Jack Welch would disagree. He says they did nothing illegal.
Q: In the last two weeks, we've seen an incredible meltdown of a major corporation -- Enron. What do you make of that? Who is to blame?
A: You really put me on the spot here. I'm reasonably familiar with that situation, having done a lot of business with them over the years. Enron changed as a company. Enron was an oil-and-gas producer, a utility provider, an energy provider. And a pretty solid, very solid, first-class deliverer of oil and gas and energy.
Enron did what I did in a way, and I got screwed up with that too. I bought Kidder Peabody, which was an investment banking firm, in the '80s, and I got into trading and things like that. We had a rogue trader called Joe Jett who had trades that we didn't understand and we reported $400 million of false profits because we didn't really get the business.
Well, Enron jumped from their core business into a trading business. They went from people in overalls and wrenches who ran pipelines and utilities to a trading business where people wore suspenders and had $10 million salaries. And when you change cultures that profoundly and you don't know the business and you hire a whole new team to come in and do it and get some early success which feels good, in this business, it proves once again that culture absolutely counts.
I didn't buy a Silicon Valley company in the '90s, and we had some opportunities to buy some medical companies and other things, because I didn't want to pollute a GE culture with the pollution of Silicon Valley.
The facts are we had engineers -- now if you're in Silicon Valley and you're running a company, it's fine. You're all polluted, imperfect. [LAUGHTER] [APPLAUSE] No, you're in a culture and it's fine. But I've got engineers in Milwaukee developing CAT scanners and MRIs that are the envy of the world, and they're making X amount of money. And we don't have to give them BMWs to hire them, and they like what they're doing.
They come from Purdue and Illinois and Michigan, and places like that, and they're terrific, bright people, and I didn't want to have to explain to them that the people doing the exact same work out there had to make twice what they were making because housing costs are more expensive in the Valley and all these things, because you can't do it.
No one, in my view, at Enron leadership or its board cheated or anything else. I think what happened was they got into a culture they didn't understand, and culture counts. When I got into one I didn't understand, we screwed it up. We [were] lucky it was small enough. We sold it and got out. And got out alive. But it could have eaten us up if it were a bigger thing. This thing [at Enron] got bigger than the core business and it ate them up.
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