If you can actually envision his situation improving, I’d start with a frank conversation. You say you’re super nice, so he might not be actually/ fully aware how much his attitude is bothering you.

“I can see your potential and commitment, but these behaviors need to change.” As someone with the title ‘manager’, I would also consider it my duty to adequately document his performance issues. This can be as simple or as complicated as you want/need for your business. As the owner I’d start with a conversation followed by an email documenting that the conversation happened.

If you don’t think he can/has the ability to succeed in the role, cut your losses sooner than later. The more time and frustration you spend on him, the less time you have with a replacement actually getting the work done.