Symphathy for the DevilWhile I agree that the WorldCom/Enron, etc. executives are world-class crooks, my experiences in Silicon Valley during the boom provide an interesting counterpoint. As the bubble got started in the late 90's, it really became a liability to be a sane, skeptical person who remembered any history at all. People like that (like me!) were denounced as clueless old fogeys, pessimists who just didn't "get it". There was a New Economy after all! And if you followed your principles in '96, '97, '98 and bet against the stock market (which was clearly overvalued already) you got creamed and lost money. Meanwhile, your idiot neighbor, buying shares in Amazon or Yahoo, was making out like a bandit. The same thing was happening inside the companies I worked for. If you said things like "perhaps we should make sure operations are profitable before we expand any more", you were looked at as deranged. Everyone knew that first-mover advantage was all that counted. The overriding philosophy was grow now, so you'll be the only one standing when the market starts to consolidate. Sell your stock at outrageous prices and use the money to buy up your competitors. Borrow if you have to, because money is a lot easier to get now than it will be later. Growth solves all problems in the future. Bankruptcy is for other people! And so everyone tried to grow as fast as possible, no matter what financial prudence or common sense about costs would tell you. I actually worked for companies with hundreds of employees and no products that even paid for manufacturing, let alone development expenses. All that mattered was good press and high valuations. And we all had stock options, and were very happy to work for these fictional companies. I left a company and saw it's stock go up by a factor of 2000 (factoring in splits.) The options I was given when I was hired would have been worth millions of dollars if I had stayed (and sold at the peak!) I turned down offers from startup companies that went on to be valued in the billions (and then went bankrupt.) Other people had similar experiences, and it takes a lot of cynicism or a lot of character to shrug it all off and not join the fray. Although there's still a dividing line between bs'ing the press and public about your prospects and actually fudging the books, the line is the letter of the law. In spirit, everyone was lying all the time (or deluding themselves.) And the ones that didn't do that, didn't get to play. They sat on the sidelines like me and watched other people get rich. So I have a certain sympathy for these people. And I wonder why I don't read more comments in the press about how crazy it all got. You should be asking people how long they would stay honest if everyone around them was suddenly irrational and spewing endless giddy futuristic BS.
When Yahoo was valued more than Ford, I expect a lot
of executives at Ford looked around for ways to cook
the books. They had a real business and could wait
it out (they also probably didn't know what hit them.)
For a telecom company like WorldCom, it was lie or die.
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