next "Enron" would be? Tesla? [1] Others? [1] https://www.reddit.com/r/RealTesla/comments/bq06lc/the_smart...

We would probably be talking about Tesla as the new Enron already had the COVID boom not happened, which threw the car market into a pro-seller extreme. Before COVID they were so desperate for money that they were stiffing vendors, not paying the ones they had to be until after financial statements for the quarter had been generated (to appear profitable on paper), literally taking scrap parts out of the dumpsters in the back of the factory to cobble together cars that they tried to pass off on people by making them take delivery before seeing the vehicle, etc. Not to mention the 'financially delivered' nonsense.

If Tesla is still continuing those practices then there is simply no future for the company. Hopefully they have fixed those issues.

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