Interviews

The Interview: Up Close and Personal With John Sobrato

By Janet Reilly

John and Sue Sobrato pose in the Atherton home where they raised three children, who now work in the family business and foundation.

John Sobrato is a giant among real estate developers in California. The Sobrato Organization, a family-owned company, owns and manages more than 86 commercial properties in Silicon Valley and has developed and built more than 250 office and research and development facilities for such household names as Apple and Netflix. Add to that, the real estate mogul owns thousands of apartment units on the West Coast. However, Sobrato’s philanthropic side is what really sets him apart. It runs in the family: He, his wife, Sue, and their three children have given away hundreds of millions to local beneficiaries. According to John, they have no intention of slowing down as they add international giving to their philanthropic portfolio. On a recent afternoon, I sat down with John and Sue in the Atherton home where they’ve lived for decades. We discussed what it takes to build a real estate empire, the importance of being in the right place at the right time, and their deep commitment to making the world a better place.

John, you’ve been in the real estate business for a long time— more than 60 years — but your mother was the first Sobrato to conquer the market. John: That’s right — after my father died, she sold the [family] restaurant in San Francisco. It was a half a city block on Broadway, from Sansome to Montgomery, all the way down to Pacific. Big property. They had a tremendous wine cellar. She sold everything for $75,000 back then. Anyway, she had some foresight, and they had made a profit on the land they bought in Atherton. During the war years they couldn’t get produce because everything was rationed. So my mother said, “Well, let’s go buy a ranch in Atherton,” and they bought five acres, tore out the lawns, and put in row crops and chickens and stuff they had trouble getting at the restaurant. After five years of running John’s Rendezvous in San Francisco, they sold the property in Atherton and made more money than my dad made working 18 hours a day for five or six years during the war. So that’s why I’m in the real estate business and not in the restaurant business!

I understand you actually sold your first piece of real estate when you were still in school at Santa Clara University. John: Oh yeah. I started selling real estate three days a week in 1958, when I was a junior at Santa Clara. Back then we didn’t have to go to school on Wednesdays, and I arranged my classes so I was able to work three days a week and go to school three days a week. It worked out.

Were you always fascinated by the business? Pretty much so. I had noticed my mother took the proceeds from the restaurant and bought a few lots down the Peninsula. Back then, I think she built the first tilt-up building ever built … in Redwood City. This would have been ’55, maybe ’54, I was in school. I figured I’d like to learn more about the real estate business, and I was dating a girl at San José State, and her father had a little real estate company in Palo Alto. Anyway, he took a liking to me and he hired me. We had a little office at Rickey’s Studio Inn, which at the time was a big complex on El Camino in Palo Alto. We had nothing more than what was, basically, a hotel room converted on the ground floor to our office.

And were you just selling houses? I was selling houses. I wasn’t developing real estate. Back then I would sell a house for $20,000. It was a big deal. Twenty-five thousand dollars, 10 percent down. I mean, people could afford to live here then. Things have changed. It’s really amazing.

It sure is. After that, Sue and I were on our honeymoon in 1960, and I get a call: Hal Steck died of a heart attack. I had to rush back. Took over the office, took over a bank building in midtown Palo Alto called Midtown Realty and we started that in 1960. I worked there until about 1972, ’73, and sold that company to the employees, and then I moved to Cupertino. Went into development fulltime.

What were the most important business lessons you learned from your mother? John: She was pretty tenacious. Sue didn’t get along with my mother. Sue Sobrato: Well, I think it was more that she didn’t get along with me. John: Yeah, because Sue wasn’t Italian. I think that was part of it. Sue: Yeah, I think so. When you’re Irish, you just can’t be Italian too. John: Anyway, where were we?

Business lessons you’ve learned from your mother. I worked pretty hard back then. I think perseverance.You lose one deal and you just work a little bit harder on the next one, you know? You just have to come back, not give up.I kind of took after her. I was very competitive, always have been. Competitiveness and perseverance would probably be the two qualities that I would say are important to build your career.

You have one of the most successful real estate development organizations in California and beyond. What do you attribute that success to? Being at the right place at the right time. We started long before Silicon Valley was called Silicon Valley. My mother and I built our first building for Lockheed [Martin Corporation], I think in 1962, ’63, after I got out of Santa Clara, and that building still stands. Frankly, that was one of our first donations to Santa Clara University about 25 years ago. Back then you had Lockheed, Hewlett-Packard over at Stanford Industrial Park, Varian Associates. Just a few big names. We were just lucky to be in the Valley, and we didn’t have competitors like we do today. There was only one other major competitor back then — and they’re still in business today — and that’s Dick Perry and John Arrillaga. They’re still going. They were our competitors back then. A little later came Ned Spieker, but we didn’t have all these real estate funds with institutional capital. We all worked with our own money, or our bank’s money. In my case, I just borrowed heavily, and you were able to secure 100 percent financing and just go from deal to deal.

Janet Reilly is the Gazette’s co-owner and monthly columnist. She is also the former executive producer and on-air television host of “The Mix With Janet Reilly” for NBC Bay Area.

I mean, could you ever imagine 60 years ago what this place would become today? No idea. It’s really unfortunate because a lot of the service people are still living below the poverty line. We have all this wealth in the Valley, and a lot of folks can’t even afford an apartment. They double up, triple up, live in garages. These are people working in our restaurants, cleaning our houses, doing the gardening, working in the hotels. These people are really, really hard workers, and we have to do something to be able to help them so they can avoid a two-hour commute.

You’re also in the residential business. What do you think is the solution to California’s housing crisis? Well, we’re never going to be able to make it affordable for everybody. There’s just not enough land. We’ve got the Bay on one side of the Valley; nobody wants to fill the Bay. We’ve got mountains that ring the Valley; nobody wants to build above the 15-foot slope line. We’ve got a greenbelt down in Coyote Valley, can’t expand that. So, pretty much the Bay Area is hemmed in, and the only solution is to go up. We’ve got to increase density, but the neighborhoods object. People who are here have a little bit of a selfish attitude. “I got mine. I don’t want any more kids in our school. I don’t want any more cars on the road.” And they just come out in droves anytime a developer tries to pitch a project with increased density, and it’s tough. It’s tough. All this money that Apple and Google and Facebook [donated to fix the housing crisis], it’s now about … $5 billion, plus the state bond and everything else. That’s great, but the money alone won’t fix it. We’ve got to change people’s attitudes. [People will] have to start worrying about, ‘Where are my grandkids going to live?’ And be a little bit less selfish and take a little bit more density.

Your company is, of course, known as much for its legendary philanthropy in the Valley as it is for real estate. What inspires your giving? [My daughter] Lisa got the idea [for a family foundation] because the family members were getting all these requests — maybe 10-12 a week. Lisa took the lead and started the Sobrato Family Foundation 22 years ago. … Back then, just Lisa and [my daughter] Sheri would go through the requests and that got a little tiresome, so we hired a woman, Diane Parnes, to run it for us. Diane did that for about nine years and then we just had to expand. Now, we have about 25 people working in philanthropy, and our real estate company has less than that — maybe 23 in the real estate department.

How do you shape the next generation in your family to continue the tradition of giving? That’s a good question. All three of our children, John [Michael], Sheri and Lisa, are very charitable. They’re not selfish. They understand that Sue and I have signed the Giving Pledge and all our wealth is going to charity.

Speaking of the Giving Pledge, you and Sue and your son, John Michael, have signed the Giving Pledge that was initiated by Melinda and Bill Gates and Warren Buffet. First multi-generation family to do that. How did that come about? Were you approached? Well, yes, because we joined back five or six years ago. So, I get a call one day at the office. I was still working at the office back then.The receptionist said, “It’s Warren Buffet.” I said, “Oh yeah?” I said,“I know who it is, it’s my old partner Carl [Berg],” because he likes to joke around. I pick up the phone. I said, “Carl, would you cut this crap?” The caller said, “No, it’s Warren Buffet. I’d like you to join the Giving Pledge.” So he goes on and on talking to me about it, and I said, “Warren, you’re too late because we decided many years ago that we were going to give all our wealth to charity, not just half”— which is the requirement for the Giving Pledge. He says, “Oh, no, no, no, no. I definitely want you to sign up.” So we did. Then [our son] John Michael did similarly. We’ve been able to influence a few of our friends to join. Tad and Dianne Taube now are members. Mary and Mark Stevens are members. Just the local people who are very philanthropic throughout the Bay Area.

What is the most significant gift you think you have given in terms of impact? John: Well, in dollars, certainly the gift we made to Santa Clara University — $100 million for a new building called the Sobrato Campus for Discovery and Innovation. It’s probably the biggest gift I’ve given personally, not out of the foundation. It’s really going to transform Santa Clara University. It’s a STEM building and it’s bringing all these disciplines that are scattered across campus under one roof. Anyway, I feel really, really obligated to Santa Clara because they shaped our family [many family members, including John, attended the university], especially on the values side. You know, being Jesuit and working for mankind.

So, what’s next for the Sobrato Foundation? About six months ago, we had a family retreat in the Santa Cruz mountains. We determined that we really need to do more on an international scale, because when you invest one dollar in India or Central America, it’s the equivalent result of spending six or seven dollars of philanthropy in the United States. There are a lot of folks in Central America. If we could help them, if they had education and business opportunities in their countries, they wouldn’t be standing at the border of the United States. So, some of our money is going to go there. We’re also going to put a lot of money toward the oceans, covering overfishing, plastic pollution, things like that. Over the next five years, every time we build another project, we’re going to sell an existing project in the same dollar amount and put those funds in the foundation. This means that over the next five years, we’ve got a pipeline of about $2 billion worth of new business. We’ll be selling off $2 billion over the next five years.

That’s wonderful. We’re looking for a new person who has a global vision to run the foundation. Lisa’s been great, but she just doesn’t have the time.

I know you and Sue love to spend time on your yacht. How did you get interested in sailing, and what else do you do to relax and have fun? Well, I play tennis three days a week.

Oh, I didn’t know that. Yeah, and what else do we do? We don’t have a bunch of houses all over the place. We just have a boat, which we can move around — depending on the weather — where we’d like to be. We’ve had the same boat now for 17 years, which is unheard of in the industry. Guys build a yacht and they have it a couple of years, and then they start another one, and they charter it because they only can use it three or four weeks a year. We spend 16 to 18 weeks a year on our boat. We’ve been doing it for 17 years, and we still do it.

Right. Then the boats got little bit bigger. Sue: John and John Michael went down to Los Angeles to look at a boat. They called me and said, “You got to fly down here; we found this boat, this 42-foot boat, we want to buy.” So I fly down there and I’m on the dock and, to me, after having ski-boats, this thing looks like the Queen Mary. And I’m going, like, “Uh … Who’s going to run this boat?” So, anyway, we ended up buying it.

Is that the one you currently have? John: Oh, no, no. Sue: It had, like, two little state-rooms. … The boat broker showed John how to run it, which was hysterical. We set out to comeback to Newport Beach from Catalina. We ended up in Long Beach. The navigation was …

A little off. Sue: But anyway, we survived

Do you love it as much as John does? Sue: I really like, particularly now … this boat, we have a crew of seven. I’ve never had any live-in help, nannies, any of that stuff. So, to me, to go there and be waited on, especially when I fractured my back in August, “This is great.”

Last question, John. How would you like to be remembered? How would I like to be remembered? I guess, as a hard-working son of an immigrant who was able to do a lot for the community in all kinds of ways.

The Lightning Round

My biggest regret … Not spending the time when the kids were little.

I’m happiest when … I’m on my boat with my family.

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