With Google seeking to raise USD 1-2 billion in the next few months, I think attention is going to shift to preparing companies for Google to takeover. I think there will be significant VC and entrepreneurial activity which will involve making bets (I think Friendster is an example) that Google will, with its newly acquired cash hoard, acquire promising companies before Yahoo and Microsoft get to them. This is a bubble which will be fuelled by a small set of companies with ample cash amongst them.
Google will have little choice but to make these acquisitions. Going public will change their life. Yes, it will make for great wealth creation, but it will also put pressure on them to deliver on the unrealistic expectations that will be there in the form ot the stratospheric stock price. For Microsoft, Google will become enemy no. 1 (currently that position is held by Linux, but there is no company in the Linux space that Microsoft can target). The best thing for Google is to stay private, keep improving its search technologies, and keep growing, considering the cash that it continues to generate.
Back to the food chain point. So, VCs and entrepreneurs alike will now try and position their companies as “Google-takeover candidates”, because the Google IPO is not likely to signal the arrival of other public offerings from the smaller companies. So, the only exit for many of these companies is an acquisition. This isn’t a bad thing at all. The networking space in the 1990s saw a food chain built around Cisco. My point: it is likely to be good for some VCs and entrepreneurs, but may not be the best thing for Google.