I can tell you what I'm doing right now to hire the first, and lead, engineer.
A common interview technique is to give a problem you're currently facing to a candidate to see how they would solve it. This is great both for you, as it demonstrates how they are going be effective, and for them, as it gives them a real sense of the work.
We have specific technical milestones that we're trying to reach. Following the above, I've cast one of our core challenges into a very simplistic version. It doesn't reveal much about our "secret sauce", but implementing this is a necessary prerequisite to delivering the final product.
In my case, I email the candidate the problem after the phone interview, a few days before they come on site. The expectation is that they will walk me through their proposed solution. However, I let them know that they get bonus points for actually coding up a prototype.
If they can do that, then they demonstrate a) the ability to get something into code quickly, and b) a clear understanding of the problem and possible solutions. That goes a long way for me.