I'm extremely surprised that she said that in front of your whole team and no one checked her, especially in a place as politically correct as Silicon Valley. I thought people would be walking on eggshells when discussing a minority team member's culture or country of origin.

I've worked with a pretty ignorant woman who was a nice person for the most part but a bit rough and unsophisticated, and she would ask the most naively ignorant questions that would make everyone in the office laugh. She would refer to me as Chinese even though I told everyone at some point that my parents were from Vietnam and when someone else in the office corrected her (I didn't correct her because I'm actually ethnically Chinese), she asked "Isn't Vietnam in China?" which made everyone laugh. Our office also took part in a weekly general knowledge quiz and some of the answers she would come up with were just absolutely hilarious.

I guess what I'm trying to say is people are ignorant and will unknowingly say dumb shit, some more than others. I deal with it by processing it as a naive ignorance similar to that of a child which doesn't make me uncomfortable. Some people may say that she's a grown woman and she should know better but I find it's better to not have high expectations for peoples knowledge of anything outside their area of expertise because they'll end up disappointing you.