Reading Enron’s story from The Smartest Guys In The Room
It seems that one particular problem from Enron’s business model can be found elsewhere easily – developers focus a lot on up-front calculations (present value of all the expected future cash flow from a project), getting deals done, and moving on the next one.
In the process, banks lend money based on the similar calculations before real projects finish and generating cash flows, employees of developers get paid based on the formula linked with similar calculations, etc…
Things are good when they are good. But when “unexpected” things happen, this business model can be troublesome.
Similar dilemmas can be found in property, solar, etc..