Yes and they get a salary for this like they would at any other company.

If they take on a below market salary and or additional risk exposure in join a startup they should negotiate a package (be it options or otherwise) that adjusts for that.

Obviously you can argue that employees are in a weak negotiating position; but largely the tech sector in major hubs is skewed in favour of employees with a significant range of employers (run from tech giants to new startups). If a particular company isn't willing to offer a compensation package that satisfies you then there are countless other potential employers.

(and you can obviously start your own company as well)