Welcome back to Inc.’s 1 Smart Business Story, a showcase of our sharpest work, shared one tale at a time. How does a beloved, founder-led brand lose more than 95 percent of its value in just four years? 

In the case of Schoolhouse, a Portland, Oregon-based home goods company, the answer lies with the collision of a steady, craft-driven business and an aggressive private-equity playbook. 

Once a cult-favorite brand, Schoolhouse was acquired in 2021 for $48 million by Food52, which was backed by the private equity firm The Chernin Group. By early 2026, it was sold out of bankruptcy for just $2.2 million. 

This cautionary tale, written by design journalist Yelena Alpert, traces how misaligned leadership and rapid growth expectations sent the company into a downward spiral. 

In this piece, you’ll learn:

BY YELENA ALPERT

When the Portland, Oregon, retailer was sold to Food52, it was tasked with growth at all costs. Four years after the $48 million acquisition, it was over.

The employees of Schoolhouse always took the holidays seriously. Every year, the Portland, Oregon, showroom of the home goods retailer was transformed into a whimsical “Holiday Bazaar” decorated with live trees. Customers enjoyed cocktails and crafts, snapped photos with quilted stockings, and milled about shelves piled high with pillows and lamps on the ground floor of the 1910 brick factory that was the heart and soul of Schoolhouse’s operations, sales, and manufacturing. The spirit of “work hard and be nice to people,” emblazoned on a poster that hung in the upstairs offices, buzzed throughout the room. 

“We tried to make everybody feel like they were a part of what we were doing,” says founder Brian Faherty. “Because they were, and they mattered to us. And they mattered to our customers.”

But in the days leading up to Christmas 2025, the holiday mood at Schoolhouse was grim. Four years after the company’s acquisition by New York City-based media company Food52, with funding from the growth equity firm the Chernin Group (TCG), the company was operating under a spending freeze: canceling product purchase orders, reneging on vendor payments, and facing a flood of customer complaints. 

The company’s annual holiday gathering, set for December 18, had been dubbed by some as the “Holiday Bizarre.” “Everyone in the marketing, merchandising, and product teams was answering customer emails,” says Jorie Garcia, a former Schoolhouse art director. Nearly everything on the website was marked down, and many customers were angry about orders that were canceled or were shipped late. The company’s showroom had become a warehouse sale, with deep discounts. “They were liquidation sales without us knowing it,” says Katie Elliott, former SVP of design and development at Schoolhouse.

Schoolhouse was sinking, and Erika Ayers Badan, CEO of Food52, was looking for a cash infusion to keep it afloat. The celebrity CEO (thanks to her time running Barstool Sports) had confirmed employee speculation of a sale at a meeting in early December. A big-box home retailer was considered to be the likely buyer. When an all-hands meeting was scheduled for December 17, the day before the holiday gathering, the assumption was that it would be to announce the new ownership. 

Instead, Badan got on the video call and told the group she had bad news. Avidbank, the lender that provided Food52’s credit line, had unexpectedly swept clean the company’s accounts. 

“Erika came on and said that many people were about to be laid off and we would get an email in the next five minutes letting us know whether or not we were affected,” Elliott recalls. “She was distraught and apologized and then ended the call.” Nearly every Schoolhouse employee was let go immediately, without severance, part of companywide layoffs that affected about 75 percent of Food52 employees.

This financial cataclysm represented a shocking turn for TCG’s investment, a far cry from its two major funding rounds into Food52. The first, in 2019, gave TCG a majority stake for $83 million, and the second slug of capital, another $80 million in 2021, tripled Food52’s valuation to $300 million and allowed it to purchase Schoolhouse for $48 million and the cookware brand Dansk for an undisclosed amount. 

Now, four years later, Food52 was more than $25 million in debt, and the liquidity crisis threw the company into bankruptcy. In the company’s Chapter 11 filing, Badan described the cause of the company’s debt as a predictable story of profits gone sour as a result of operational complexity, tariffs, and not being “immune to the post-Covid downturn.” 

But in interviews with more than a dozen Schoolhouse and Food52 employees, a different explanation emerges, one that blames a chaotic C-suite that never really understood what it had in Schoolhouse and an unrealistic chase for growth and profit. (Both Badan and TCG declined requests for comment.)

Last month, Schoolhouse was acquired out of bankruptcy for $2.2 million. That means that the company lost more than 95 percent of its value in about four years. What looked like a safe harbor acquisition for a founder looking to hand off his creation to a like-minded brand built on taste became a carnival of revolving-door executives blinded by their own ambition, exorbitant spending, shifting strategies—including a wild attempt to Barstool-ify Schoolhouse—and more.

“The product was there, the employees wanted to work, and the customers loved the brand,” says a Schoolhouse product developer. “TCG and the people they put in charge were all directly responsible for the downfall.”

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