Everyone has hobbies. Auto-racing just happens to be one where the cost can range from a few thousand to a realm of unlimited funds. I'm sure John Carmack's rocketry escapades aren't cheap either.
I'm not sure what's self-indulgent or flashy about it. The costs involved are perhaps at a scale that you and I are not use to, but its just another level up. And then there's the Jeff Bezos's and Richard Bransons, who have their own hobbies, done at the stratospheric cost scale.
You're talking about conspicuous consumption, buying things for the express purpose of displaying wealth. You don't exactly buy a bespoke 680hp barely street-legal race car that can't even be driven in your own country for that purpose.
Right, you buy a bespoke 680hp race car for the purpose of masturbation, essentially. Some people choose to invest in other companies. Some people choose to operate charities or donate to them. Others may invest in something that holds its value, like real estate. What type of person spends their money on stuff like this? Not a particularly interesting person.
Actually, a one-off supercar will more than hold its value. Its value should actually increase (especially seeing as the Zonda it's based on is ending its short production run), as has been shown by the values of Ferrari Enzos which have almost doubled since production ended.
So, from an investment standpoint, it's sound.
Plus, it's his money. He (if it is DHH who bought it) can spend it how he likes, and he likes cars, and has the ability to fulfil a desire. You'd rather he buys another house/apartment? Why? Where's the point in that? Why not take a job in a 7/11 and "get-by" at the end of the week? In fact, why not just put all your money in a low-yield bond and sleep in a tent? Why spend money at all? Why earn money at all?
I will assume you don't like cars or see the point in supercars in general? I was lucky enough to drive a Ferrari F355 around a racetrack a few years back and it was one of the best experiences of my life - because I'm a car fan. A part of me loves them, and my desire to own one isn't as a status-symbol, it's for the feeling I get when I clip an apex on the limit of grip on a racetrack.
Also, from my standpoint, someone who'd rather invest their hard earned money in something sensible than something they truly want isn't a particularly interesting person...
No. What you suggest is socially destructive, buying an expensive car is socially neutral. Why such an aversion to expensive cars? I'd rather live in a studio apartment with a Ferrari, than a 4 bedroom house (which I don't need - as it's just me) with a "normal" car.
Besides - why the heck should a private guy have to do anything of social value with his money? What, you want him to fund your startup with his hard-earned cash? Why should he?
There is nothing that says an entrepreneur has to spend their wealth investing in startups. Tom Perkins commissioned the Maltese Falcon, Larry Ellison (co)owns The Rising Sun, Elon Musk founded a freaking space-ship company because he wanted to.
This: "Instead, he's blowing his money on expensive thrills."
Why shouldn't he? It's his money, he's not harming anyone by doing it, is he? Owning an expensive car doesn't mean you do anything illegal or immoral with it.