I did my D.Phil. at Oxford University, and my B.Sc. at Simon Fraser University; while SFU is one of Canada's best universities, it clearly doesn't have the stature of Oxford or Harvard. Were the students at Oxford more intelligent than the students at SFU? No. Were they more motivated? No. Are there jobs for which I'd rather hire an Oxford alumnus than an SFU alumnus? Absolutely.

The largest advantage of a great university like Oxford is in increasing the range and depth of ideas presented to students. It's impossible to completely separate the teaching role of a university from its research role: Teaching (and inconvenient questions asked by irritating students, like yours truly, in class) informs research, and research informs teaching. And quite apart from the "indigenous" research, if you're at a minor university without a strong reputation for research, you don't have Knuth dropping by for a few months, or Rivest visiting to give a lecture (albeit about the rather odd notion of obtaining forward security by using a stream of broadcasted random numbers which is too fast to be stored).

There are undeniable advantages to being at a great university in being exposed to new ideas. Why haven't PG et al. noticed this? Probably because their measurement -- can someone create a successful startup? -- is just as biased as everyone else's measurements. After all, when was the last time that a YC-funded startup really did anything new?