By Sean Wolfe

It’s tempting for entrepreneurs and venture capitalists to design a company today with a notion of who will want to buy it tomorrow.But that irritates deep-pocketed acquirers, who would prefer companies simply innovate, and let buyers worry about what’s worth spending money on.

At a San Francisco venture capital conference Wednesday, the heads of corporate development at Google and Microsoft said firms shaping themselves expressly to be attractive acquisition targets were in for a rude awakening.

“The people that say they should build their companies to be bought by Google—I don’t think that’s a good idea,” said Salman Ullah, Google’s director of corporate development. “To be focused purely on liquidity paths isn’t very useful. When VCs ask what we should build, that’s not very useful, either.”

It’s understandable that big buyers like Mr. Ullah can get testy. VCs and their portfolio companies are eager to be appealing to companies like Microsoft and Google which have shown a healthy appetite for acquisition, and substantial war chests.Google, for instance, bought roughly thirty companies in the past three years. Microsoft buys between 15-20 companies per year.

To understand the attraction of getting bought, look no further than Google’s move last year to acquire YouTube for $1.65 billion—a healthy price for a company with no profit. At the same time, knowing how to appeal to a big buyer is an essential skill at a time when a company with $10-$50 million in revenues still has a difficult time going public on Nasdaq. To illustrate, there were 56 venture-backed IPOs in 2006 raising just $3.7 billion. Mergers and acquisitions, by comparison, raised $31.2 billion for 404 transactions during the same period.

Bruce Jaffe, vice-president of corporate development at Microsoft echoed Mr. Ullah’s comments. His take is that companies should do what they do best, and innovate.

“At the appropriate time we do talk about what we’re doing, and then they (potential acquirees) fit, or they don’t fit,” he said.

Suggestions for what makes a fit vary. Mr. Jaffe said he has a preference for management teams that are looking beyond just selling the company.

“Are these people that are looking to build a huge business? It’s okay for them to say help me grow. But there’s a balance between that and how they can utilize the assets that Microsoft brings, like our sales channel, and how they complement with our own R&D,” he said.

“There are many franchises that have been created that are the foundations of the companies we buy,” he said. Examples include Bungie Software Products, a game company bought in 2000 that created the successful Halo first-person shooter game. Along the same lines, Microsoft more recently bought Massive, a network for video game advertising that delivers ads for Microsoft’s Xbox Live and MSN Games.

Fitting in at Google is somewhat simpler. Google doesn’t care where teams are located, Mr. Ullah said, because software can be coded anywhere in the world. But the product that is being developed by the team should leverage Google’s core architecture. One of Google’s earliest acquisitions, DejaNews had built a Web-based interface to Usenet—one of the Internet’s earliest threaded messaging applications. Purchased in 2001, DejaNews ultimately became the core of Google Groups, which also allowed users to create their own private groups. One of its more recent buys, Writely had developed a word processing application, which became part of Google’s Docs and Spreadsheets service, and an open challenge to Microsoft’s Office software suite.

“If you look at the 30 acquisitions we’ve made over the past two or three years, you can see what kinds of products come out of those acquisitions. The products are new, but the deep infrastructure is ours,” he said.