Madrona Venture Group is backing a Seattle startup called Zero260, which quietly unveiled a photo sharing application for the iPhone last month and now plans to roll out a full slate of consumer-oriented products later this year.

The 2-person company has kept a relatively low-profile since it was incubated in Madrona's offices with a $1 million investment last October. In fact, CEO David Bluhm's LinkedIn page lists his title as "CEO of Shhhh -- still stealth."

Bluhm is a Seattle startup veteran, having co-founded venture-backed companies such as Medio Systems, HandsOn Mobile and 2Way Corp. But his last few executive positions -- including GoTV Networks, NextMedium and WUF Networks -- have all been based in California.

The Seattle native and UW grad said he's excited to be building a company in his hometown again, joking that he was starting to lose credibility with his entrepreneurial friends here. Bluhm is joined at  Zero260 by founder Damon Danieli, who spent 14 years at Microsoft as one of the core developers of Xbox Live. Together, they plan to set up what amounts to a development studio for iPhone applications.

Given Seattle's historical strength in mobile software development and the excitement around the iPhone, Zero260 is not alone in that endeavor. Other Seattle area companies such as Mobui and Zumobi also are attacking the market.

But Bluhm thinks there's plenty of room to operate given the groundbreaking nature of the iPhone.

"This is the thing we have been waiting for since the dawn of mobile," said Bluhm. "We've been talking about mobile data since the early 80s and there have been a lot of false starts ... but this is the user experience and the ecosystem and the direct-to-consumer model that we have all been waiting and working for."

Zero260 is creating applications in what Bluhm calls the "studio model" -- meaning that it will not only develop and design its own products but also partner with other developers and consumer brands to launch new offerings. He says they are basically "incubating apps," creating a "nerve center" in Seattle around the various mobile development platforms. Their initial thrust is the iPhone, though that will expand to Google Android and other environments as they gain steam.

Obviously, with more than 15,000 applications in Apple's app store, it can be extremely difficult for any one product to stand out. It is harder yet to make money from it. Bluhm recognizes that challenge, having attacked the opportunity as the former president of Hands-On Mobile. Formerly Mforma, the San Francisco company (which received seed funding from Madrona) has developed a number of mobile gaming, music and news products.

Bluhm said they will be doing "any and all things to get above the noise" in the app store.

"We are not trying to see if something sticks to the wall," said Bluhm, who joined the company as CEO about five weeks ago. "We understand that we are going to have to do a lot of things to grow into that ecosystem and to be successful in it, rather than just throw some things out there and hope for the best."

And how will the company make money? Bluhm anticipates a host of revenue models, from subscriptions to advertising to charging fees for applications.

The company's first application, PhotoFeedd is described by some as a Twitter for photos. The free app publishes a list of photos related to a select topic, and allows to email those photo threads. Danieli, who created the company after undergoing a kidney transplant last summer and being turned down by Madrona on another idea, said the first application is very much in the development phase. He plans to have a more complete version of the product available later this month before the CTIA Wireless show.

Zero260 is actively working on three mobile applications, though Bluhm declined to offer details about each one. But Danieli, who spent more than a decade at Microsoft, said he's having a blast developing for the iPhone and the flexibility it provides. "It is a new game out there," he said.

Madrona's Paul Goodrich -- who led the investment -- said the idea behind Zero260 is that a small team can very quickly develop mobile applications at a low cost.

"Given the level of customer engagement with the iPhone, we believe there is an opportunity to learn relatively quickly what resonates (or not) with the consumer," said Goodrich.

In fact, the company's name plays into the idea of moving fast.

"We don't spend a lot of time pontificating over what may or may not work or 15 different ways to do the application," said Danieli. "We get out there early with the app."