×

Twitter still has a ton of growth potential

Twitter hasn't iterated as much as some have hoped, taking flack both in the media and on Wall Street, but I believe there are many opportunities ahead which can potentially lead to huge growth for the company.

It's still the place to be fore live content. No more was this evident than during this year's Super Bowl where directly after the play that sealed the game for the Patriots, a meme went viral mocking the Seahawks for what many view as a game-losing decision and the Nationwide commercial on child safety that so many were talking about earlier in the night.

There are countless other examples of live events that showed us the power of Twitter. Google clearly recognizes this as well, recently announcing a deal to include tweets in search results for the first time. We're big believers in this at Metamorphic, investing in WhipClip, which is making live TV more searchable and shareable.

The biggest knock on the company, though, isn't about existing users. Twitter's most engaged users are extremely engaged, which we already knew. The Holy Grail for the company has been user growth. In its latest earnings report, Twitter missed their target on users.

Read MoreTwitter earnings strong; user growth disappoints

It appears, though, that they have finally figured out the best way to grow this number. There's a philosophy in the industry called the 1-9-90 rule. This states that, on social services, 1 percent of people are creating content, 9 people are actively sharing content, and 90 percent are consuming content.

To date, Twitter has done a poor job of optimizing for the 90 percent. If you log onto Twitter's homepage without an account, all there is to do is sign up. After signing up, a new user has to find people to follow in order to have an engaging experience. While Facebook has a similar experience, Facebook is more of a social network, while Twitter is more of a social media website used to consume content from those you don't know intimately.

I'd compare Twitter to YouTube in this regard. On YouTube, you don't need an account to consume content. It's just as easy to search and discover new videos with an account as it is without an account. This makes YouTube users that aren't logged in monetizable, whereas they are lost on Twitter. Plenty of people don't have YouTube accounts but they still consume content, click on ads, and create revenue for the company.

Read MoreCramer: Twitter's enormous red flag right now

The company is taking steps in the right direction here, experimenting with a new homepage that is designed to lure new users. Twitter said late last year that 500 million people visit Twitter.com in some capacity each month and don't sign up or log into the service. A new homepage is a great first step to converting these folks.

Twitter also recently announced plans to syndicate promoted tweets off of the Twitter platform, through partnerships with Flipboard and Yahoo! Japan. This brings non-Twitter users to Twitter content and context to other platforms for monetization. I remember at Google, when we first started syndicating Adwords to other platforms. There's only a finite number of keywords on the Google.com homepage and our scale came when we took the Adwords offering and syndicated it to publishers.

This is meaningful because it gives publishers a new monetization alternative to Google. Google is innovating around everything, especially advertising but this specifically is a very interesting opportunity for Twitter.

Mobile content and advertising still isn't really being created for mobile. It's just desktop content that is transferred to mobile. Because of Twitter's 140-character limit, it's the perfect content for mobile. Twitter has an opportunity with short-form text and video to help brands and content creators build precedent and link structure for discovery.

Read MoreTwitter CEO: We're not marrying Google

The truth is that people aren't searching as much on mobile. We invested in TapCommerce (which Twitter acquired this summer), a company that was solving this problem for brands and app developers. Twitter has an opportunity both through syndication and the Twitter platform to seed and feed backend mobile content.

Roughly 80 percent of Twitter traffic is coming from mobile devices (as opposed to Google, with is roughly 48 percent), making it an ideal solution for discovery on mobile. Prior to syndication, this only existed for Twitter users, but it's being opened up for audiences on Flipboard and Yahoo! Japan and hopefully eventually it'll be opened up for the rest of the web.

I'm a big believer in Dick Costolo and his team. The product still isn't built for the non-power user but they're improving and taking a long-term, sustainable approach to building a powerful social media company. If Dick, Adam and the rest of the team can pull off these feats, it'll mean happy days ahead for Twitter.

Commentary by David Hirsch, co-founder and partner of Metamorphic Ventures, an early-stage venture capital firm in New York City. Prior to MV, he spent 8 years at Google, where he was on the founding team that launched Google's advertising-monetization strategy. Follow him on Twitter @startupman.

Disclosure: David Hirsch, through Metamorphic Ventures, is an investor in WhipClip and TapCommerce.

Read MoreGood chance Twitter CEO leaves in 2015: Analyst