The biggest thought that comes to mind is that these companies don't actually make money. If Snapchat was pulling in the $33bn in revenue that Mars Inc. pulls

The biggest thought that comes to mind is that these companies don't actually make money. If Snapchat was pulling in the $33bn in revenue that Mars Inc. pulls in, then I imagine they would be much more likely to keep it private. But these companies' valuation is based on the idea that they have a huge market, and MAYBE they'll make money someday. Generally I believe that when these social network companies go public, their price-to-earnings is insanely high, meaning that in order for investors to receive value, they'd have to either hold the stock for a very long time, or be confident that the revenue will ramp up quickly enough to start making money very soon. Ultimately, a VC has taken the risk that the company can be sold to "someone else", whether acquisition or IPO. That's when they see the company as having it's maximum value to them. They're not in the business of creating a sustainable business, they're in the business of taking something small and making it big. Once they get a valuation that they feel can maximize their investment (either IPO or acquisition), they're happy to lock in their money and move on. Take Zynga or King for example. They were revenue machines when they were close to IPO. But investors knew the money-train was coming to a close, so they sold out and locked in their massive gains. The companies were very lucrative for a short period of time, so that drove up their IPO price. But VCs needed to get out before the popular games took a dive, which they inevitably did, and the investors got out at excellent valuations. If they had kept the company private, they wouldn't have had nearly the return they had.