When David Shaw turned 50 in 2001, he paused to take stock of his life. D.E. Shaw & Co., the New York based investment firm he had founded more than a decade earlier, was thriving. Its core business -- a quantitative-based hedge fund that relies on sophisticated computer-driven algorithmic models to find mis-priced securities -- had grown from $28 million in 1988 to more than $3 billion. But Shaw, who has a Ph.D. in computer science from Stanford University and taught for six years at Columbia University before moving to Wall Street, was growing frustrated. As chairman and CEO of the firm, his days were taken up with management issues like compensation, arbitration and business strategy.

"I missed doing hands-on research," says Shaw, who has found the spark he was looking for in the field of molecular biology and drug research.

To lead his firm into the future, Shaw entrusted its...