This seems to have been drawn from the same statistical distribution of many stories that center around this idea that "MIT students are smarter than students anywhere." The ideology of MIT is that you should go to MIT daycare, then MIT kindergarten and all the way through to the PhD and beyond, and if they had enough people in that pipeline they wouldn't bother taking applications from anywhere else.
That idea is definitely one of the things holding Boston back in terms of startups -- you definitely see research labs at MIT that don't hire postdocs from Stanford or Cornell because they only want to hire MIT people. There are plenty of MIT grads who are mediocre at best but many local startups (particularly those started by MIT grads) don't realize this and often make up all sorts of excuses about why things went wrong.
In contrast (but not contradiction) with your experience, as an MIT undergraduate math major applying for PhD programs, my advisor warned me that the math dept. doesn't admit their own graduates. I applied anyway and indeed was not admitted (which was fine since I was admitted to UW-Madison, where I most wanted to go).
That idea is definitely one of the things holding Boston back in terms of startups -- you definitely see research labs at MIT that don't hire postdocs from Stanford or Cornell because they only want to hire MIT people. There are plenty of MIT grads who are mediocre at best but many local startups (particularly those started by MIT grads) don't realize this and often make up all sorts of excuses about why things went wrong.