History in the Making: Donald Sussman & David Shaw

February 19, 2018 James Heinsman Company Spotlight

It’s always fascinating to get a peek into the early days of the hedge fund industry and of the people who have helped to shape it. Certainly, Donald Sussman and David Shaw are shapers of the industry and the story of where their two worlds collided is one worth retelling.

In a recent article in NY Magazine, that’s exactly what was done. In the summer of 1988, David Shaw asked Donald Sussman if he might come to see him for some advice. Asking advice of the Paloma Partners founder, Shaw wanted to know whether or not to take an offer from Goldman Sachs. Donald Sussman had an incredible talent for recognizing talent. Shaw explained to Sussman that “I think I can use technology to trade securities.”

Donald Sussman, reading Shaw and his talent said, “If you’re confident this idea is going to work, you should come work for me.” Paloma Partners ended up investing $30 million with D.E. Shaw, and his certainly never regretted it. D.E. Shaw has grown into a company with an estimated $47 billion and Shaw is worth an estimated $5.5 billion.

Interestingly, in the early days, Sussman would visit Shaw’s office weekly. As Sussman recounted,

“Once they started trading, they started making money out of the box. These were very serious folks. I used to go and sit next to them watching them trade. They didn’t miss a goddamn thing. The atmosphere of the place was unlike any other investment firm. It was like going into the research room in the Library of Congress.”

Now, as D.E. Shaw gets ready to celebrate its 30th anniversary, Sussman will be celebrating along with him. Donald Sussman’s firm invested hundreds of millions of dollars with D.E. Shaw;  Sussman can say with certainty, “I never doubted him for a minute. I never envisioned that D.E. Shaw would be $47 billion, but I did envision how David would change the world of finance.”

The rest, as they say, is history.

D.E. Shaw, David Shaw, Donald Sussman, hedgefunds, Paloma Partners,

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