Good question and inquisitive thought. And yes Sadhguru is correct. So we will explore this in two parts: What is the Sanskrit Meaning of Shiva and why is he called Raw/unmanifest/that which is not?
- In the Rig Vedā, the word “Śiva” occurs more than 30 times, and all these are not personified names (swarūpa), they are various aspects of auspiciousness and pleasantness. For example, the hymn “Be Śiva with me” meaning be gentle with me. The first homage to Rudra calls Him pleasant or peaceful, then all the synonymous titles follow – such as benevolent, caring, prosperous, glowing, gentle, knowledge & eloquence, love, bond, friendly, pure, generous, compassionate, pure/pious, and many more (I will present references for all these synonyms/titles below). In this way Śiva: the auspiciousness pervades forever, hence the title “Sadaa:Śivam”. As the famous Tamil Poet Thirumular, composer of Tirumurai says, Anbe Sivam (அன்பு சிவம்), meaning “Compassion/affection itself is Sivam”. Lets take a contrast: In this, the all-pervasive entirety is Viṣṇu/Hari who manifests beyond kālá (time). Viṣṇu is the canvas for creation, whereas the creative idea is called Brahmā. In this creation manifest countless beings with a mind, this mind becomes the ruler – which is Indra. Sri Aurobindo says: “the invisible force that propels creation from the lowest to the highest state of Viṣṇu is called Rudra”. Eventually, everything dissolves or assimilates back to the forever state of bliss that is Śiva(the unmanifested state "that which is not" we will go in detail next). Hence, all these concepts are beautifully iconified into the spectacular realm of Puráńas and Itihāsa.
Let's take a contradiction: Rudra is called “The Asura of Mighty Heavens” RV2.1, and Maruts are addressed as the “Lord of Asuras” RV1.108/122. There is also the title Manyu SY10.20 and the title Ugra RV2.33,9.11, meaning a ferocious one. So, this Rudra who is ferocious, makes us weep, whose children (Rudras) are rustic, mountain dwellers, destroyers, who associates with Asuras and nefarious beings, is Ghora (terrible), Manyu (wrath), Vrātya (nomadic), Ugra (threatening); in total contradiction is Śiva (The Auspicious), He is bliss/ānandam, pure, generous, has a compassionate hand and a beneficent heart, is pious, and is the very bestower of bliss. So here are the synonyms/titles for Śiva:
Śiva = the auspicious RV10.92 , Mayaḥ = bestower of ananda/bliss
RV1.114, Śreṣṭhaḥ = the foremost & pure RV1.43, Mīḍhvaḥ = generous
RV1.114 , Mṛḷayākuḥ Hastaḥ = a compassionate hand, Shamtamam Hruday =
pleasant or beneficent heart RV1.43, Sumna = pious/pure/forgiving
RV2.33.7, śam-yoḥ sumnam = bliss/ānandam RV1.43.
Hence, in Nirvana Shatakam, Śrī Śankaracharya addresses Śiva as “Cidanandata Rupa Śivoham”
Rudra is Un-Manifested / Raw / “That which is Not”
To understand why, we have to understand the diversity in counting Rudras, which is taken into consideration during the Yajñá in the discussion. So let's go with clear factual examples: Kṛṣṇa Yajur Vedā Taittirīya Saṃhitā 1.4.11 states “three and thirty in troops”; at the same time it says “eleven are seated on waters”. When Vedic meter is considered, Rudras are associated with Triṣṭubh which has 11 syllables multiplied by 4 steps, hence Śrī Rudram of the Kṛṣṇa Yajur Vedā describes 11 homages to Rudra. Similarly, Śatarudriya of the Sukla Yajur Vedā mentions 6 Rudras with Triṣṭubh and gives 6 X 11 = 66 homages to 100 Rudras. The same Śatarudriya 16.54 states that Rudra manifests in all and so there are innumerable thousands of Rudras. Taittirīya Saṃhitā 4.5 talks about 1000 Rudras covering the Earth with 100 bows and 100 arrows. Yoga of Ṛṣi Vaśiṣṭha describes 100 Rudras. When the delivery of sacrifice is in discussion Atharva Veda 15.5 talks about 7 delivering intermediator spaces of each direction, Bhāva to the Eastern, Śarvā to Southern, Paśūpati to Western, Ugra/Aghora to Northern, Rudra towards nadir or below regions, Mahādeva to the upper regions of the sky/zenith and īśhana towards all other intermediator regions. When associated with the human body, Sharva (Śarvā) is associated with the kidneys, Bhāva with the liver, Rudra with the blood and the liver, Paśūpati and Agni with the heart, Mahadeva with the intestines and Ugra/Aghora with the stomach/gut TS1.4.36. Vājasaneyi Saṃhitā of the Sukla Yajur Vedā describes 6 aspects – Bhāva, Rudra, Śarvā, Paśūpati, Nilagriva and Śitikaṇṭha. When Rudra is associated with Liṅga then five aspects are described – Sadyojata, Vamadeva, Aghora, Tatpurusha and īśhana. So, here is the key: depending on the cause and the event, the concept of Rudra manifests. This is the reason why He is called Viṣvarūpam or Pururūpam (the universal or cosmic form with multiple flavors) RV 2.33.10/TA 10.23.1. Bṛhadāraṇyaka Upaniṣad 3 says 10 vital pranas of the body plus the Atman are the 11th Rudras. Śrī Rudrām and Śatarudriya present totality of Rudra’s omnipresence – especially Taittirīya Saṃhitā 1.8.6, which says “one Rudra without a second”. This, in turn, gave a foundation to the Svetasvatara Upaniṣhad (one among the 18 primary Upaniṣhads), which says in Chap 3, sloka 2:
एको हि रुद्रो न द्वितीयाय तस्थुर्य इमांल्लोकानीशत ईशनीभिः।
प्रत्यङ्जनांस्तिष्ठति सञ्चुकोचान्तकाले संसृज्य विश्वा भुवनानि गोपाः॥
There is (हि) The One (एको ) Rudrā (रुद्रो) and none (न) other than
He, none can make Him second (द्विती) in being (याय) that is in
existence (तस्थु:र्य) among the worlds( इमां:ल्लोका), He is the
authority (ईशते) by His own authority (ईशनीभिः)| In all
worlds/dimensions (भुवनानि) is His convolution and projection and
guardians (संसृज् + ज्य + गोपाः) in entirety (विश्वा), He is
established (तिष्ठति) in all beings (हे जनाः) as the indweller
(प्रत्यङ्); and all beings (भूत्वा), at the time of final dissolution
(अन्त:काले), become/withdraw into Him (सञ्चुकोच) ~ Svetasvatara
Though Svetasvatara Upaniṣhad is an absolute synopsis of Rudra, in this exploration we will take the path of Vedic Samhitas, Brahmans and Aranyakars but use Upaniṣhad as a contrast to our analysis. According to the hymns of the Rig Vedā – as Sri Aurobindo states – Rudra is the invisible force, and His arrows and Maruts are individual forces/phenomena that can save us but also cause destruction to reorder creation. He manifests in the skies and in the sunlight, in the clouds and in rain, in lightning and in thunder, in the tempest (violent storm) and pleasant weather. He manifests in waves and rapids and also in still waters. He is here and beyond and in all directions, He is of all paths and mansions. He operates from near and from far, He manifests in animate and inanimate, He manifests in terror and in pleasantness, in fortune and in destitution. He is Ugra (the terrible), yet is the source of happiness and the source of delight. He manifests in all forms and in all beings and in all groups without reservation or preference, He manifests in the learned and in the immature, He manifests in all ages and genders and physical attributes and professions. He manifests in those who inflict yet he is also the healer and the foremost doctor/physician, He is the Ruler and lord of multitude diversities TS4.5,VS16. We have seen above that Agni becomes Rudra, and the same Agni becomes Siva. Rudra enters into various aspects of Yajñá based on the cause, He manifests in waters placed in vessels called Kalasha. Rudra manifests into various aspects like in medicines, into Soma, into Winds (Vayu) as prāṇa, into Vedic syllables (Triṣṭubh), and so forth. The following is a perfect example as to how Rudra manifests into various Divinities. In this case Rudra manifests within Vastospati and so within Agni.
He offers ten in the same place; the Viraj has ten syllables; verily
having obtained the Viraj, he makes it into a brick and piles it up;
verily in the Viraj he obtains the sacrifice; the piling up must be
repeated by him. Therefore that is the place of sacrifice where he
advances having spent ten (nights); not suitable is the place where
(he spends) less time than that, Now Vastospati is Rudra. If he were
to go on without offering to Vastospati, the fire becoming Rudra would
leap after him and slay him; he offers to Vastospati; verily with his
own share he appeases him; the sacrificer does not come to ruin.
~YajurVedā Taittirīya Saṃhitā 3.4.10
Conclusion: It is because of this ability to manifest into various divinities, especially in the most fierce aspects of divinities, that Rudra is greatly feared by Adhvaryu, sages, Ṛṣi and other Devatas during the meticulous process of Yajñá. On the other hand, the commoners fear Rudra for their cattle, their families, children, offspring, homes and farms. But, as we discussed, Rudra becomes a polar contradiction, wherein the same sages, Ṛṣi, and commoners sing to Rudra and Maruts for their protection, their wellbeing, their health, for knowledge and for liberation from death. This fierce Rudra is also gentle, auspicious, friendly, a doctor who heals with medicines, gives immortality, a deliverer to Yama (the path of Truth), the abode of Truth (rta), provider of wealth VS10.20,3.57, the three-eyed liberator(Triambaka), and protector of descendants, making him the most diverse, independent, foremost (Sriṣṭhaḥ) and contradictory Divinity – who is WHOLE, and not dependent on anyone, but self-supreme (Svadhanva) father to all.
All these aspects match well with the Puráńas that define Śiva and the Ganas that surround Him in thousands and thousands of groups and leagues KYV4.5,VS16.6. They describe him as the one residing on mountains, seated on the highest position, fair in complexion, with locks of hair, wearing deer skin, handsome and muscular, with three eyes and a blue neck, holding a spear (Tri:Shula). We see the divine contradiction that He is both fierce and benevolent/adorable KYV4.5.10, ferocious yet gentle, supreme yet reachable, nourisher yet destroyer, a father to both pious and nefarious, a calm ascetic and a supreme dancer, simple yet dazzling. He is the wave and the calm sea, and many more immeasurable contradictions. As we enter into the Yajur Vedā, especially into Śrī Rudram and Śatarudrīya, aspects of Rudra, Śiva and Soma become crystal clear. The question always remains, why is Rudra of the Vedās addressed as Śiva in the Puráńas? Based on our discussion so far, the answer is quite simple. Whereas the Vedās focused on the cosmic phenomenon called Rta and revolved around Yajñá, the Puráńas and Itihāsa focused on the benevolent side of Rudra – his nourishing, healing, protecting, unconditional and blissful nature – and Śiva (the Auspiciousness One) was most suited.
So, as you can see, Rudra can manifest into anything and in everything. Śatarudriya gives the story to support all this which you can read on "Sanatanadhara Siva Rudra across vedas". This is Sadhguru said he is that which is not, because Rudra is not a single entity. He is called the AdiYogi because he is Dakshina Murti (the one seated on the rightmost and highest seat of all Yoga). So I will end this reply with a quote Siva said to Parvati "I am the Ocean and you are the wave". Pranam