In the early days of the Internet, its disruptive nature wasn’t a result of technical protocols or flashy GIFs. It was the promise that anyone could head West, set up shop, and succeed based upon their merits, that a startup out of Stanford could organize the world’s information, or that it was possible for a couple of guys to take out an entire industry. It took the ethos of Silicon Valley startups, where the craziest and most brilliant win, and opened it up to the entire world.

As the Internet grew, the gatekeepers of the analog world slowly became irrelevant. It used to be the companies like book publishers, game distributors, and music labels controlled commerce in their respective industries. But following the big bang of the Internet, when the public flooded servers everywhere, a meritocracy seemed to form. Companies like Amazon and Google appeared, which changed the commercial world from something built upon decades of gatekeepers and historical precedent, into something that was based upon meritocracy, hard work, and skill.

But as search engines and Web-based portals swung the world away from a dependence upon gatekeepers, the pendulum now seems to be swinging back. There are new gatekeepers in town, and they are even more powerful than those the Internet once killed off.

These new gatekeepers are the platform owners — companies like Apple, Google, Twitter, Facebook, Amazon, and even Spotify, the companies that can ban apps or determine who is on the promoted apps boards, the companies that can be the lifeblood of startups, or the death knoll.

To elaborate on how this “gatekeeper” model works, consider mass-market consumer products — children’s board games, for example. The gaming industry was controlled by a few major brands like Milton Bradley and Parkers Bros. If you were an enterprising game creator looking to make it big, you would turn to one of these powerhouses, who could take the game, buy the rights, and distribute the game along existing promotional channels around the world. Without these gatekeepers, widespread success was nearly impossible.

The thing about these deals though, is that they weren’t so much based upon the actual board games as they were upon the people striking the deals. The industry ran on a gatekeeper model, where knowing someone was more important than the quality of a game. Looking at the current app market, with success coming from being feature on the App Store and Play Store, it’s clear that history is repeating itself.

But being chosen by the people who control these lists, or the Android equivalents, is highly unlikely, nearing the impossible. For all of the hundreds of thousands of apps in various marketplaces, less than a couple dozen are featured every week. So how do developers and startups get onto these lists? By having direct relationships with the companies.

I spoke to one app developer — who asked not to be named so as to not damage a relationship with Apple — and he described the process of being featured is the App Store as extremely bizarre. According to this founder, Apple tries to make the process of being “featured” as being very merit-based. But more often than not, it all boils down to personal connections.

As an extension of this, the relationships that yield such career-making “features” are fragile. Companies — particularly Apple — tend to act like the typical jealous girlfriend, overreacting to even the faintest hint of a sleight. This same founder told me that when their company shared with Apple that the company would be launching an Android application in a few months, Apple said the app wouldn’t be featured on the App Store ever again.

The “Apple as jealous girlfriend” metaphor is never more clear than at official Keynote events. If we look at the companies that are invited to speak on stage, they are almost always iOS-exclusives, have close historical ties to the company, former Apple employees on staff, or are generally pro-Apple. It’s a classic case of personal relationships being the key to success.

The situation is the same at Twitter. There is a clear sense of a developing caste system, where major developers and Twitter executives are communicating with each other, while “lesser” developers are left in the dark. According to an executive at a company with very close historical ties to Twitter, who also declined to speak on the record, all of the ruckus over Twitter’s policy changes surrounding developers didn’t faze their company at all. Twitter had been upfront from the beginning, and there had been no issues or anxiety over the impending changes.

Contrast this with what I heard from the developer of a major Twitter client prior to the announced API changes. At the time, the developer expressed confusion over Twitter’s lack of communication. The company clearly knew what it was going to do, but it only really communicated to the companies that it had a personal relationship with. This disparity shows a clear “most favored nation” system within the community.

It’s the same at Facebook. Sure, anyone can develop for the Facebook platform, and maybe some random developer will have success. But if you know people in the company, the situation is very different. Look no further than Dalton Caldwell’s “Dear Mark Zuckerberg” letter from earlier this summer. Caldwell was able to meet directly with executives at Facebook in the time leading up to an app launch. This isn’t treatment just anyone can get.

There’s one major conclusion to be made from these observations. That the new gatekeepers, operating by the old rules of favoritism vs. merit-based judgment, give more access to companies in Silicon Valley than those elsewhere in the United States.

These new gatekeepers will fundamentally challenge if smaller “unknown” developers can succeed or not. Instead of success being based upon a meritocracy, success may end up being dependent upon networking skills and connections. That’s quite a departure from the Internet’s original promise of success based upon blood, sweat, tears, and talent.

Earlier today, Etsy announced a gift card program which will serve as a proprietary payment processing system. Also today, Spotify announced that it would be selling physical gift cards in stores across the United States. This follows companies like Facebook, Apple, and Zynga, that have all sold gift cards at one point or another, all redeemable for virtual goods. More recently, it follows startups like Livrada and larger companies like Google, who are all trying to cash in on the gift card market.

The question, though, is why? Why are all of these technology companies diversifying away from the technology world, and instead making inroads into the physical, analog world?

The answer is that for all of the promise of digital sales and ecommerce, the virtual world doesn’t match up to the virtual world in two areas: sentimentality and the size of the market. These two issues present problems for companies looking to make money online. After all, it’s almost impossible to create sentimental value when there aren’t tangible goods, and the size of the market is going to grow at a predictable rate regardless of third-party intervention.

These problems can be solved though, through a hail-mary pass to the brick-and-mortar retail sector. Physical stores still represent the vast majority of sales, and will for quite some time according to eMarketer. The question then is, how will online retailers take advantage of this market?

The answer is the gift card, which is why we’re seeing more and more companies launch gift card-centric promotions. Gift cards are small, in that stocking them is a small sacrifice for retailers; they are well-known, in that convincing consumers to purchase them isn’t hard; and, they are cheap, in that they present little risk to the companies. It’s the type of solution that just makes sense.

This would be enough to solve the problem of entering the physical world, and take advantage of the market. But just leaving it at that would miss the bigger picture of opening up entire segments of the market otherwise be inaccessible.

These segments include gifts-giving, and the habits of non-technically savvy individuals.

Consider the case for Spotify. When you give someone a Spotify subscription, instead of receiving a nice gift-wrapped CD case like in the olden days, you receive a sparse email with a link to sign up for the subscription music service. How does that sound for a birthday present? Less than ideal, and I’m saying that from first-hand experience.

With gift cards though, there is a tangible quality to the gift, akin to the nostalgia for physical books that people often feel when reading ebooks. Sure, it’s not exactly the same. But at the same time, a gift card is much closer to reality than a push notification.

The second segment that is untapped are the non-technically minded people. Not the people who ignore computers entirely, but the type of person who doesn’t have the time to find the latest tech service, but who would use it if they knew about it.

This market can be reached by putting these gift cards in front of people. In this capacity, they end up serving as advertisements, but instead of losing money, the companies are actually being paid to advertise to people. It’s a win-win.

The final advantage for companies selling gift cards is the third segment of the market: people without credit cards. That’s nearly 30 percent of the United States, according to one survey. It includes teenagers, cash-dependent people, and those with bad credit scores. But these people may still want to cash in on the digital market, but can’t. Gift cards open up this rather sizeable group of people.

When I wrote about Livrada earlier this summer, one of the things founder Leonard Chen shared with me stuck with me: the transition to digital can be both painful and exciting. This takes a little bit of pain out of the equation for everyone. Something that startups seem to be realizing more and more now.

[Image Credit: 401(K) 2012]

Earlier today, the Securities and Exchange Commission issued a set of proposed regulatory changes as part of the implementation of the JOBS Act. The Act, which is supposed to simplify the process for raising capital for startups, gave us the promise of disrupting the venture capital industry. Instead, the SEC has tied up the JOBS Act in red tape, by moving slowly and stalling the implementation of the regulations.

Prior to the JOBS Act, companies that were raising capital had to register the fundraising with the SEC — but they were never allowed to publicly advertise the fundraising in places like newspapers or online. This meant that the number of people who learned about the investments were much smaller. The disruptive nature of the JOBS Act, though, is that it will allow companies to tell everyone that they are raising money, meaning that the number of potential investors increases dramatically.

As a precaution against everyone investing based entirely off of the hype of a given pitch, though, the SEC has mandated that accredited investors are the only ones eligible to invest in privately owned, early-stage companies filing for the advertising ban exemption. To become accredited, the SEC has a few rules on the books as part of the proposed changes. Investors must have a net worth of over $1 million, or, investors must have an annual income of over $200,000.

These rule changes may end up being a pain in the side of crowdfunding groups, as the SEC is being intentionally vague on who is liable for determining eligibility. The Commission has decided that instead of putting approved regulatory organizations like broker-dealers or the SEC itself in charge of determining if investors are accredited, the onus for determining eligibility should be placed on issuers — the entities that are actually handing out the stock.

Taking responsibility and being liable for the determining if investors are accredited or not is a big problem for the issuers. The process is costly and time-intensive, and if they mess up, they will have violated SEC regulations. As a result, the issuers will likely end up turning to broker-dealers to take care of the eligibility process, while at the same time retaining the liability for any mistakes made.

The concern over liability isn’t news to the SEC, though. As noted in footnote 53 of the proposed regulations, “Several commentators, in fact, have recommended that the Commission take action to facilitate the ability of issuers to rely on third parties to perform the necessary verification.” Despite the recommendation, though, the SEC is still putting the liability at the doorstep of the issuers.

This footnote hints at a future where issuers aren’t directly liable for any rule-breaking, but because this isn’t actually a part of the rules, it just makes the situation even murkier. If third-parties will be held responsible down the road, why aren’t they being held responsible from the get-go? And why are issuers being handed the short-straw in all of this? These mixed signals are a nightmare for companies looking to be involved in the crowdfunding process. After all, if it’s not clear if you’re violating regulations, how do you avoid breaking the law?

I spoke with DJ Paul, the COO of Crowdfunder, and he shared with me that even after speaking to his company’s lawyers, it’s not clear who is actually liable if an investor ends up not being accredited. For companies that are trying to be innovative while also working within the confines of securities laws, this can become a big (and possibly expensive) headache.

Another issue with the proposed rules is that there is no specification as to how issuers can advertise the sale of securities. According to Bill Clark, cofounder of crowdfunding-focused broker-dealer MicroVentures, there is the possibility that other issuers will advertise securities with overhyped statements like, “the next revolution in social networking,” which would be more attractive to investors than simply stating that the facts of the fundraising. This could mislead investors, and there’s no clear protection in the proposed regulations.

The delays and vague regulations aren’t going unnoticed by those in power, though. As Patrick McHenry, a sitting member of the House of Representative’s Committee on Oversight and Government Reform, told SEC Chairman Mary Schapiro in a letter to the Commission (PDF),

“…by issuing a proposed rule, rather than an interim final rule, the Commission is unlikely to finalize the rule until next year. By kicking the can down the road, you are abdicating your responsibility to follow the law, failing to fulfill your sworn commitment to this Subcommittee, and ignoring the will of Congress and the President of the United States.”

There isn’t a clear motivation for why Schapiro and the SEC are pushing the implementation back, or why there is a delay in implementing an interim final rule. Every side of the debate has weighed in, from the broker-dealers, to state regulators, to companies wishing to have the JOBS act implemented. At this point, the act should be going full steam ahead, and yet its being delayed yet again.

[Photo Credit: Scott*Eric on Flickr]

Because of this strong position, it would seem to make sense for Apple to kneecap one of its biggest competitors, Amazon, before it gets too strong. However, according to several people I talked to, it’s in Apple’s best interests to play the waiting game for now.

There’s one obvious motivation for Apple to go on the offensive, as demonstrated by its lawsuits with Samsung, Motorola, and HTC — Apple believed that these companies were eating into its profits. The motivations for suing may have been cloaked in the shroud of protecting innovation, but make no mistake about it, Apple sues when there is a competitive threat. After all, Apple didn’t bothering making a stink over the JooJoo Pad.

And from that point of view, it makes sense for Apple to keep its eye on Amazon. Amazon has an incredibly strong foundation to compete with Apple. It has the strongest content library outside of Cupertino, it has the distribution channel of Amazon.com to compete with Apple Stores, and it has the developer ecosystem on its side with tight integration with Amazon Web Services. The only thing that Amazon doesn’t seem to have, though, is a killer product. (That’s only a matter of time, in all likelihood.)

This foundation will all tie together in the future, when Amazon pushes into the smartphone space and further into the tablet space. After all, Amazon will need more proprietary devices to provide “all of the world’s content” at a low price, as its mission statement claims.

In the meantime, though, Apple’s focus should remain on Google. Google runs the Android ecosystem right now, and Android is still the biggest threat to iOS, courtroom losses and all. Independent mobile analyst Horace Dediu backed up this claim by telling me, “Amazon is a bigger threat to Google than it is to Apple. So I think Apple will leave [Amazon] alone, at least as long as Google is still their main concern.”

What this means is that Amazon is currently holding Google in check while Apple fights them from a different angle. This sentiment was echoed by Jim Dalrymple of The Loop, when he told me, ” I think the relationship will remain on good terms as long as Amazon doesn’t push things like using Apple’s trademarks for ‘App Store’ or other items.”

In the long-term, Apple will likely end up having to fight Amazon in the courtroom. But it will be worth it for Apple to be patient. After all, there’s no point in fighting a war on two fronts without provocation. For now, Apple has Amazon on its side against Google in a “enemy of my enemy is my friend” kind of way.

This isn’t a new strategy. Larry Ellison was known to have taken a similar strategy as he built up Oracle. Ellison plays the long game in the enterprise software industry, coldly calculating his moves as he knocks down, acquires, or squashes competitors. This strategy could lend itself well to Apple, as it looks down the road. Eventually Apple could take on Amazon in the market and in the courtroom, but in the meantime the threat is Google-Motorola, and that’s what needs to be addressed. If Amazon can help with that, then there’s no reason to take on an ally before need be.

All of this is to say, don’t expect Apple to sue Amazon tomorrow. But at some point in the near future, if the execs at Cupertino are paying attention to the enemy in the north, there will need to be licensing talks, and if all else fails, litigation. But it should be slow, steady, and according to a long-term plan. As Dediu old me, “Litigation is not a weapon used lightly.”

This presents two very large problems for Diaspora. One, decentralized services, and especially social networks, rarely succeed. And two, it’s going to be doubly hard for Diaspora, since it has already faltered as a centralized project.

Regarding the first, Diaspora is still the same product today that it was yesterday. Yet, moving forward there is a dramatically different future in store for the service. Instead of being pushed forward by a centralized vision and with a command structure with the company at the center, the efforts will be pushed forward by the whims of the community.

This may make sense for Diaspora, because after all, it is a “distributed social network,” so being managed by a “distributed community” seems like a natural extension. Despite this nice parallel, Diaspora still has to deal with the realities of distributed projects that are taking on centralized services.

Looking at the history of this problem, there are a few examples of projects that took a similar tack and failed. For example, Google Wave, which was going to be a distributed project, only gently guided by Google, but run by the community. The project that was going to be the next wave in communications, with millions of dollars in backing and promotions across the Web. In spite of all this, though, it died.

The problem is that decentralized services have a much harder time tackling networking problems than centralized services. Sometimes its on the product development side, but sometimes its just the fact that there isn’t a person with a sign saying, “The buck stops here” in a decentralized service.

But most importantly, the key difference between a centralized and a decentralized service is that with a centralized service you only need to win over users, but with a decentralized service, you need to win over both users and hosts.

As Dan Wineman said last week in response to the call for alternative Twitter services, “The moral of the story is that the qualities that make Twitter interesting…are direct consequences of its centralized architecture. Without the centralization you can still have something interesting, but it’s a different thing.”

When asked whether or not App.net, the project that is aiming straight for Twitter, would run into the same problems that Diaspora did, seeing as both were billed as alternative social networks, founder Dalton Caldwell told me, “It’s the difference between a CD-ROM with Ubuntu burned on it and Amazon Web Services. Both of them could be used to setup a server environment, but what you do in practice with an Ubuntu CD-ROM vs AWS is very different.”

This statement goes a long ways towards highlighting the differences between a distributed and a centralized service. The product can still be great — most open source projects are decentralized, or loosely centralized — but that doesn’t mean they will win over the majority of users. And they rarely make money.

Which leads us to our second problem, which is simpler to understand. How will Diaspora ever make money and be financially solvent over the long term? If it couldn’t do it with a centralized structure, how will it ever succeed as a business when no one is in control?

Of course, it’s fine for the company to not make money. But its already gone the Kickstarter route, and it wouldn’t really work to tap the same well twice. Then there is the paid option, but since App.net swiftly captured the early mindshare (and wallets), it won’t be an easy sell.

Which leaves the Diaspora project without a central command structure, without financial incentives or motivations, and without a radically innovative project. If it succeeds, it will be beating incredibly long odds.

[Illustration by Hallie Bateman]

We’re surrounded by an invisible, chaotic matrix of manipulated frequencies every day. WiFi. 2.4 GHz. 5 GHz. 3G. 4G. 123G. But while these connections are all pointing to the same thing — the all-knowing Internet — they are working against each other, when they should be working with each other.

These signal bounce into each other, and in the process confuse the masters they serve — devices, and such things. But what if there was a way to bring all of these signals, all of these connections, and all of these disparate frequencies into cohesion? If you could take a 3 Mbps connection, and add a 10 Mbps connection, and end up with a single 13 Mbps connection?

Well, now there is. It’s called Connectify Dispatch, and I’m personally very excited about this.

Dispatch, a piece of software currently under development, works by taking all available Internet connections and pulling them together into a single point for the computer. It may sound complicated from a technical standpoint — and it is — but from a user standpoint the result is simply a faster connection speed without the hassle.

Not to overhype something in the very early stages, but this has the potential of disrupting the entire telecommunications industry. Connections become commoditized and packaged in a new way. Also, the carriers likely won’t be happy about this as it potentially threatens the current stranglehold on the market (which makes me happy)!

Looking at the technological side, it isn’t the type of product that can be whipped up in your spare time on the weekends. Instead, it has taken a team of engineers that have worked with DARPA, the Department of Defense’s advanced research division, and has pushed the edge of technology a little bit forward with robotics work with the US Military.

There are downsides. For one, the company is currently planning to release Dispatch for Windows only. This is a real bummer for me, as I’m deep in the catacombs of the OS X user base. That being said, CEO Alex Gizis has told me that OS X support is in the pipeline, because “we have people demanding that now.” Down the road, Gizis tells me that Android and Linux versions are in the works.

Another downside for the company is convincing people to use it. After all, despite the pain of slower connections, people don’t sit around and think, “If only I could connect to more than one network at a time.” Most people don’t even know the intricacies of networks, let alone the value (and challenge) of connecting to more than one at a time.

Platform support and community outreach withstanding, the pros far outweigh the cons. For one, the company has already tested the software to the point where ten connections can be bridged simultaneously. As the demonstration video shows, the connection went from nearly a dozen low-bandwidth connections, to a single 60+ Mbps connection.

In addition to the technology and utility behind the product, the business model is fairly clear cut. The software is useful enough that it can be sold directly to consumers. Forget paying for a social network that may or may not take off, and which may eventually falter. This technology will be useful so long as there are WiFi connections. Which is to say, for the long-term foreseeable future.

When I asked him what the target market for the software is, Gizis comically responded, “We’re targeting the niche of people who use the Internet.” But joking aside, Gizis does make a good point. Anyone that uses bandwidth intensive services over the Internet has seen the dreaded B-word before (“buffering”). If there’s a future with that word wiped clean, Dispatch may play a big part in bringing it to us.

Right now, the company is raising funds for the project on Kickstarter. And while I’m loathe to link to another Kickstarter campaign, all indications point to this technology being actually disruptive. It may not be a fancy watch, or a walking robotic spider, but it actually solves a pain point that I experience nearly every day.

Even though I’m a user of OS X, and it’s unlikely that I’ll be switching to Windows full-time in the time preceding an OS X launch, I’m still going to back the project. I’d hate to see the technology disappear to the netherworld of the deadpool of startups.

[Image courtesy Connectify]

Earlier this summer, Airbnb launched a new feature called Wish Lists, a feature that allows users to create lists of places that they want to visit. For example, users with a penchant for castles can create a dream list of medieval fortresses, while users desiring to get away from the urban sprawl can create a list of secluded spots that they want to get to.

The feature launched earlier this year, with the purpose of simply improving the user experience. The company had begun to see that users were flagging properties not to save them for later bookings, but instead to put together virtual scrapbooks of a sort, all centered on which destinations were the most lustworthy. Now, though, it’s giving us a glimpse of Airbnb’s future.

The company spent time working over the design of the site and the user experience, and finally landed on the current version of Wish Lists. Instead of putting the emphasis on “Book Now,” the company has moved the emphasis to the quality of the properties. This move has been significant for the company, as it was essentially playing off of a hunch that users want to aggregate their taste, rather than simply book a place for a night.

So far, the hunch is playing off. According to numbers that Airbnb shared exclusively with PandoDaily, users have added over one million hearts to various Wish Lists in the last few weeks. And it isn’t just a fad, as over 45 percent of users that login each day are using Wish Lists.

While the company didn’t disclose the exact number of conversions from Wish Lists to purchases, it did share some important numbers on the correlation between the two sides of the business. According to the company, of all purchases made on the site, over 80 percent of them were made following the user putting a heart on the property and adding it to a Wish List. It may not be rock solid proof of the significance of Wish Lists, but it’s as close as we’re ever going to get.

That being said, it’s too early to tell whether or not Wish List users converting into paying customers will be a sustained trend for the company. Regardless, it does put the writing on the wall for Airbnb’s future. Much like Pinterest, Airbnb is capitalizing off of the fact that people like to share their innermost material desires. It may not result in 1-to-1 conversions, but giving users what they want deep down inside is never a bad strategy.

A few years ago, I went on a trip to Morocco with my family. As is normally the case when we travel, we went to a local market in search of good deals on locally made goods. We walk into the market, and it’s suddenly a cacophony of sounds, languages, items being thrown in the air, and merchants pulling us into their stores. All of the stores sold the same thing, but every merchant claimed “my store is the one that you want!” It’s hit-or-miss on actual quality.

That’s what it feels like when I go to the App Store. There are apps that are fun to use, but once you leave the Top 100 chart, you enter the territory of the unknown. So you download apps, try them out, and delete them. But once in awhile, you find an app that really stands out and which immediately claims a place on your Home Screen. Prismatic’s new iPhone app, launching today, is one such app.

Prismatic, which is my personal favorite news aggregation-meets-news reader-meets-social feed, has had a solidly built website for months now. However, while the company has made it clear to me in the past that a mobile strategy is key to the company’s future success, it also wanted to take its time. According to founder and CEO Bradford Cross, the company built and threw away five different versions of the mobile app before it came to the current revision of the design.

The first thing you notice when you open the application is that it is fast. Now, it may not seem like a big feat to make an app almost entirely based on text and articles work quickly, but it is. As Cross told me, the company optimized every single part of the app to be as quick as possible. The optimization is reminiscent of the old days of MIT’s Tech Square in the 1940s and 50s, when hackers would do everything within in their power to cut even just one command from a program.

The optimizations are clear all over the place, if you know where to look. For example, the individual rows themselves are specially designed not to take up too much memory and slow the application down. Then there’s the custom Web browser, which is effectively an in-house version of Readability, and which loads articles directly from Web pages and then strips out all of the scripts which slow down the loading.

The optimizations are so impressive, in fact, that even Apple has taken notice. According to Cross, the company has received clear communication from the company that engineers have begun to take notice of Prismatic’s optimizations. As Cross told me, it is vindicating to receive praise from Apple on the design of a product, because after all, it is Apple.

Aside from the optimizations for speed, the second big feature that Prismatic is bringing onboard is localization. When the user opens up the app for the first time, Prismatic begins looking for where the user is currently located. This additional layer of data is incredibly important for the company, according to Cross.

In fact, as Cross tells it, localization may well be key to the future of Prismatic. Since pushes into the local news market have failed so miserably, according to Cross, the company thinks that a different approach is needed. This approach involves supplying users with the news they normally want — for me, technology, politics, and over-the-top rants — but then sprinkle in localized news based upon the user’s location.

Again, this feature sounds much simpler than the implementation shows it is. The application takes the location from the phone, and then sends it to Prismatic’s servers. Prismatic then reverse engineers the location and ties it to publications which are  located near the user (in New York City? NY Post. In San Francisco? San Francisco Chronicle). Not only does it do this, it does it fast.

Now, this doesn’t mean that when you show up in Seattle that all of the sudden you’re going to be bombarded with Seattle-centric news. What it does mean though, is that Prismatic has another layer of data to base recommendations off of. Tied in with the existing layers that the company is building on all Twitter users, it begins to look like the icing on the cake.

As Cross told me, the app was designed to be fast, usable, and easy. “We spent two months honing performance,” says Cross, all so that when the user is standing in line waiting for a coffee, they can quickly check the news. And I can personally attest to the fact that it works, so well that it has won a spot on my home screen.

CircleUp

Instead of targeting technology startups, as might be expected, CircleUp so far has worked with companies taking on very different markets. The four companies — Episencial, Little Duck Organics, Melt, and 18 Rabbits – are gunning for things like the organic kids snacks industry and the natural baby skin care market.

In addition, CircleUp’s platform introduces investors to companies that they wouldn’t have otherwise heard of. This is a big disruption for the industry, enabling a startup in the middle of Iowa to raise money from investors all over the country.

These differences in business mean that CircleUp is able to take the focus away from hype and user growth, and instead highlight how much money the companies are making. It does this by featuring startups that normally have more than $1 million in revenue — a big departure from competing platforms and a bonus for investors using the service.

But on top of the financial requirements, CircleUp also performs a number of other basic services to help out investors. The company does a background check on the entrepreneurs, and makes sure that investors are able to perform due diligence on the startups before allowing them to invest.

CircleUp uses a model similar to that of Austin-based startup Microventures, a broker-dealer that pools investor money to invest in startups. But the CircleUp and Microventures diverge in two key ways.

The first is that CircleUp isn’t actually a broker-dealer, despite operating as one. Instead, the company has partnered with an existing broker-dealer, WR Hambrecht, to ensure that the company is following all financial regulations. CircleUp is compliant with all financial regulations, according to the company, but its application for being a broker-dealer hasn’t been approved yet.

The second is that CircleUp doesn’t share in the risk/reward structure of the investment. Instead of taking an equity stake in the startups, CircleUp instead has decided to take a commission off of the funds raised.

To allay fears that CircleUp is trying to rake in as much cash as possible, founder and COO Rory Eakin says the company only takes a commission “on new capital introduced from the network.” This means that CircleUp will only claim a commission, when the investors come via the company, and when the round of financing is successfully raised.

If CircleUp were to continue on its current trajectory, it would likely do well over time. But according to Eakin, this growth will only be accelerate if and when the SEC enacts the JOBS Act. Namely, when the SEC lifts the ban on general solicitation of equity, which will allow startups to publicly state that they are raising a round of funding, CircleUp will get a lot more visibility and will be able to attract a number of additional potential investors.

However, as we reported earlier this year, the ban likely won’t be lifted for a few more months, with the rest of the JOBS Act delayed well into next year. When the ban does lift, though, CircleUp will really be able to take off and bring more startups onboard.

You’ve got this video you’ve put together of some cats all climbing over each other to get to the top of the stairs. It’s funny, but it won’t reach viral status unless you add a killer soundtrack. Do you know what would work? “O Fortuna”. Over the top drama, cute cats, comical scene — a perfect recipe.

But it’s also a recipe for a lawsuit alleging copyright infringement. After all, chances are that you haven’t actually licensed “O Fortuna” from Carl Orff’s estate.

However, two startups, Pixorial and Rumblefish, are looking to help people avoid this situation. Pixorial — a video creation and sharing service — and Rumblefish — the providers of one of the largest music licensing libraries on the Web — are partnering to help users find licensed music without the fear of infringement.

The partnership sprang up from an interest on Pixorial’s part to help users create better videos. According to CEO and founder Andres Espineira, users had been telling the company that “the right song was hard to find [for videos].” Once Espineira began to look at other providers to help fix this dilemma, Pixorial immediately landed on Rumblefish.

On Rumblefish’s end, the deal will likely bring in a nice stream of money if users take to the feature on Pixorial. According to the two companies, the deal provides a number of free songs to users to try out in the beginning. But after that, users will pay for the license to the tracks, and most of that money will then be passed onto Rumblefish.

However, while the partnership does solve a definite pain point for users, there are still issues. Firstly, while there are definitely users who want to avoid infringing copyright laws, there’s still bound to be confusion along the lines of, “I already have this song in iTunes, so why should I buy it again?” This issue will need to be addressed with incredibly clear communication on the part of Pixorial.

Secondly — and more substantially — is the size of the music library. While Rumblefish does have one million tracks available for licensing, that number isn’t actually as big as it sounds. Consider that iTunes and Spotify, two of the largest music libraries around, have 25 million and over 15 million songs, respectively.

The problem this catalog size brings up is that the chances of Pixorial having exactly the song users want are slim to none. That being said, Pixorial is addressing this potential problem by suggesting songs grouped into themes, rather than specific artists and tracks.

Regardless of the problem, the fact that Pixorial and Rumblefish are even trying to tackle this problem is encouraging. In an industry with a mentality of “let’s break it and figure out how to legalize it later,” it’s nice to see companies decide to operate within the confines of the law.