I love twitter for their product, and have spent some time thinking why it’s not succeeding as a company. As far as my naive thinking goes, there are more than 140 million users like me who use Twitter everyday and love it - it’s a great consumer product. But when it comes to growth as a business, it’s on a downhill.
From this context I have been thinking about how do companies become lasting giants, and have realised that it essentially boils down to two not-so-easy steps:
Step 0 - create a product which your (niche) target customers love, grow it, and achieve product market fit. Easier said than done, however a lot of companies stop here (either they get acquired or perish - ex. WhatsApp, Yahoo, Pinterest, Dropbox)
Step 1 - bring at least one other type of users (network) on your platform who create value for your consumers. They could be developers, sellers, property owners etc. If interaction between both of these networks is more efficient than any other existing mechanisms, it creates a huge network effect, and help the company elevate its status from a great company to a lasting giant.
It is arguable that advertisers (as the other type of users) alone can help create lasting companies. IMO, they don’t add enough value for the consumers, and therefore more often than not, companies need to add another types of users. I believe this is the reason Google & Apple need developers and apps on their platforms.
Amazon is a marketplace for a while now. Similarly, though it was hard for marketplaces like Uber & AirBnB to solve chicken and egg problem (step 0), but once they have, now they are unstoppable. On the other hand, Yahoo, for example, eventually perished because it only had advertisers. Facebook may look like as an exception, however in its pre-mobile days, its growth was largely fuelled by its developer platform, and these days content providers create that value for consumers which keeps advertisers interested.
It will not be easy for Twitter, however it needs to start moving from step 0 to step 1 as soon as possible. It has played an integral role in numerous social movements like Arab Spring, and world needs Twitter to exist.