But does that really happen? It seems that we have a lot of bloated, buggy, inefficient code out there because it was initially built using something that was 'quick and dirty' for the MVP and was never rewritten properly once it caught on.

I have clients that still use Excel spreadsheets for their database instead of using a real one just because their data was initially stored there and they never changed. New features were added incrementally over time and it became costly to break everything for a complete rewrite. So they limp along forever because management won't let them do it right until it absolutely breaks.

Yeah, it's definitely a cultural shift from the way most software is built today, but it's a better way to do it in most cases. I was also assuming a startup environment in my comment; established companies can generally afford to do more work up front to make the foundation more robust, and they are (slightly) more likely to have a better idea of what their customers want ahead of time.

But to answer your question more directly, it does happen, it's just uncommon. Where I've seen it done successfully, the rewrites have been piecemeal, not all at once, so that definitely helps with the buy-in factor.