Hence, more money going into bits. And more instant billionaires. Also no cure for cancer, or flying cars or (insert 1950's projection of the 21st century here).
edit: I'm borrowing Peter Thiel's "bits and stuff" metaphor here.
My first inclination for why things like Facebook and SnapChat are valued so highly is because investors operate under the delusion that reaching many eyeballs means profit. What they seem to not grasp is that there is a fundamental difference between things like print and TV ads and ads on Facebook. When Facebook was bought, I did a rough calculation that given their valuation and number of users they'd need to extract $50-60 on average from each user to justify the valuation. That's a huge number. Most I know people to date have given them exactly zero: they don't play the games, click on ads, etc.
Once the idea that having a huge number of inert users comes under test and we realize that it doesn't hold up, the valuations will plummet.
Other countries like China have close to zero regulation compared to the USA in many areas. Why are there no Chinese cures for cancer or flying cars, if regulation is the overwhelming reason why?
But the larger answer to that question is that China is still moving into the first world, a process that would be retarded if they were throwing massive amounts of capital into R&D
Medicine is subject to FDA regulation at the manufacturer level, JCHO at the hospital level, various state boards at the provider level, and both state and federal agencies at the payor (insurer) level.
Actually I would argue that the reason for no cancer cure is that it's illegal to offer experimental drugs to people who 1) consent and 2) are going to die anyway. But that's another show.
At least snapchat is not psychologically exploitive company, like zynga, the guys who make clash of clans and such.
You already see the results of this don't you. If people were half serious about something like medical electronics the way they are about Facebook. The cost of diagnosis and testing etc would be way lesser.
Ultimately we only get what we want.
I also think you don't give enough credit to "dumb luck". Sometimes timing, external forces, chance encounters, and coincidence can make silly things take off and useful things get lost in the mix. The key is to maximize your opportunities as best you can.