Half of the time it's startups subsidizing each other in a circle to have users. Like if you're a VC, you "force" your companies to use tools made by your other companies. So everyone will use the chat app made by one company the VC owns, the CRM software, all the different SaaSes etc. So it's just money moving in a circle, but then all the apps get to claim good sales and user numbers.

A big part of it is that if you're in a very competitive realm, where most of the startups you hear about are working, then every day counts. If you can spend $1M to develop a product in a year or $2M to develop it in 6 months, that extra million gives you a 6 month head start in sales, revenue growth, and publicitity. Depending on the numbers involved, that frugality could cost huge amounts of money overall.

Note that you don't hear so much about the many, many startups doing slow growth things in less glamorous fields. I know a few companies making agricultural products for small farmers. Yes, frugality makes perfect sense for them. They're not going to have a hockey stick growth curve where they go from $0 to $10M to $1B over the course of 2 years. Their revenue graph will look more like a traditional manufacturer. They're doing things the way you describe, but they're not all over tech and non-tech news sites.

Quicker and bigger is better than slower and smaller. Especially in a competitive sector.

Better to go bust quick, than to eke out a tiny profit by being super frugal. The latter is a waste of everybody's time.