In my view they should be paid market rate. That's the real issue here. Even with that magical "first hire" you're now a company who is hiring employees. It's PRECISELY this problem that angel investing is designed to solve (and why pure boot-strapping is so incredibly difficult).
Equity for an employee should be viewed as a bonus and nothing more. Equity is a powerful tool for a company, and it shouldn't be parted with so easily. What if you need to raise some (non-dilution) bridge financing? You've limited your options if you've already committed huge equity to employees. It just doesn't make a ton of sense.
Pay market rate and benefits. Hold on to your equity for dear life.
Equity for an employee should be viewed as a bonus and nothing more. Equity is a powerful tool for a company, and it shouldn't be parted with so easily. What if you need to raise some (non-dilution) bridge financing? You've limited your options if you've already committed huge equity to employees. It just doesn't make a ton of sense.
Pay market rate and benefits. Hold on to your equity for dear life.