From the September 2011 issue of Entrepreneur

Prerna Gupta wants to change the way music is made. Her philosophy? Anyone can do it, and everyone should do it. The 29-year-old is co-founder and CEO of Atlanta-based Khu.sh, which releases iPhone apps to facilitate exactly that.

Khu.sh's main product, LaDiDa, is described as "reverse karaoke." Here's how it works: A user sings into the iPhone mic, and the technology composes unique background music to match, automatically employing pitch correction and other vocal effects. An amusing YouTube demo shows Parag Chordia, Gupta's husband and Khu.sh's co-founder and CTO, warbling off-key into his phone such phrases as, "Here I am, singing very badly in public" and, "You will know at the end why I've subjected you to this." He then stops, punches a button on the screen and out pump his "lyrics," laced into a surprisingly catchy, loungy music track.

LaDiDa debuted in October 2009, spun out of technology Chordia developed while heading the Music Intelligence Lab at the Georgia Institute of Technology.

"We were playing around with it and we felt it needed to be out in the world for people to enjoy, so we commercialized it," says Gupta, a 2004 grad of Stanford University whose first startup, Yaari, a social dating site for Indians, was shuttered in 2008. "The market crashed right before an acquisition deal went through. But I picked myself back up, and now things are going well."

LaDiDa has more than 2 million downloads, according to Gupta, who says Khu.sh has been experimenting with pricing models. Initially priced at $2.99--expensive for iTunes--LaDiDa nonetheless maintained top-10 status among paid music apps. In May 2011, Khu.sh temporarily offered LaDiDa for free, resulting in more than 1 million downloads in a week and making it the No. 1 free music app in the U.S. and 14 other countries. The current 99-cent price point includes four music styles and allows for in-app purchase of additional styles like acoustic rock, rhythm synth pop and "dirty South rap."

"If you give everything away for free, you will invariably reach more people," Gupta says. "But we are very focused on revenues, and we are currently gathering data to develop a profit-maximizing monetization model for our apps."

In July, Khu.sh released its second app, Songify, which transforms speech into song; it was created in partnership with the Gregory Brothers, whose "Bed Intruder Song" was a viral YouTube hit that reached the Billboard Hot 100 chart. "We've proven that there is mass-market demand, and people want to express themselves through music if it's fun and user-friendly," Gupta says.

Khu.sh has attracted seed funding from accelerators like 500 Startups, investment from reputable angels like Pat Matthews of Rackspace and grants from the National Science Foundation and Georgia Research Alliance. The company is profitable, Gupta says, with revenues "in the lower millions." She has hired four employees so far this year--the team comprises engineers with advanced degrees in physics, artificial intelligence and music technology--and is looking to grow further.

Gupta wishes to expand to other devices and platforms and is in the midst of raising $2 million to $5 million in Series A funding, moving toward her ultimate goal of making music ubiquitous as a form of social expression.

"There's so much conversation about the music industry dying and not adapting, but we think there's a ton of opportunity out there," she says. "Traditionally, a small group would create while everyone else passively consumed. In the future, the rest of the world will be composing--and sharing and following."