Jonathan Rochelle, 47, knows what Google can do for a small business. As group product manager for Google Docs, he is responsible for developing some of the Web giant's most innovative small-business software. Google Docs grew out of a Web spreadsheet company he started and sold to Google in 2005. Rochelle also plays an advisory role in Google's secretive process of acquiring startups.

We spoke with Rochelle to get his tips for using Web tools in your small business -- and what it takes to get noticed by one the world's coolest companies. Here are edited excerpts of our conversation.

Entrepreneur: Many small companies aren't taking full advantage of cloud computing, despite its lower cost and greater convenience. Why?
Rochelle: There's still a lack of awareness about the difference between cloud computing and locally installed software. With cloud computing, you can access your stuff from anywhere, you don't need to get a new computer. If you open up an office and you have three employees, there's still a traditional approach to buying three computers and networking them together. With cloud computing, you don't necessarily need to buy new computers or network them. Instead, everyone can use their own computers and access shared documents online. The old approach is going to change, but there's a legacy that's making it hard. One of the things holding Web computing back from becoming mainstream is the shelf. You don't go to a store to buy it. People don't know where to go to "buy" cloud computing.

Entrepreneur: What are some tips for small businesses shopping for cloud-based software?
Rochelle: Following other companies that are using proven solutions is one of the most important things. And, don't use combinations of programs that don't fit well together. So, where you can, you want to stick with a single company that offers most of what you are looking for. What's more, don't try to match the product exactly to your process. That is really expensive. If you are willing to change your process just a bit to match a technology that's trusted and credible and working, you can save a lot of money. It's worth the little bit of pain of changing your process so that you're using standard technology.

Entrepreneur: What business opportunities do you see for would-be software entrepreneurs?
Rochelle: Niche apps. Business software is going through a platform shift to the Web. As that happens, all prior software can be re-questioned. So there are opportunities for the guy who writes the application that helps a dentist's office, the guy who writes the application that lets you run your hardware store, or helps a journalist be more effective. The biggest opportunity is in delivering the best software in those niche classes on this new Web platform. Web-based software is much less costly for buyers than traditional software and programmers can be so much more innovative, that it's worthwhile for an entrepreneur to say, OK, let's start from scratch.

Entrepreneur: When sizing up potential acquisitions for Google, what do you look for -- something unique?
Rochelle: We certainly look for some kind of secret sauce that would be hard for us to do from scratch, but the team is probably the most important thing. The people have to be passionate about what they're doing. That's the driver.

Entrepreneur: Any advice on the best way to show that you've got a good idea and the right team?
Rochelle: Don't present what you think the buyer or the partner wants to hear. It's just a bad thing to do. A completely honest conversation about where you're headed is a must.

Entrepreneur: How did Google come to acquire your company?
Rochelle: In 2003, I was running a firm I started called ITK Solutions that created business software for large financial-services companies. Financial spreadsheets were kind of a bit magical, because they gave the businesspeople who were not technicians the ability to deliver cool, automated things like complex formulas, charts and lots of data. But spreadsheets were inherently locked in a box -- they were on a desktop. My partner Farzad "Fuzzy" Khosrowshahi found this idea of converting a spreadsheet to Web code. There was a very specific financial model at the time that we estimated would take about six months to put up on the Web. But he was able to convert a spreadsheet code into Web-based code in almost no time. At that moment, we knew we'd go into business together.

Entrepreneur: Did you approach Google right away?
Rochelle: Not exactly. Around that same time, we contacted someone we knew for some advice about one of our other products. And it turns out, he's at Google. So we set up a meeting, but not with the intent to sell. In fact, he was very clear that our product was not something that Google was interested in, but he was happy to help us, on a personal level. So he looked at the concept, we drew a few pictures on the board for him, and it was a good conversation. But not good enough.

So we then showed him Fuzzy's product prototype of our Web spreadsheet. And he literally pulled the laptop away. He tried a few complex formulas. And he said, "Wow, this thing works." And then he said, "I changed my mind. I think Google's interested." And from that point forward, it turned into a conversation about acquisition.