Factory's CEO Matan Grinberg fired board adviser Chris Degnan after allegations of confidential information sharing with Cognition, sparking a public feud between the two companies.
Matan Grinberg, co-founder and CEO of the AI coding startup Factory, made a shocking announcement on X on Wednesday: He fired board adviser Chris Degnan.
Grinberg alleges that Degnan shared confidential information with Factory's biggest competitor, Cognition.
Two hours after Grinberg's post, Degnan announced on both X and LinkedIn that he had joined Cognition as its chief revenue officer.
But the drama doesn't end there. Degnan was Snowflake's first sales hire and later spent 11 years as the data company's chief revenue officer. For the past five months, he has been a partner with RPT Partners, a Newport Beach, California, investor in Factory.
Grinberg said he sees Cognition, the maker of the Devin coding agent, as his biggest competitor. Cognition raised another $2 billion at a $48 billion valuation earlier this month, and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi as customers.
According to Grinberg, Degnan had earlier acknowledged having a 'casual' conversation with a Cognition executive but had assured Grinberg that he had no interest in working for the competitor.
On Monday, however, Degnan apparently disclosed that he had actually been in ongoing talks with Cognition.
This caused Grinberg to grow concerned about how much confidential information Degnan had about Factory, and how much he had shared and might share in the future with his new employer.
He says he fired Degnan as a board adviser on Tuesday, writing: 'For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor.'
Chris was subject to confidentiality obligations in connection with his work with Factory.
We do not know the extent of the information he shared, but it puts his timely questions about our product roadmap and what the parity gap involves into a new light.
But Degnan disputes that account as well.
He says the last Factory board meeting he attended was weeks before he had 'ever spoken' to Cognition and that he hasn't shared confidential information.
Degnan also says that when he told Grinberg that he was resigning to take the role at Cognition, Grinberg offered him a full-time job at Factory, which he declined.
Degnan's post announcing his new job at Cognition doesn't mention Factory.
Very notably, it does say that RPT Partners and the firm's managing partner, Chad Peets, will now be working with Cognition.
In the old, pre-AI world, a VC firm was especially cautious not to engage in conflict-of-interest business.
In today's world, many a VC has invested in direct AI competitors, such OpenAI and Anthropic.
In fact, Khosla Ventures is an investor in both Cognition (since at least early 2025) and Factory.
That didn't stop the venture firm's founder, Vinod Khosla, from jumping into the drama, seemingly in defense of his bigger portfolio company Cognition.
Nor did it stop Khosla Ventures partner Keith Rabois from weighing in as well — in defense of Factory.
Grinberg's decision to fire Degnan has sparked a public feud between the two companies, with each side accusing the other of unethical behavior.
The conflict raises questions about the ethics of venture capital in the AI industry, where companies are increasingly competing for talent and resources.
As the drama unfolds, it remains to be seen how this will impact the future of Factory and Cognition, as well as the broader AI industry.
One thing is clear, however: the stakes are high, and the consequences of this conflict could be far-reaching.
Sources
- TechCrunch: Factory CEO just accused his VC board advisor of spying for Cognition
- Yahoo: Factory CEO just accused his VC board adviser of spying for Cognition
