Earlier quoted context omitted.
That CEO and Mark Shuttleworth must be trading notes. It is okay to bring up something like flunking out of school 20 years ago but why drill someone on it?
It may be a way of filtering out older workers without having a policy as such.
Your resume is a showcase of your best accomplishments. Short of clearance-level interviews with your family and friends, people in C-level positions ask for transcripts from 20 years ago because it's the only intelligence concerning your failures they can get their hands on (your previous employers won't ever attest on-record that you sucked).
So with that in hand, think about how you're going to feel when the only things they want to talk about are topics you were struggling to understand while your brain was still underdeveloped. He's big-dicking you to ensure your submission in any ongoing business relationship, and probably lowball you on salary just because he likes taking things from people after humiliating them.
Asking about failures in past jobs is fair game-- you are free to disclose that much at your discretion. Asking for a transcript itself isn't even that weird either, just to verify you went to the school you said you did. But grilling you about failures from 20 years ago is someone engaging in emotional abuse; they're desperate to have something to hold over you.