Daniel Kim's Dilemma (B)

Abstract

Daniel Kim was considering "blowing the whistle" on his friend, the CEO of a fast-growing startup where Kim had spent most of his professional career. When Kim joined the company, called Cardio-Metric, in 2002, it consisted of seven young engineers (including its two 25-year-old founders) working from a one-bedroom Minneapolis apartment. By 2008, when the venture capital-backed company recorded $110 million in revenues, Kim had become close friends with the founders, who served as CEO and chairman. Cardio-Metric's success, however, concealed troubling internal developments. Since 2002, the CEO's management style had progressed from unconventional, to questionable, to egregious. Kim, Cardio-Metric's on-and-off CFO, had repeatedly confronted the CEO over his behavior - including charging large purchases with no clear business purpose to Cardio-Metric and presenting unrealistic financial projections to investors - but the CEO dismissed Kim's concerns and ordered him not to share them with others at the company. By April 2009, Kim believed the problem had grown out of control, and he was considering disclosing the CEO's actions to the board of directors and a team of external auditors. There was much at stake. Kim's disclosure would undoubtedly ruin his friendship with the CEO, endanger Kim's own role at the company, and even jeopardize the future of Cardio-Metric itself.