A VC deal term giving investors first claim on exit proceeds — typically 1x their investment before common shareholders see a dollar, sometimes stacked across multiple rounds or with participation rights. William Hockey calls the "preference stack" the hidden tax on employee equity: in a non-home-run exit, it can wipe out 10–80% of the upside common shareholders thought they had. Combined with Dilution, it's why he treats venture-backed equity as unreliable compensation.