How to hire someone who is more technical than you?

1. How do I know if the person is competent? I obviously need someone who knows way more than I do or else I'll just do it myself.

Have they done a similar job before? If you're looking for advantced technical skill that usually comes by having experience. They should have reference. Since you've been dabbling in the technical areas, you've probably been faced with problems you could ask them to solve.

1. How do I maintain respect and motivate if they know more than I do? Is there any book on hiring for entrepreneur? I don't want to read books written by HR guys because those situation won't be applicable now.

I'm not sure what you mean by respect in this context. There are areas where you provide the expertise, so you will be respected if you perform well in these areas. As long as you recognize the other person's skills and allow them to do their job, you should get a lot of respect. If you're going to constantly challenge them in areas you know nothing about, you're just showing them how foolish you are.

Books can offer some tips in how to hire technical people, but you better get ready to spend a lot of time vetting each other. How are they going to know you are motivated? How can they be sure you respect their technical expertise? Because if you hire the right person, you will never be smarter than they are in this area. This is especially true if you remain focused in running the other aspects of the company.

If you are interested in being the sole leader and want to dominate this partnership, you will either attract poorly talented partners. The good ones will not stick around if you're on some power trip. I suggest you get ready to give respect if you play on getting any.

I would have posted this as a comment, but don't have the score to do so. It's likely that a management-specialized forum is better for this question:

How are you able to lead someone when they know more than you? For example, if you assign them a project, how can you motivate them to do their best since you can't "lead-by-example"? 2nd, if you know that they didn't do a good enough job given their ability, how can you "correct" them without making them feel "why don't you do it if you think I didn't do a good job?". Obviously, I can't do what they did but I know they can do better.

Managers should know how to manage people technically-more-able than they are.

You have highlighted a bunch of concerns here, especially regarding the trust issue. My advice, would be to get a strong technical cofounder, someone who is your equal in the company. They then will be able to lead further technical members by example.

I think it's important to have technical people invested in your business, especially when your product is heavily reliant on them.

Finally, I'd recommend, as others have, that you give them pretty free reign. Make sure they understand that their actions will make or break the business, and only hire those that are ready for that responsibility.