MBA Entrepreneurs

Rocket-Internet MBA On The Dominance Of London

Written by Ifeatu Nnaobi | MBA Entrepreneurs | Friday 4th May 2012 15:10:42 GMT

Can you imagine setting up a brand new internet company in the UK’s third largest city, Glasgow? Steven Renwick explains the unhealthiness of London's dominance of the UK economy

Munich boasts a whole lot more than girls drinking beer, something not many UK cities can say for themselves...

Munich boasts a whole lot more than girls drinking beer, something not many UK cities can say for themselves...

We've followed up our 'Inside View' of Rocket Internet, with more news and views from the folks at the company which churns out internet startups at an amazing speed.

Rocket already supports internet startups in more than 20 countries around the world and is still growing! One of their employees, Steven Renwick, is an MBA grad from Oxford University's Saïd Business School and writes a witty blog called The Wannabe VC.

Here's an excerpt from his latest post, where Steven applies the concept of Zipf's Law to question whether the economic dominance of London as a city is good for the UK. 

I’m in Munich, Germany at the moment, working on a new internet company that is growing in leaps and bounds. We’re hiring lots and lots of people, both technical (developers) and non-technical. Something in particular about this interests me – Munich isn’t Germany’s first city, it isn’t even its second – in fact Munich is the third-largest city in Germany behind Hamburg and the capital, Berlin.

Why does this so fascinate me? Well, can you imagine setting up a brand new internet company in the UK’s third city? According to Wikipedia, Glasgow is the UK’s third city. In fact, let’s forget "Glasgae" for a second, can you imagine anyone ever setting up a brand new super successful internet company in Birmingham, the UK’s second city? Nope, neither can I.

In the UK it seems that unless you’re in London, you’re nowhere. How does one city get to dominate a country so much, and is it good for the UK? According to George Zipf’s theory of rank-size for an ideal distribution of city size, the second city should be half the size of the largest city, and the third city, one third the size, and so on.

Mark Jefferson described “primate cities” as those that so dominate the country that they capture most of the population and economic activity in a country. Classic Primate Cities include London and Paris, whilst the most extreme example is Bangkok, which is 40 times larger than the next city.

Compare that to Germany, where Berlin has a population of 3.3 million, Hamburg is 1.6 Million, and Munich is about 800,000. They almost perfectly follow Zipf’s Law. So which ecomony is doing the best out of the UK, France and Germany? Yeah I won’t bother answering that…

Although Berlin, where my direct employers are actually based, is itself considered a bit of a European start-up hub, I never get the feeling that it dominates Germany in the same that London dominates the UK. I don’t think many of my non-British friends in the UK would seriously consider living anywhere in the country other than London. In fact, do people even want to visit Birmingham or Glasgow? Not really. Other than a weekend trip to Edinburgh, for most people London is the UK....

You can read the rest of Steven's article here!

About the Author

Originally from Dundee, Scotland, Steven works for Rocket Internet helping them start internet companies. Prior to Rocket, he did his MBA at Oxford University, where he focused on entrepreneurship and venture capital investing. In a previous life he was a scientist – he has a PhD in Genetics from University College London and a BSc (Hons) in Biochemistry from the University of Dundee. You can keep track of his adventures on his blog The Wannabe VC, where this article was originally published. 

Comments

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Wednesday 9th May 2012, 10.18 (UTC)

Rory Black

Never thought about opening an internet company in Glasgow. I visited Edinburgh a few years and it didn't strike me as a 'business' place. Its been good to learn about Scottish Enterprise. I'll be visiting Glasgow in a few weeks so I will try to envisage doing business there. Very nice write up. Thank you:)


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