Yes exactly. The VCs and investors have broken the unwritten contract that early startup employees can see an exit like the founders.

It’s going to be much more difficult to get employees for early stage startups from here on out.

This has actually always been the case (Dan Luu's article from 2015 comes to mind), but, previously, it required doing a bit of actual math, and doing a bit of reading:

https://news.ycombinator.com/item?id=10758278 (2015 danluu.com/startup-tradeoffs)

This Windsurf employee #2 revelation of the 99% loss in value for employee stock, is simply a confirmation of an existing practice, just more visible and easier to reason about.