Wow. That statement alone tells you everything you need to know about that person and what kind of manager they are. The fact that it was the founder is just...wow. Since it was the founder, if I was in your shoes I would have asked this fool if they took that same approach when they ever worked for someone else - that they never did a single thing that was creative outside of work. Yeah, we know the answer.
Also - "We'd never exercise that right. But we reserve the right." Don't believe that for a minute. My father once worked for a fortune 500 financial company (but he was an IT person) and his hobby was music. He self-produced an album. A little while later they let a bunch of people go who were all 40+. He declined their package so that he could sue them for what was clearly age discrimination. That company then tried to claim that everything he did in his free time was owned by the company and they counter-sued him for royalties related to album sales and public performances. Keep in mind his contract did not include any of the draconian language like what you turned down. The only thing it said was that he was an "on-call" employee who needed to make sure he was available on short notice for systems-related emergencies. So they used that to say that because he was "on-call" they therefore owned every single second of his existence.
You can't make this shit up.