starting a business with friends and hiring friends are two different things.

Exactly. Having a friend as a W-2 employee was a terrible experience for me. I wouldn't be opposed to starting a business with a friend though.

In what way is this different? I've done both (hired friends and partnered with friends), and they seem to have similar advantages and disadvantages.

Advantages: you enjoy the people you work with; deeper level of commitment and trust.

Disadvantages: if your professional relationship struggles, your friendship struggles; conflict of interest between friendship and business.

If you're in business with friends, either the friendship or the business needs to come first, and everyone should clearly know what that is. Are you willing to harm your friendship for the sake of the business? Or are you willing to let your business suffer for the sake of the friendship?

If you're in business with strangers, the decision is easier.