A Stubborn NYC Tenant Held Out For An Absolutely Insane Amount Of Money

There are many valid arguments for and against the concept of rent control. Generally speaking, if you live in a city that has rent control, there are strict rules to how much your rent can be raised every year. For someone looking to rent for a long time, rent control is the greatest thing ever. Your goal should be to lock in a lease at an apartment you absolutely love, then never leave. My neighbors are an elderly couple who have lived in their apartment for over 20 years. They currently pay $700 a month for an awesome apartment that would easily rent for $2500 if it was on Craigslist tomorrow. Their landlord is essentially losing $1800 every month. Another major downside for rent-controlled landlords is that it's basically impossible to kick tenants out. 

This can be a real problem for an owner who is interested in remodeling or demolishing the entire building. The building owner either has to be patient enough to wait for the current tenants to move on their own… or die. If time is of the essence, there's one other option to get tenants to leave: Pay them. And in a city like New York, where real estate is more precious than gold, paying off tenants can be an extremely expensive endeavor. Then there's the story of Herbert J. Sukenik. Herb Sukenik held out for an absolutely insane amount of money to finally vacate his dingy 350 square foot Central Park apartment. It's the most money ever paid to get a single tenant to leave an apartment in New York, possibly the world.

Stubborn NYC Tenant

Herbert Sukenik was born in the Bronx, New York in 1930. He attended Cornell University where he earned an undergraduate degree in physics. He then stayed at Cornell to earn both a masters in physics and a Ph.D. By all accounts, Herb was brilliant. He was also a bit of a social outcast. He worked for General Electric for a while then at Martin Company in their Space Systems division. In 1974, Herbert, who had become somewhat of a recluse, rented a tiny 350 square foot apartment in the Mayflower Hotel building. He never married and seemingly had no friends or family. He basically lived like a hermit for the next three decades.

The Mayflower Hotel building sat on what was arguably the most valuable and highly coveted real estate in the world. Located at 15 Central Park West, the building was situated perfectly for someone to build luxury condos that would fetch tens of millions of dollars apiece. Possibly more. Seeing the obvious potential this property presented, in 2004 the entire building was purchased by real estate tycoons Arthur and Will Zeckendorf for $401 million.


The Zeckendorf brothers quickly began the process of paying off each one of the current tenants to move. Many of the early tenants accepted the first offer: $650,000. That left just a few holdouts. Those early birds should have held out longer because the move-out offer was raised to a mind boggling $1 million. All the remaining holdouts accepted, except one: Herb Sukenik.

At first, Herb offered to vacate his unit if the Zeckendorfs bought him a 2200 square foot, two bedroom apartment in a building nearby, then rent it back to him for $1 a month, for the rest of his life. The Zeckendorfs agreed. But then Herb suddenly backed out. Herb probably realized he was the lone holdout and these developers had very deep pockets. He demanded money. Lots and lots of money. Flabbergasted and unwilling to be held hostage, the Zeckendorfs began demolishing the building anyway. They hoped to drive Herb out from all the construction hassle and noise. Herbert was undeterred.


After living in a construction zone for over a year, Herbert's stubbornness finally paid off in 2005. Admitting defeat, the Zeckendorfs caved and made an offer Herbert could not (and did not) refuse. In order to finally get Herbert to leave his decrepit 350 square foot apartment, they offered him a one time cash buyout of… get ready for it… $17 million. That is by far the most money ever paid to get a single tenant to leave a New York City apartment. It's probably the most money ever paid to get anyone to leave any apartment. But it gets better. Not only did the Zeckendorfs agree to give Herb Sukenik $17 million cash, they also agreed to let him live in a $2 million apartment on Central Park South where he will pay $1 a month in rent for the rest of his life.

$17 million plus a $2 million apartment basically free for life! This guy is my idol! With Herbert finally gone, the Zeckendorfs were finally clear to completely remodel the Mayflower Hotel pretty much from scratch. They sunk $1 billion into the building and turned it into what is now the most expensive and highly coveted address in all of New York City. Today, "15 CPW", as it is called, features a completely private driveway hidden from paparazzi, a cinema and 14,000 square foot gym that has a 75 foot pool. A one bedroom apartment averages $7 million. Two bedrooms $12 million. Three bedrooms $15-$30 million. Four bedrooms (only one available) $60 million. Five bedrooms, (only two available) $65 million and up. Current tenants include Goldman Sachs CEO Lloyd Blankfein, Sting, Jeff Gordon, Alex Rodriguez and Denzel Washington.

 By Brian Warner on March 7, 2014

The First Trillion-Dollar Startup

In 1957, eight entrepreneurs decided to do something that seemed crazy. They launched a new tech company called Fairchild Semiconductor in a small town south of San Francisco. The entrepreneurs had a difficult start, but Fairchild eventually became the first major computer chip company in the region. 

Although many people are familiar with Fairchild’s success, few know the full extent of its impact. During the last year, our team at Endeavor Insight has traced the story of Fairchild and gathered intriguing new data. We uncovered something that was quite surprising: if the value Fairchild created is measured in today’s dollars, we believe the firm would qualify as the first trillion dollar startup in the world.

Fairchild’s Launch and Early Success 

The achievements of Fairchild’s co-founders are even more impressive when you consider where they occurred. The San Francisco Bay Area is now a thriving tech hub, but it was a very different place in the mid-1950s. At that time, there were no venture capital investors in the region. Stanford University did not produce any of the major research on computer chip components and immigrants made up only a small percentage of the population.

As the chart below illustrates, the San Francisco area was far behind other U.S. cities in the development of the transistor companies that made up the early computer chip industry. No one expected the region to become a hub for these technology businesses.

Seven of the eight co-founders of Fairchild had recently moved to the San Francisco area from cities with more established transistor firms and investors. Three of these entrepreneurs – Jay Last, Bob Noyce, and Sheldon Roberts – had earned PhDs from MIT in Boston. Eugene Kleiner and Julius Blank were engineers in New York City, and Jean Hoerni and Gordon Moore had worked at Caltech near Los Angeles. (The final co-founder, Victor Grinich, was a former researcher and PhD student at Stanford.)

They leveraged their professional networks in these cities to find two key supporters who helped them raise capital and sign contracts with their first customer. These connections set them on the path to success. After just three years, Fairchild’s annual revenues were over $20 million. By the mid-1960s, the group had invented a new product, the integrated circuit, and was generating $90 million in annual sales. Yet, this was only the beginning of the co-founders’ accomplishments.

The Fairchild Valley 

As Fairchild started to grow, employees began to leave the firm to launch new spin-off businesses. Many of these firms also grew quickly, inspiring other employees still working at the company.

“You got these guys leaving and starting companies and the companies are running, working,” a former manager recalled. “You get a look around and look in the mirror and say, ‘Well, you know, how about you? What are you going to do?’”

The eight co-founders supported a number of these new businesses. Kleiner encouraged an employee to start a company that made the glass components Fairchild used in its manufacturing process. Noyce served on the board of Applied Materials, a local electronics equipment manufacturer, and mentored the company’s young founder.

It wasn’t long before the entrepreneurs at Fairchild began to create their own spin-off firms. “That experience of starting this company and watching it grow – I thought I’d like to do that again,” recalled Last. In 1961, he partnered with three of his Fairchild co-founders to create Amelco, a new business that produced specialized devices. Two other co-founders, Moore and Noyce, left Fairchild several years later to start the computer chip firm Intel.

The eight co-founders also reinvested their capital into a number of new local startups. In 1961, four of them helped to fund the Bay Area’s first venture capital firm. Another founder provided the financing that helped a former employee launch AMD. When Moore and Noyce launched Intel, the other six co-founders helped to fund the new business.

The growth of these new companies started to reshape the region. In just 12 years, the co-founders and former employees of Fairchild generated more than 30 spin-off companies and funded many more. By 1970, chip businesses in the San Francisco area employed a total of 12,000 people.

“That’s part of the legacy of Fairchild that maybe doesn’t get the attention it should,” Moore has said. “Every time we came up with a new idea, we spawned two or three companies trying to exploit it.”

The achievements of these companies eventually attracted attention. In 1971, a journalist named Don Hoefler wrote an article about the success of computer chip companies in the Bay Area. The firms he profiled all produced chips using silicon and were located in a large valley south of San Francisco. Hoefler put these two facts together to create a new name for the region: Silicon Valley.

Hoefler’s article and the name he coined have become quite famous, but there’s a critical part of his analysis that is often overlooked: Almost all of the silicon chip companies he profiled can be traced back to Fairchild and its co-founders.

Adding Up Fairchild’s Impact

Fairchild’s success continued to fuel the growth of companies in the Valley in the years after Hoefler’s article was published. When Steve Jobs was starting his career in the 1970s, he often rode his motorcycle to Noyce’s house and spent hours listening to the older entrepreneur’s advice. According to Noyce’s wife, Jobs also had a unique habit of calling their home around midnight. The first investor in Apple was also a former Fairchild employee.

The 92 public companies that can be traced back to Fairchild are now worth about $2.1 trillion, which is more than the annual GDP of Canada, India, or Spain.

In 1972, Kleiner co-founded the venture firm Kleiner Perkins, which has gone on to invest in hundreds of companies, including Google and Symantec. While Kleiner was starting Kleiner Perkins, a former Fairchild executive named Don Valentine was launching another venture firm called Sequoia Capital, which has also invested in several hundred companies, such as Cisco and LinkedIn.

Many of the companies funded by these two firms were led by entrepreneurs and executives who have gone on to become important investors. Companies like Sun Microsystems, Netscape, and PayPal spawned investment firms such as Khosla Ventures, Andreessen Horowitz, Founder Collective, and 500 Startups.

Our team at Endeavor Insight recently worked to quantify the impact of Fairchild Semiconductor and its co-founders. We identified over 130 Bay Area tech companies that were trading on the NASDAQ or the New York Stock Exchange. Our analysis indicates that about 70 percent of these firms can be traced directly back to the founders and employees of Fairchild.

The total impact of these businesses is staggering. The 92 public companies that can be traced back to Fairchild are now worth about $2.1 trillion, which is more than the annual GDP of Canada, India, or Spain. These companies also employ over 800,000 people.

If we look beyond the publicly traded businesses listed above, Fairchild’s impact is even greater. In total, we can trace over 2,000 companies back to the firm’s eight co-founders. This includes companies such as Instagram, Palantir, Pixar, Nest, WhatsApp, Yammer and YouTube.

The story of Fairchild illustrates how entrepreneurs can reshape their local communities. When successful founders generate new spin-off companies, mentor others and act as early-stage investors it increases the opportunities available to new generations of entrepreneurs. The intellectual, social, and financial capital that successful founders reinvest into new companies strengthens the local entrepreneurship community and enables successful hubs, like the original Silicon Valley, to develop.

Fairchild trades on the NASDAQ with a market capitalization of around $2 billion. However, the full value of the company can only be measured by tracing the way the firm’s success has been reinvested into new founders and companies. By this measure, Fairchild is the Valley’s first trillion-dollar startup. It might even be the most important entrepreneurial company of the last hundred years.

Posted Jul 26, 2014 by Rhett Morris

Editor’s note: Rhett Morris is the director of Endeavor Insight, the research arm of Endeavor, a nonprofit that supports more than 900 entrepreneurs in 20 countries.