Which is better? Hiring employees or finding Co-Founders & Partners for my Startup?

When it comes to startups or small business I believe in one key principle: never go into business with someone who has nothing to lose if the business fails. So the differences between employees and co-founders or partners should be analyzed along not their ability to profit, but their ability to lose. Mutual wealth doesn't build loyalty, but mutual suffering does. 

I would only take someone on as a partner if they are willing to invest in your startup. Think about it, if they are willing to hand over their own resources to your startup, it first shows they are truly passionate and believe in your idea, second, it means they have serious stake in your startup to succeed.

Now, there is nothing wrong with offering deferred compensation to newly hired employees, especially if cash is particularly tight, kind of like a stock option. You could offer them a small equity stake, and I mean small, no need to be magnanimous, it's still your resources that are lost if the startup fails. Each passing year, you could increase it a little for the employees that stay behind, but employees who leave would lose out on it. That gives them a stake for the company to succeed, i.e., when you either decide to go public or sell the company, they would cash in, and depending on how long they stayed, they could end up with some nice bonus. Naturally, the equity should be awarded based on how much the employee contributes to growth, the star performers being awarded more. Also if you choose to go this route, check on tax implications, as it can vary and come countries tax stock options or other equity compensation even when they technically still have no value.