Nearly six months after launching Paper for iPad to much praise and fanfare, George Petschnigg still can't stop smiling. Our interview hasn't even begun and he's already spouting off the various ways his team has tightened up Paper to be easier and more intuitive for users. It's typical startup founder talk, except Petschnigg leads an unusual startup that has thus far delivered on its promises to build a great product. Ask him about money, and his tail drops between his legs as if he's ashamed, or perhaps even embarrassed, for profiting on a tool he built for himself, his friends, and his colleagues.

His company, FiftyThree, is now thirteen employees strong, but still largely works out of Petschnigg's one-bedroom apartment in TriBeCa, despite having built one of the top-grossing creative apps in the App Store. Paper 1.1 launches today, the culmination of nearly six months of work to improve the app for the company's three million users, including tech luminaries like Jack Dorsey, who've posted in total more than 20 million Paper projects to the internet. And FiftyThree is just getting started.

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"We have knowledge of how things work," Petschnigg says, preparing to dive into one of his frequent pseudo-philosophical musings on how humans create. "We know that a tomato is a fruit," he continues, "but the wisdom comes with not putting a tomato into a fruit salad." He starts on tomatoes, but quickly moves to the iPad's graphics processor, and why Paper's watercolor brush is three times as fast as before. "When graphics operations get scheduled on the GPU, there are different ways of ordering commands," he says. "In theory it shouldn't matter, but in practice it does." Paper was already a very responsive app, but when it comes to seeing a mark on a page near-instantaneously, there's always room for improvement.

"When you draw, you want strokes to appear at an even speed and even rate."

"When you draw, you want strokes to appear at an even speed and even rate, which gives the system a reliable feel. If you hit the CPU or GPU at an even rate, the results end up being very smooth," he says. Every brush inside FiftyThree's "Expressive Ink Engine" has been fine tuned to be up to three times faster, and you can now draw all the way to the edge of the screen — a top request from users. The 1.1 update also saves battery, since requests are made to the iPad's processor more consistently. The Rewind feature, which lets you undo brush strokes, also received some attention in Paper 1.1, and responds accordingly based on how quickly you move your two fingers in a circle.

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"Using both hands is like digging into clay."

Another tentpole feature in Paper 1.1 is the ability to duplicate and re-arrange pages inside notebooks or between notebooks. You can tap and hold the plus sign in notebook view to either duplicate a single page or an entire notebook. If you press and hold down on a page while in notebook view, you can use your other hand to swipe through a notebook or pinch into another notebook entirely. The two-handed page manipulation is a novel idea in iOS, just like Paper's now famous two-finger Rewind jog dial for undoing erroneous marks. "We want to keep people in the flow of things with a very visceral sense of working with their pages," Petschnigg says. "Using both hands is like digging into clay. We're still in a time where we're imagination-limited and conventions have not yet been set. It's like the very beginning of figuring out how a mouse should work — is it one or two or three buttons?" he asks.

Two-hand page manipulation, like FiftyThree's trademark Rewind undo feature, becomes obvious as soon as you try it. "For re-organizing content you can do a grid or a clipboard, or create different modes or a dedicated storyboard, but we want to pick the one that keeps you closest to your ideas, and moving forward," Petschnigg says. "It's a fine dance where you want to use the real world as a familiarizing metaphor, but you don't want to be trapped by those limitations either."

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Fortunately, Petschnigg doesn't have to make all of these decisions on his own. In fact, he often finds himself taking on the role of Human Resources director to manage insurance and other minutiae for his rapidly expanding team (which is still hiring). Over the past few months he has assembled an all-star team of engineers and designers: Peter Sibley, who engineered Photosynth, Ian Curry, who helped design the interactive exhibit at the 9/11 Memorial Museum, Matthew Chen, a former mobile developer at Google, Allen Lau, an award-winning illustrator, Becky Brown, a designer from Lunar, Aseem Kishore, who co-founded The Thingdom, and Dalas Verdugo, who built out Vimeo's support community. And don't forget — FiftyThree was founded by John Ikeda, the man behind the Xbox 360 controller, Julian Walker, who engineered Seadragon at Microsoft, Andrew Allen, an award-winning filmmaker, and Jon Harris, who helped design the experience behind Zune and Xbox. FiftyThree is a rare artist co-op that can actually pay the bills.

FiftyThree recently also enlisted Amy Cao from Foodspotting to handle the company's rich online community of tumbling and tweeting Paper artists. In fact, the company today also launched its own Tumblr theme complete with multi-touch gestures that let you thumb through your work — even inside a browser window. The Pro version costs $19, but is fully customizable.

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"Technology should serve the human need to create."

So we arrived at money again. Petschnigg's voice lowers in tone and in volume. He starts mumbling. FiftyThree is doing very well for itself since many of its users opt to purchase the $6.99 "essentials" pack of brushes, according to Petschnigg. "We've been one of the top grossing programs," he admits, "earning more than Sketchbook Pro or even Adobe's Photoshop Touch. Those companies have been around for years." Not bad for an app startup working out of its CEO's apartment. Just about the only thing Petschnigg will spend money on are a few Herman Miller Aeron chairs for his team, an espresso machine, and a few boxes of fresh fruit every week from Fresh Direct.

"One of the reasons we think Apple gave us its Design Award was for our in-app purchase implementation," Petschnigg says, which lets users try out brushes before they buy them. "It's not just Angry Birds, Twitter, and email anymore," he says. "Technology should serve the human need to create." If FiftyThree's success is any indication, that's exactly the direction we're heading in.