Google spinoffs prime VC territory in 5 years?

Are corporate spinoffs generally a good idea? Sure they are -- they unlock value for the new company and requisite shareholders while "freeing" a hopefully-profitable venture from the auspices of corporate sluggishness. Huge corporate powerhouses can be breeding grounds for "internal companies" that have a great business plan all their own with a product and a margin that is just being buried by the overall company from a product and financial perspective. Why not unleash it separately? That is the thought behind the spinoff, right?

This quote quite piqued my interest when thinking about spinoffs waiting to happen inside big and medium companies right now. Here it is: "Five years from now, Google Inc. (NASDAQ:GOOG)is going to be a great hunting ground for spin-offs." This from Bart Schachter, a partner at Blueprint Ventures. Blueprint's mission is kind of unique: it seeks to break small groups out from large corporations and give them a footing as a startup. These groups, according to Blueprint, generally have 10 to 20 employees and are mainly irrelevant inside their corporate host. It's a classic case of letting the best-performing model prisoner free from his or her shackles.

As companies reach critical mass stage, "things that aren't core to their multibillion-dollar businesses just aren't interesting to them," says Schachter. Is this happening at Google yet? From all indications, it is not. Google is not even a decade old yet but has grown so rapidly that another five years down the road it may be well on its way to what is considered the "bloated corporation". Google's hegemonious culture and "fly by the seat of its pants" operating mentality will probably continue to a point, even as more order in introduced into the company as it grows. In 2012, though, will Google start spinning off small pieces of itself into smaller companies?

Right now, the company still receives almost all its revenue from search advertising, so five years into the future is kind of a clouded view. What will Google's future look like then? Hard to say. But, if the company is grooming several businesses now that end up being spun off in the next few years, we may all soon see just how little this company has grown so far, even in the midst of a $120+ billion market cap.

For an interesting look at Google's acquisition strategy, read my colleague Tom Taulli's piece Google's Wild and Crazy Buyout Team.