London, Berlin, start-ups and growth

I enjoyed reading Schumpeter’s article in the Economist comparing and contrasting London and Berlin as cities for start-ups . As Schumpeter says “there are big differences in the urban environment in which both ecosystems exist. London is cramped, expensive and fast-moving. Berlin offers lots of open space, good value for money and an almost Mediterranean speed of life…Berlin is dirt cheap… you only have to earn about £2,300 ($3,700) in Berlin to enjoy a standard of living that in London costs £4,000. Rents are more than 60% lower than in London.” Berlin start-ups also have less to worry about in terms of their talent being poached – the big global players like Facebook or Google which have sizeable and growing presence in London are absent. But these pluses are also minuses – it means the talent pool is smaller in Berlin than London and arguably the more relaxed culture makes firms less ambitious.

Perhaps the two cities are playing complementary roles? As a location for start-ups, each city is offering a differentiated product, which will appeal to a slightly different niche.

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