Early Life
David Elliot Shaw was born on March 29, 1951. He was raised in Los Angeles, California. His father was a theoretical physicist specializing in plasma and fluid flows, and his mother was an artist and educator. Shaw showed an early aptitude for mathematics and science, excelling in school. He earned a bachelor's degree from the University of California, San Diego, with a double major in mathematics and applied physics and information science. He continued his education at Stanford University, earning both a master's and a Ph.D. in computer science in 1980.
Rise to Success
Shaw's career began in academia, where he served as an assistant professor in the computer science department at Columbia University. During his time at Columbia, he conducted research in massively parallel computing. In 1986, he transitioned to the financial sector, joining Morgan Stanley as Vice President for Technology in the automated proprietary trading group. In 1988, Shaw founded D. E. Shaw & Co., a hedge fund that would become a pioneer in quantitative trading, utilizing advanced computing to exploit market inefficiencies. His firm's innovative approach earned him the nickname "King Quant".
Key Business Strategies
D. E. Shaw & Co. employed proprietary algorithms for securities trading. The firm is known for developing complicated mathematical models and computer programs to exploit anomalies in financial markets. By 1996, D. E. Shaw had delivered average annual returns of 18% since inception, accomplished with low volatility and little correlation to major indices. Shaw has since stepped away from day-to-day operations to focus on scientific research.
Philanthropy
Shaw is actively involved in philanthropy through the Shaw Family Endowment Fund. The fund has made significant donations to various educational institutions, including Harvard, Yale, Princeton, Stanford, Columbia, and Brown Universities, totaling $37.3 million in college donations from 2011 to 2017. The Shaw Family Endowment Fund has also donated to the American Association for the Advancement of Science and other organizations like the Stephen Wise Free Synagogue, Memorial Sloan Kettering Cancer Center, and the Horace Mann School.