Back in 1999, well before Twitter came on the scene, everybody was ranting and raving about Internet stocks. The World Wide Web was all over the news and inside everyone’s portfolios.

People couldn’t get enough of the big tech boom. Entire portfolios were comprised of high-flying investment beauties like WorldCom, NorthPoint Communications, Covad Communications, XO Communications and Global Crossing.

And everybody knew those companies were all going places.

Sure enough, they did… straight into bankruptcy after the dotcom bubble burst in 2000. And because investors failed to diversify, they lost entire fortunes, as well.

Easily awed by the next big thing

There should have been a lesson learned in all of that. Yet fast-forward to the present day and, somehow, not much has changed.

We’re still all too easily awed by the next big thing, especially when it comes to technology and the Internet. Facebook, for example, had people panting over its (probable) upcoming IPO long before it ever announced any such thing.

And the same goes for its fellow social media site, Twitter. Far too many people seem certain that it will bring them the big bucks if they can only get into it. Even bigwig investors like Prince Walid bin Talal of Saudi Arabia, who recently bought a $300-million stake in the company.

Problem is, they’re focusing on just the surface. If they dug just a bit deeper into the company, they might not be nearly as impressed.

Twitter doesn’t appeal to executives

On the surface, Twitter certainly looks like a phenomenal prize. With 2,400 advertisers and 100 million active users, it shouldn’t come as any surprise that it’s worth around $8 billion.

For a small glimpse into just how popular the service is, try going to a movie theatre. Chances are, someone sitting nearby will leave his smartphone logged into Twitter, which will ping every few seconds with alerts that Lady Gaga, Charlie Sheen, Kim Kardashian, Barack Obama, or Justin Bieber have just sent mass tweets.

Incidentally, all five are in the top 30 most tracked Twitter accounts, along with a host of other singers and entertainers.

But just because Twitter has a strong following, both among consumers and investors, doesn’t mean that it’s a healthy company.

Nicholas Carlson, a deputy editor with Business Insider, notes that influential members of the Twitter team just keep quitting, including former Engineering VP Mike Abbott, former Consumer Marketing VP Pam Kramer and former Engineer Adrien Gaarf.

That kind of exodus indicates a far less peachy picture of the company’s health than so many drooling investors would like to think.

Twitter insider speaks out

According to an anonymous former Twitter employee who confided in the aforementioned Carlson, the company executives who left had good reason to do so. Apparently, there are just too many negative issues surrounding Twitter’s modus operandi, mainly structural and cultural flaws.

Among the lengthy list the Business Insider recaps are these:

• A “self-congratulatory, complacent environment” based on the premise that “this is our product” and that’s that.
• A popularity driven workplace, which has led to a lot of infighting and employee discontent.
• Engineers who are more “lucky” than talented, and hire more of the same.

Now, as Carlson mentions, management turned over not that long ago, so it could possibly be in the process of changing its disconcerting policies even now. But even so, Silicon Valley’s MercuryNews.com still had to ask recently: “What is Twitter?” admitting that “almost six years after it stumbled into existence, that remains a surprisingly hard question to answer.”

An air of mystery might work well whenever Apple (NASDAQ: AAPL, Stock Forum) gets ready to debut a new product. But it’s never a good thing when an entire company comes across as ambiguous.

Twitter’s lack of clear purpose puts severe limits on its future profitability and even existence. So unless it gets its act together, the company might become just another unwarranted investment craze… before it even gets listed.