Case Studies Club Business Strategy School

Case Success Guide

Overview

A sudden cooling system failure at CloudVault, a mid-sized colocation data center, exposed not only vulnerabilities in its infrastructure but also untapped potential. The emergency response forced founder Jake Sullivan to act swiftly, spending over $200,000 in emergency logistics and procurement—an event that catalyzed a deeper evaluation of how to better deploy idle capital. The opportunity surfaced shortly after: a potential $1.8 million acquisition of a larger, more advanced facility in Tucson. With only $2.3 million in cash reserves, the decision posed a critical question: Should CloudVault pursue a high-stakes acquisition and international expansion, or focus inward to fortify and optimize its current operation?

This case requires a cold-eyed analysis of logistics, procurement complexities, and crisis-driven transformation. Decision-makers must balance short-term liquidity risks with long-term growth potential in a volatile but high-demand sector.

Backstory

CloudVault wasn’t built to be glamorous. Its location—a nondescript industrial zone on the outskirts of a sun-scorched metropolis—was chosen for practicality: affordable real estate, stable energy access, and proximity to fiber routes. When Jake Sullivan first stepped into the warehouse five years ago, he wasn’t running a tech empire. He was subletting space to a startup that vanished almost overnight, leaving behind racks of idle servers and unpaid rent. What followed was part curiosity, part necessity—Jake took over the servers and discovered a hidden but profitable industry: edge data centers.

Over time, CloudVault grew quietly, hosting mission-critical infrastructure for law firms, regional SaaS providers, and an increasingly large number of blockchain startups. Monthly recurring revenue climbed steadily, and by the time 2025 rolled around, Jake was sitting on a cash pile north of $2 million. The servers were stable. Clients were loyal. But the business model had...