Things are broken in startup compensation. FAANG (and other large bay area tech companies) pay mid six figures for senior engineers. A startup will offer you equity that in the 95% outcome nets you that much, and only after 10+ years (with a large chance that's it's worth zero). Oh, and you have a to take a huge financial risk when you leave due to the 90 day exercise window, potentially paying hundreds of thousands in tax on an illiquid (and potentially worthless) asset.

This used to work when companies IPO'd within a few years, but now that 10-15 years is common the system has broken down. As a personal example, neither of the two startups I've worked for (14 years and 9 years old) are anywhere close to an exit.

Letting employees sell their equity would definitely help, but typically the equity packages are too small for this to make them directly competitive. An offer at a $20M series A company might be 0.5% equity over 4 years, but a FAANG offer will be 10x that with little of the risk.

Removing the 90 day exercise window or granting employees money to early-exercise would help reduce this risk somewhat, but doesn't help with the limited upside.

Eventually, statups are going to have to realize that if they want to attract good employees they're going to have to either massively increase cash compensation (which means raising more) or give dramatically more equity (which limits how much they can grow pre-exit).

Personally, I think it's gotten so bad that the only way I would join a startup again is as a founder.