While I admire the overall message you are emphasizing I don't really understand your example. Did he say, 'I'm the smartest guy in the room' or did you assume that's what he thought of himself because he happened to have a PhD from MIT? I would imagine anybody who went to MIT wouldn't have that kind of complex, being around some of the most intelligent individuals in the world, but then again, I shouldn't assume.
Furthermore, what does him 'being so smart' have to do with the failure of his company? I don't see the relevance here, as estone814 said, just because somebody is book smart, does not mean they are people smart. There is an element to this in all things however.
I can tell you though that the smartest people know their weaknesses. The smartest people build relationships with people who are strong in areas they are not. Such as tech and marketing people. Generally, these are two completely different types of people. But together, they can achieve amazing things.
I'm not really sure how to clarify. Difficult to explain my vantage point if it didn't resonate from the post.
Your assumptions need a long, long explanation. Having dealt with geniuses my entire life that run companies, I can most certainly communicate that what you may think to be logical and reason, is far from how things play out. Maybe this helps...