You don't necessarily get fired (if you're an engineer) when this happens, but you probably do get socially brutalized. The founders/investors inevitably begin bringing in "experienced managers" -- people whose primary qualifications are a few years in low-level management at a big-name company. They might even be the same age as you, if not younger. Important decisions begin to bypass you in favor of the new management structure. You get less and less authority in roles that you helped define. It's a really crappy experience.

The problem is that you're a known quantity, and the founders/investors see you as a great worker -- in a certain role. They perceive some problem, and since you're part of the system with the problem, you are seen as incapable of fixing the problem. Better to hire Magic Mike from Facebook or Brilliant Bob from Google to come in and make everything better.

I've seen this happen so many times. If you're an engineer, your choices are generally a) swallow your pride, ride out your vest and don't advance in your career, or b) quit, lose the money, and hopefully move into that more senior role somewhere else, so that you can be Magic Mike next time.