Education technology (edtech) company TagHive, founded in 2017, used a direct sales team and third-party distributors to sell its Class Saathi hardware and software solution to 300 clients, mainly primary and secondary schools in India. The product aimed to improve student engagement and performance, reduce the time it took teachers to develop and grade learning assessments, enable administrators to better track data, and provide parents more insight into their children’s learning. Founder and CEO Pankaj Agarwal initially priced Class Saathi using a one-time fee, or perpetual licensing, model. However, in 2023, the company began piloting a recurring subscription fee model to ensure steadier revenue. To support the new pricing structure, TagHive enhanced its software with artificial intelligence and expanded its customer support team and their responsibilities to subscription fee customers. By December 2024, TagHive was cash flow positive and planning to scale. Pankaj and his leadership team were considering whether to extend the pilot to all customers and what the effects on other parts of the organization might be. For example, the pilot had prompted TagHive to increase the capacity and responsibilities of its customer support team. If all clients were under the subscription fee model, could the company afford to continue expanding the team or should it rely on its distributors to provide post-sale customer support? Distributors were responsible for half of sales, but outsourcing customer engagement and support could put customer satisfaction and TagHive’s reputation at risk.
On January 27, 2025, the head of a relatively small hedge fund named Late Apex Partners sent a highly critical letter to the board of directors of Vail Resorts, the world’s largest ski resort operator. In his letter, and the 88-slide presentation that accompanied his letter, the activist investor criticized the firm’s strategy, leadership, and financial performance. In fact, he was calling for fundamental change: replacing the CEO, CFO, and board chair; changing the firm’s capital allocation strategy; and focusing more attention on customers and employees to fix the company’s damaged reputation. On the day the letter became public, Vail’s stock price jumped 6%, representing an increase in almost $350 million of market value. With the stock price down more than 50% in the past few years, Vail’s relatively new CEO (Kirsten Lynch) and the board chairman (Rob Katz, the former CEO), had to decide whether to respond to the letter and, if so, how. What made this decision difficult was that several relatively small and unknown activist investors had won important victories against large corporations in recent years. Examples of this kind of “David vs. Goliath” battle included BlueBell Capital successfully removing Danone’s CEO in March 2021, Engine No. 1 winning three board seats at ExxonMobil in May 2021.
This accounting case is intended to teach students how to compile an income statement, a balance sheet, and a cash flow statement. It focuses on Blank Corporation, an innovative South Korean company that bridged content and commerce by selling products directly through social media posts featuring video content that was designed to go viral. As Blank grows in 2016 and 2017, CEO Nam Dae-Kwang puts the company on a firmer footing, and begins to communicate with investors, by creating standard financial results.
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