"If you don't want another Enron? Here's your law:
If a company, can't explain, in ONE SENTENCE....what it does....it's illegal.”
Lewis Black is a comedian who makes people laugh at the absurdity and hypocrisy that dominates modern American business.
He was talking about the Enron scandal, which happened nearly 20 years ago, it was one that led to the bankruptcy of the Enron Corporation and the dissolution of Arthur Andersen, at that time one of the largest audit and accountancy partnerships in the world.
Enron's founder along with his Financial Director developed a series of accounting loopholes, special purpose entities, and poor financial reporting, that enabled them to hide billions of dollars in debt from failed deals and projects. They were so successful they not only misled the board of directors, but at the same time they so confused the auditors, Arthur Andersen, that they simply ignored the issues.
Eventually in December 2001, it filed for bankruptcy. Before the bankruptcy they claimed they had $63.4 billion in assets, which made it the largest corporate bankruptcy in U.S. history!
That was until one year later, when WorldCom went down for even more!
The world still didn’t learn and as a result in 2007 an even bigger collapse occurred, the subprime mortgage crisis.
In each case the directors of these companies didn’t know what was happening as their business models were so complicated nobody except the perpetrators understood and could explain what was happening.
It could never have been explained in one sentence, 60 seconds or even several hours!
This is why Lewis Black hit the nail on the head, if you can’t explain your business in, I believe, 60 seconds, it is too complicated for others to understand.
By others I don’t just mean investors, I mean your customers, they have to understand what you are offering.
So, I ask, can you describe your business in 60 seconds?