Source: Twitter.

Venture capitalist Chris Sacca was one of the earliest investors in Twitter (NYSE:TWTR). When the company announced its IPO, his fund, Lowercase Capital, loaded up on as many shares as it could buy, becoming one of the largest stockholders by the time Twitter came to market.  Instead of getting out after the IPO, Sacca has held on to his shares through the stock's wild ride over the last year and a half.

On June 3, Sacca posted an opus detailing his views of "What Twitter Can Be."

"I want this company to succeed. I want the people who work at Twitter to win. I want this stock to be worth more," he wrote. "I own more of it than virtually anyone working at the company." Sacca had set the stage for this write-up a couple of weeks earlier with a post title "I Bleed Aqua."

In the June 3 post, Sacca stressed that he's not an activist investor, but he provided some insight into what he thinks Twitter should do to continue growing like it did before the IPO. His notes came out before CEO Dick Costolo's resignation, but nowhere did Sacca imply that new management was necessary to make the changes he thought Twitter should implement.

In fact, his comments weren't too far off from what Twitter CFO Anthony Noto has said in the past year since taking his post at the company. So, let's look at what's going right, what's going wrong, and what the future might hold for Twitter, according to Chris Sacca.

A quick look at what's going right
Sacca commended Twitter's management for stepping up its game. The pace of product development has accelerated dramatically over the past year, and the company has made several noteworthy acquisitions -- including Periscope and TellApart. The recent deals with Google (NASDAQ:GOOG) (NASDAQ:GOOGL) to bring Twitter's data into search results and its ad inventory into DoubleClick are a "big win" to increase exposure to both products, according to Sacca.

Sacca also pointed out that Twitter management has stopped selling its stock, with Noto actually purchasing some shares. Insider buying ought to inspire more confidence in investors considering purchasing shares in the company.

Additionally, revenue grew 74% last quarter. Even though that's a slowdown from last year, Sacca said no other public company of Twitter's scale is growing that fast.

What's not going right
More important, perhaps, is what's not going right at Twitter. User growth has been the company's biggest and most publicized problem. It just passed 300 million users, but is falling behind other social networks such as Instagram. If you look deeper, however, you'll find that the bigger problem might be retention. Sacca said almost 1 billion people have tried Twitter and left.

Beyond that, Twitter's direct-response advertising has failed to live up to expectations, including management's own. Last quarter, the company had to adjust its earnings guidance downward after blaming direct-response advertisements for slowing revenue growth. As a result, investor confidence in management has plummeted, which directly impacts the stock price. These disappointments and lack of confidence stem from management's inability to "tell its own story," according to Sacca.

Fixing the problems
Sacca and Noto both understand the problems facing Twitter. In recent talks with analysts, Noto has said it is important for Twitter to take control of its exposure in the media. Noto claims Twitter has 90% aided brand awareness -- i.e. people recognize that "Twitter" is a social media company -- but only a small percentage of the addressable market uses its product." Creating a clear brand value proposition -- "telling its own story" -- is key to improving that penetration.

Sacca also said Twitter needs to make the service easier to use, make it easier for users to start tweeting, and make it feel less "lonely." "[M]ost Tweets will never be starred nor retweeted nor replied to at all. Thus, Twitter starts to feel lonely and less fun," wrote Sacca.

On the first front, Twitter is making good progress. Its Instant Timeline, "While You Were Away...", and Highlights for Android offerings all point to more curation. Noto has mentioned that those products are just the start of Twitter's curation efforts. We could see something like the "Twitter Channels" Sacca cited in his post, which he proposes separate out content based on topic, location, or popularity.

Sacca said Twitter can take it a step further by increasing awareness of live events on the platform, where the company excels -- particularly with the addition of Periscope. Indeed, Twitter has had some success with events such as the World Cup and NFL games, but there are many live events being talked about on Twitter that the vast majority of people don't even know about. Making it easy for users to discover the best content around those events would increase engagement and retention.

To make the platform feel less lonely, Sacca proposed copying Instagram's mechanism to double-tap to "heart" a tweet. Favorite is too strong a word, he says. Making it easier for accounts to say thanks for following or sending automated messages when a celebrity reads a user's reply or sees that a user followed her would make users feel included in a community. Theoretically, that would improve retention.

Where management isn't aligned with Sacca
Twitter still has work to do on making it easier for users to tweet, and that's where Noto doesn't quite agree with Sacca. Noto said Twitter needs to focus on making its product a consumption-first experience. Twitter already has the best content, Noto says, and it has it in real time. Organizing that content is where Twitter can succeed. Sacca would like to see more participation on top of that consumption, but Noto doesn't think that's necessary to succeed.

Of course, even if Twitter's management knows where it must go to succeed, it still needs a road map on how to get there. Sacca's notes could prove extremely valuable for the company in that sense, but I wouldn't expect it to do everything he says. However, Sacca and management appear to be aligned on adding curation offerings, and it seems to be a big focus for Twitter presently.

Curation should directly impact Twitter's advertising revenue for both logged-in and logged-out users with better ad targeting, and the potential to show more ads to more engaged users. With the acceleration in new feature rollouts, we should see the impact in the near future.