The standard equity shares held by founders and employees, which participate in company value but rank behind preferred stock in liquidation.
Common stock is the basic form of equity in a corporation. Founders receive common stock when they incorporate. Employees receive options that convert to common stock when exercised. Common stockholders typically have voting rights (one vote per share) and participate in the company's residual value.
The catch is that common stock ranks below preferred stock in liquidation. If the company is sold or shut down, preferred stockholders (investors) get paid first according to their liquidation preference. What's left over — if anything — goes to common stockholders. In a successful acquisition or IPO, this doesn't matter much because there's enough value for everyone. But in a down scenario, preferred stockholders might get everything while common holders get nothing.
Common stock is also what gets priced in a 409A valuation — the fair market value the IRS cares about for option grants. Preferred stock typically has a higher value per share because of its additional rights, which is why common stock (and thus employee option strike prices) can be significantly lower than the price investors paid for preferred shares.