Rerun: “The Tiny Company Walking in the Footsteps of Microsoft”

By Travis Johnson, Stock Gumshoe, December 16, 2007

For those who weren’t waiting on the Gumshoe’s every word back in March, this is a rerun that has been emailed like crazy nationwide in the last few weeks … at least, if the flood of emails I’m getting about this one is any indication. So, the company’s still the same, the teaser is still the same, this is both the “Crazy Idea that Dazzled Bill Gates” and the “Tiny Company Walking in the Footsteps of Microsoft.” It’s been a good stock so far … maybe it will continue to be. What follows is my original writeup on this teaser … enjoy.

This one comes to us from the fine folks at the Motley Fool, who send out some of the LONGEST email solicitations for their newsletters that I’ve ever seen.

The latest one I received runs the gamut — from talking about Warren Buffett’s claim that he could get 50% returns if he could start over again today, to mentioning several of the Fool newsletters and special reports … but the most interesting teaser company is near the top.

Tom Gardner asks us whether we’d like to “Bank Insider Profits on the Crazy Idea That Dazzled Bill Gates!”

Well sure, that sounds like fun!

In this case, they’re drawing a pretty simple comparison — there was a foundational company in this field, which they drop some hints about and which was a huge success for early investors (not so much for recent investors, but we’ll get to that in a moment).

And in China, there’s a smart group of folks who have essentially copied that idea, for a bigger and nearly untapped market that’s growing quickly — and that is a logical fit for this business plan.

So what’s the US company that laid the foundation? If we can figure that out, we’re halfway there — and without selling our soul for a free report from the Gardners.

Here are the hints — and this one is almost too easy to even write up, frankly:

The US company was started by a guy named Rich Barton, who had a revolutionary idea. Bill Gates helped him bring it to fruition.

Lots of insiders and early investors made buckets of money, and it was sold to a “legendary Hollywood mogul” for $1.3 billion — and it’s gone up nearly eight-fold since.

This is more than enough to identify the company, but they throw in some enthusiastic plaudits from Barrons and the Economist regarding what an ideal internet business this is, and how well the business model works.

Enough? This company is clearly Expedia — everyone’s favorite internet travel broker from days gone by, and now one of many cutthroat competitors in a tough business.

Rich Barton, by the way, is also the guy behind Zillow, the real estate website — which seems to have hit popularity just a few months before the peak of the housing cycle. I expect he’s thankful to have his billion-dollar Expedia payout in the bank now.

But that’s not the real tease company — we want the Chinese version.

And that, for those who haven’t been watching the middle kingdom, is (I’ll save you the work of following the hints they provide about Ctrip’s founders — Oracle engineers, etc. — that confirm this is the company Tom’s selling us on).

I actually like this company and their prospects, but don’t know much about them or own shares — and I have no idea if this idea that was borrowed from Expedia will really build a multi-billion-dollar empire the way Barton’s original idea did.

But now you know — another stock uncovered, and it didn’t cost you a dime … or your phone number.

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