There is a lot more to an investment than just the valuation. If VCs are shooting for outsized returns on home run investments that make up for their failed investments, then Greylock shouldn't have made the investment at all. "At least $1 or 2 billion big but no one had certainty it would end up being $50-100 billion+ big" - that sentence is laughable in its tautology. If people had certainty about that, the valuation would be way more than $500MM and another $250MM would have made no difference. For VC fund to invest at a $500MM valuation in hopes of an exit at $1-2B, they have already indicated that they are riding the coattails of earlier investors. This article makes it sound like Greylock evaluated Facebook in an intellectual bubble and took a big leap of faith, but that's just what they want you to believe.

Outside of the value of actually being helpful, I can see why this would appeal to Mark. I bet he saw Greylock as a better partner for helping him maintain control over the subsequent rounds.

Existing investors like Peter Thiel, Reid Hoffman must have influenced fb's decision. Honestly, what kind of VC firm can add value worth up to $250MM.

>(a) kids move on to the next thing The risk is small given fb users's engagement time. "Kids" were spending hours on fb. This is an entirely different beast than myspace and friendster.