As an engineer, it's usually more rational to take extra salary over equivalently-valued equity. The median equity grant at a startup ends up being worth zero.
That doesn't contradict equity aligning incentives more between the startup and the employee. The reason it's more rational to take salary is because you get paid even if the startup tanks; if you're a startup founder and your primary goal is to prevent the startup from tanking, you want your people to take equity as much as possible so they have every incentive not to let it fail.
The original question was about signaling, and here's the problem with wanting to do a startup and yet get paid mostly in salary: it exists in a bit of a no-man's-land as far as risk tolerance goes, where you still face significant risk of being out of a job and yet don't get the upside of startup success. If you really want stability and a paycheck, why not go work for Google? They're not going anywhere any time soon. The only time I would recommend taking a startup job paid primarily in salary is if you're mostly in it for the learning experience, so that you can see how things are done in a small company and yet financially insulate yourself from things going poorly.
"If you really want stability and a paycheck, why not go work for Google?"
Because you can often get a less corporate job doing work you enjoy more with people you enjoy more while still having manageable risk and progressing your career. That goes triple for software engineers in the Bay Area, for whom "out of a job" is a minimal risk that frequently results in a pay raise.
People mostly don't work for startups for the lottery ticket. Equity isn't really compensation, or shouldn't be taken as compensation, so much as it's a social signal. And even then, equity is more about investors than employees. Equity only evaluates to any sort of compensation at all in the event of an exit, in which case they want the senior staff to have some degree of additional incentive not to immediately leave for a new gig.
That doesn't contradict equity aligning incentives more between the startup and the employee. The reason it's more rational to take salary is because you get paid even if the startup tanks; if you're a startup founder and your primary goal is to prevent the startup from tanking, you want your people to take equity as much as possible so they have every incentive not to let it fail.
The original question was about signaling, and here's the problem with wanting to do a startup and yet get paid mostly in salary: it exists in a bit of a no-man's-land as far as risk tolerance goes, where you still face significant risk of being out of a job and yet don't get the upside of startup success. If you really want stability and a paycheck, why not go work for Google? They're not going anywhere any time soon. The only time I would recommend taking a startup job paid primarily in salary is if you're mostly in it for the learning experience, so that you can see how things are done in a small company and yet financially insulate yourself from things going poorly.