"We Built a Heck of a Business"


More than a week after announcing his startling resignation from energy giant Enron Corp. for undisclosed personal reasons, former CEO Jeffrey K. Skilling, 47, says he has no regrets about leaving after only six months at the helm. Replacing him in the interim is Enron Chairman Kenneth Lay, who previously served as CEO for 15 years before Skilling stepped in. (See BW Online, 8/24/01, "Enron's Ken Lay: "There's No Other Shoe to Fall")

So why did he quit? Skilling still isn't saying. A divorced father of three who's now engaged to be married anew, Skilling, like Lay, insists Enron is in great shape, with a deep bench of talent, despite a 50% drop in the company's stock this year. Indeed, Skilling is brimming with plans for his future. Before leaving for a whitewater rafting trip in Idaho with his 11-year-old son, he chatted on Aug. 23 with Dallas Bureau Chief Wendy Zellner. Here are edited excerpts from their conversation:

Q: I have to start with the obvious question: Why are you leaving so abruptly?

A. The answer we gave is exactly right. I left for personal reasons. Yeah, of course lots of things go on when you're making that decision. Sure, you watch the stock price and all the rest of that. But that wasn't the reason. The reason was, it was time.... I've worked very, very hard for a very long time. When you do that, something has to give. You kind of lead an unbalanced life and, at some point, you just decide, "Hey, there's a lot more to life than just working."

Q: Why didn't you decide that before you became CEO [in February of this year]?

A: That's another thing that bugs me a little bit. I came to Enron from McKinsey & Co. in 1990. I came over as chairman and chief executive officer of Enron Finance Corp. and went on to build our nonregulated merchant business. For most of my career at Enron, I was chairman and CEO of Enron Capital & Trade, and today it's 80% to 90% of net income of the company.... When people say this is surprising when you just became CEO, I've been CEO of businesses within Enron for a long, long time. I'm not sure I ever aspired to being CEO. I aspired to building a business. We built a heck of a business, and I'm very proud of that. Some people would even argue that it changed an industry.

Q: You were quoted as saying that if the stock had been going in the other direction, you might not have felt the pressure to leave. Is that right?

A: There are some things I need to do in my personal life, and I need to do them now. I don't think that [the stock going up] would have made a difference.

Q: Is it some kind of family crisis? Is it about you personally or about other members of your family?

A: I can't deal with that. I really can't explain it.... I'm looking forward now. I'm looking for things that I want to do, and there are a lot of things I'm very interested in right now.

Q: What do you do next?

A: I'll give you just a list of things. First, there are a number of personal and family things that are very important to me, and that's going to take a big chunk of my time.

Another one that I think is important is the whole city of Houston and what has happened. The last couple of years, everyone has been blinded by Silicon Valley. I don't think they've realized...there are some very fundamental powerful things happening here.... We have fundamentally adopted and taken advantage of the power of the Internet, the power of computers in ways I don' t think any other industry and any other part of the country has really figured out. There are things I think I can do to be of assistance there.... There are some models there that other people ought to be looking at.

I firmly believe that the model that Enron has created, this model where, over time, you use markets rather than vertical integration to tie together organizations and build services and products for customers, that's the future of business. It's happening more and more, but it has been masked by all this noise that has surrounded the dot-coms.

Q: Are you talking about consulting? Or would you invest in some kind of technology-related business?

A: I'm not sure yet. A number of people have sought me out for points of view, and I will continue to do that. I've even, believe it or not, been contacted about potentially being dean of a business school.

Q: Which one?

A: I can't say. I'm not leaving Houston, Texas. This is the place to be right now. The other thing I want to do is...spend some time on what I call hands-on charity.... There's a certain therapeutic value in going out and building a house for someone or cleaning up a park.... The other thing I'm hoping I have an opportunity to do is to help articulate the value of markets. When you look at something like the whole California thing, the problems in California were not a failure of the market -- they were a failure of political leadership.

Q: You've said that you took the falling stock price personally. In hindsight, what do you think you did wrong or could have done differently?

A: Anybody that had a high [price-to-earnings] multiple has been hammered. I think part of that was legitimate because...people had probably an unrealistic expectation of the effect technology would have on economic growth and productivity.... I put Enron in the same class as a lot of companies that are excellent companies that had very high p-e's, and that was adjusted by the market.

Q: What will it take for Enron's stock to bounce back?

A: You've got to get the stock price back the old-fashioned way. You've got to earn more money. If, quarter-in, quarter-out, the company continues to perform as it has, at some point, unless p-e multiples go negative, the stock goes up a lot.

Q: Why didn't you wait a few more months to meet the timetable for having a $2 million company loan forgiven, at least?

A: I'm lucky. I've done very well.... It has given me a luxury that 99.9% of the population doesn't have. I can do what I need to on the personal side. Two million in the grand scheme of things compared to living your life...I'm almost 48 years old. I started working full time when I was 14.... Now it's time to focus on things that put a little more balance in my life.

Q: You've said Enron is in great shape and has surmounted most of its issues. Do you really believe that?

A: I absolutely believe that.... The whole California thing [where Enron and others have been investigated amid allegations of manipulating markets after power prices soared last year] is pretty much done. In India [where Enron is in a payment dispute with the government over its $3 billion power plant there], I think we're making good progress.... I will say that broadband [Enron's new business for trading high-speed communications capacity] did surprise me.... It turned from a glut [in the industry] to a meltdown.

As late as four or five months ago, it seemed that everything was on plan. It was evolving the way we expected it to evolve. And then the bottom just fell out. Suddenly, it was pretty hard to do business because anyone you did business with you didn't know if they could perform on their contracts. Huge credit problems. That was a frustrating experience to have called it right and still not have been able to create the kind of business that I know we will ultimately create there.... I think it set us back at least a couple of years.

Q: What about reports that there was some unhappiness on your part about Chairman Ken Lay being too involved in the business again?

A: I can absolutely, unequivocally say that is not the case. Ken Lay is a good friend. We've worked together closely for 16 years. Ken and I have always gotten along great.

Q: When we talked as you were becoming CEO, I asked you what setbacks or failures you'd ever had in your life. You said none. Do you consider this to be your first failure?

A: Maybe this will sound awful, but I don't. I remember when there were three of us on the 39th floor at Enron, when we got this whole nonregulated side of the business going. Like I said, I am very proud of what I and others accomplished at Enron. We built a company that, 10 years from now, 20 years from now, is going to be a factor to be reckoned with. I can probably say I have no regrets.

Q: Were you surprised that your leaving drove the stock price down some more?

A: Yes, because I firmly believed that everything was in good shape. I said to Ken, this is the time to do it if I'm going to do it because everything is in good shape.... Probably people are afraid there's another shoe to drop, but it's just not the case.

Q: Do you ever want to be CEO of a company again some day?

A: I won't say never. There are a couple of things I have got to get done over the next year or two. At the end of a year or two, I don't know. I'll kind of take it as it comes. I tend to be a very enthusiastic, optimistic kind of person. I've almost never gone more than 30 days without having some sort of earth-shattering idea, most of them probably pretty crazy. But over the next couple of years, while I'm doing what I need to do, I'll probably come up with some new ideas.... You probably haven't seen the last of me.


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