Google has reorganized and will become a wholly owned subsidiary of a holding company known as Alphabet, which will also house all the screwball ventures the company has started or acquired over the years.

There has been a lot of speculation and confusion over the move. But it appears to be the only thing Google could do to avoid becoming another Yahoo, which bought many up-and-coming and successful ventures only to watch them deteriorate or fold completely.

Google was heading down the same path, ignoring its core compentencies. Larry Page and Sergey Brin(Opens in a new window) got where they are as world-class developers and leaders in the search engine game. Does this mean they suddenly they can manage a thermostat company? Or a venture capital firm? Or a bank? Yahoo tried it and failed miserably.

The abject failure of Google Glass likely drove the company to conclude that simple divisions between business units cannot and will not work the same way as standalone companies.

A standalone company will reveal if something has any real potential to be successful. I sifted through various comments on different sites regarding Alphabet. An ex-Google X employee called it a disaster because it will be harder to poach employees from one division to another. But that’s a problematic element. A company on its own cannot effortlessly take a superstar for temporary assignment to shore up the defects. Poaching was part of the problem, not the solution.

As CEO of Google, meanwhile, Sundar Pichai can focus on the company’s core mission without the distraction of projects that Page and Brin have taken on.

Google has a lot of offshoots that are too off-the wall to be managed by Google’s CEO, from Google Fiber to self-driving cars. It would be wise to spin off Android from Google proper, and I think that will eventually happen. But for now, it is convenient to keep Android and even YouTube with Google.

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Some have equated this structure with Berkshire-Hathaway, where you have a big holding company and a lot of standalone corporations. The holding company provides guidance and makes sure there are no screw-ups without meddling much. Valley insiders know that Page and Brin are fans of Berkshire-Hathaway chief Warren Buffet. Alphabet is indeed similar enough to make the comparison, but has more standalone companies evolving from internal R&D than Berkshire Hathaway.

My initial thought was that this is some financial scam or a scheme to allow the founders to maintain control. You never know with Google. But logic says otherwise. None of the top folks at Google need to pull any shenanigans. It’s pointless. This is a way to create a long-term and viable structure that is more Berkshire Hathaway and less Yahoo. It’s a winner.