I played a squire musicmaster bass for a VERY long time. It fit me well, and sounded good for certain applications. The bass I play now with pro-level guys is an SX Jazz Bass knock-off, in which I put a set of Dimarzzio ultra jazz pickups. The bass cost $139 dollars when I bought it. I also use a piccolo bass which is a short scale 5-string bass that I strung up with piccolo bass strings. I use that for paid gigs as well. No problem.
Having built many basses in my lifetime, I realized that all this hype about the brand is a load of bull pucky. A solid body bass is simply an appliance for holding the strings. I believe the pickups can alter the sound, and so can the type of wood -- but even basswood sounds good to me. Naturally the tuners and bridge need to be solid so it doesn't go out of tune, and it needs to be playable. But beyond that, I really feel the brand loyalty is mostly hype.
The only exception, based on my reading, is when you play in a studio. Engineers know how to get the right sound of brand name instruments like Fender jazz basses, so, if you are on the studio clock, I would recommend being brand loyal. Otherwise, it's up to you.
The guy who discouraged the kid in your story was not very kind. Shame on him...