You are right, I am not very business savvy, but I am learning along the way.
>Want some real numbers? At this point there are two choices: >a) Full Salary + 1-2% equity. or b) 8-10% equity vested over >4 years and minimum wage salary.
I have actually offered something roughly similar to option a) to several other promising candidates, but nobody was interested. I really need to hire another engineer, and I have already been searching for several months, and the search itself is a distraction, so I want to get it over with.
The other thing is that I have known and worked with this guy for several years, so I can be confident about his technical abilities to a greater degree than I can be about some random guy that I interview. Unless you have worked with somebody, you never really can tell how good they are, at least I can't. That's why I am willing to offer my friend a generous package with full salary and 5-10% equity. The way I figure, with him on board, the overall pie should increase by more than enough to compensate for the 5-10% equity that I would give him.