Because everything he says and everything he indicates about his beliefs is that sharing is a net good and everybody should be doing it as much as possible (I'm simplifying a little bit, of course). Just because you (and many here) feel differently doesn't mean it's impossible that someone could genuinely believe in the mission of connecting everyone, as opposed to thinking people are "dumb fucks" for wanting to do so.
Listen to Larry Page speak enough times and you'll get the same sense: he genuinely believes (to at least some degree) 1) organizing all the world's information from every possible source does powerful good that is more than worth the risks/costs and 2) advertisements are effectively a human-curated addendum to information-seeking and thus entirely consistent with the "organizing information" goal. The fact that you or I may disagree with those ideas doesn't make him a hypocrite for his true-believer status.
> Is hypocrisy or stupidity a requirement for running a social network?
This is a beyond-bizarre assertion. Loudly and constantly extolling the value of less and less barriers to oversharing when you in fact agree with many people that those doing so are dumb _is_ hypocrisy. To use the same analogy, it's as if there were early records of Larry Page saying something like "once everyone gets their information filtered through us, we can nudge them into believing whatever we want". Do you think the absence of such records indicates that LP is a hypocrite?