I don't think it is as common as many people think, but I've experienced it in a few forms in the past. At one place we were making enough money to pay the bills and were growing slowly. The founder wanted an exit with multiples on his investment. He went shopping around to sell the company, but break even with slow growth is a hard sell. He eventually made the decision to discontinue the revenue making side of the company and focus 100% on building something that he thought could sell the company. He failed in that attempt.
One thing to keep in mind is that for an entrepreneur it may not be a good business decision to keep working on a project that isn't going to have an exit. If you have no way to hand it off to someone else, then sometimes it is better to redirect your funds into something that is more likely to get you a better return. So in the case I mentioned above, he felt he couldn't get the return he wanted, so he redirected the resources of the company to try to get that return.
Even though you can burn through a lot of companies that way, if you are eventually successful you can make a lot of money for yourself and your investors. Many of the people I've worked with in the past I call "serial entrepreneurs" and they know how to eventually win. It's not much fun if you are interested in building a product, though.
Who has ever shut down a company for that reason? Typically startups die when they run out of money.
Other than that I agree with you: they seem admirably humble and impressively reliable.