Enron – not alone

Recently finished the book The Smartest Guy In The Room.

Shockingly, you could find many of Enron’s problems in other industries in China during the go-go era (property):

1/ focus on doing projects/deals with early monetization. less focus on the real economics over the entire horizon

2/ lots of off balance sheet financing

3/ weak audit; can’t put a check on mgmt

4/ mgmt takes more early profits out, with potential conflict of interests in the form of SPV, etc.

It’s also similar in WeWork!

The same playbook. Remember that Adam Neumann owns some buildings WeWork leases.