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If you want to IPO a tech company and make a minimum of 9 figures, then going to Stanford is probably a part of the most reliable (or, at least, "least unreliable") path to doing so.

Or, at least, it was back when Stanford was the kind of place that it is in the process of not being anymore.

Even then, though, realistically if you're not already part of the "Stanford Set", following that path probably doesn't radically change your chances of success at that specific mission.

There is in fact a quite famous example of this, involving some kind of medical device. I blame Stanford/SV culture for that one.

Does nobody tell them that they are being ridiculous?

They will just look at you with an expression of pity and slight disgust.

At which point you can laugh while pissing on their Ferrari