Conspiracy of Fools by Kurt Eichenwald Read Free Book Online Page A

who quit on the spot.
    The evening looked doomed. Then the chief electrician came up with a suggestion: since Jeff Skilling had learned to work the equipment, why not let him try his hand? Within minutes the teenager was running the broadcast, and he was so successful he kept the job. Skilling was thrilled; here he was, a kid dropped at the station in his mom’s car, bossing around grown-ups. He found that he loved being in charge, dictating how the work should be accomplished.
    The television station went bankrupt just before Skilling left for Southern Methodist University in Dallas, where he had been granted a full scholarship. While there, Skilling had his first real exposure to the vagaries of the business world—and showed his own disposition toward gambling in the markets. He had invested his savings in the company that employed his dad, and watched with delight as the price climbed year after year. It seemed like a painless way to wealth; Skilling even borrowed against the stock to buy his first car. But the early 1970s ushered in a bear market, the price collapsed, and Skilling was broke. He was forced to get a bank loan just to purchase new tires for his car.
    But his investment failure only spurred him to deepen his knowledge of business by studying esoteric investments, like options and warrants. Ultimately, he dreamed up a theory of how to turn commodities like gold into securities like stock and wrote a school paper about the idea. Exhilarated by the intellectual challenge, Skilling abandoned his plans to become an engineer and instead focused on preparing for a career in business.
    Skilling skipped his college graduation, instead driving up to Chicago to marry his girlfriend, Susan Long, whom he met at SMU. From there, he found his first full-time job at First City National Bank in Houston, where he figured out a way to identify sophisticated crooks who were defrauding the bank with bad checks; he was bursting with pride when an equation he devised helped catch a couple of bad guys.
    Despite his success, he decided that the place that could help him really shine was Harvard Business School. He applied and was notified that a dean from the school would be in Houston for another event and would interviewhim. Freshly scrubbed and in a suit, Skilling headed for the meeting at the downtown Hyatt Hotel, but things got awkward quickly. The dean drilled Skilling with questions for about forty-five minutes; Skilling gave prepared, formulaic answers and sensed things were going badly. “Skilling,” the dean finally said. “Are you smart?”
    Skilling smiled.
I’ve probably blown this anyway. What the hell?
“I’m fucking smart,” he shot back.
    “That’s what I would guess. So why are you giving me all these bullshit answers?”
    “I thought that was what you were supposed to do.”
    “Okay, so drop that. Tell me what you really think. Why do you want to go to Harvard?”
    Skilling breathed in deeply. “I want to be a businessman,” he said. “I really want it bad.”
    The conversation began anew, continuing for another hour, and this time Skilling sensed everything was clicking. And he was right; before the day was out, he learned that he had been admitted.
    Harvard transformed him. At first intimidated by his classmates, he soon found he outscored most of them on classroom tests. His conceit began to show, alienating some potential friends. But his professors considered Skilling brilliant, and in 1979 he graduated as a Baker Scholar, a designation bestowed on the top five percent of the class.
    He was offered a position at McKinsey & Company, the consulting firm with a reputation for arrogance that matched his own, and leaped at it. After wheedling his way back to Texas—first in McKinsey’s Dallas office, then in Houston—he focused on energy, an industry whose approach to business struck him as hopelessly outdated and, more important, just plain screwy. He attacked its problems with a vehemence that