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.