Want to play it by the book: tell your manager about it. Be prepared to get fucked in your yearly perf review for "not performing" even if you do exactly what you did before.

Want to avoid the drama: don't tell anyone, then leave if/when you get traction. The less they know - the better.

I've seen people take both of these paths, the second one worked much better. That having been said - it's highly individual and dependent on circumstances. E.g. if you're high up the chain of command there will be more scrutiny over what you do after you leave. For most of us, it's not a huge concern.

You'll be fine, especially since you are making a best effort to adhere to the rules. While many people like to nitpick the specs of the contract, and they aren't technically wrong, the reality is nothing happens from the corp side without them having significant motivation and willingness to spend the time, effort, and money. There's extremely low probability of them taking any action (or even knowing about it). Plus California laws are fairly labor biased.

Are you saying that your have your FAANG employer's approval for your entrepreneurial activities, or that you don't need it? I'd be suspicious of the latter.