Factory co-founder and CEO Matan Grinberg said on Wednesday that he removed Chris Degnan from his roles as board observer and advisor, accusing him of sharing confidential information with rival Cognition. Grinberg described the conduct as an ethical violation that placed sensitive product and strategy details at risk. Hours later, Degnan announced on X and LinkedIn that he had joined Cognition as its chief revenue officer.
The Allegations and Termination
According to Grinberg, Degnan initially described a conversation with a Cognition executive as casual and insisted he had no interest in working there. On Monday, Degnan disclosed that the talks had been formal and recurring, after weeks of participating in confidential Factory board discussions and advising the leadership team. Grinberg noted Degnan was subject to confidentiality obligations, and said the timing of his questions about product roadmap and competitive parity now appears troubling.
Cognition Appointment and Executive Background
Degnan was Snowflake's first sales hire and spent 11 years as its chief revenue officer before moving into advisory roles with RPT Partners and Iconiq. His new employer, Cognition, makes the Devin coding agent, raised US$2 billion at a US$48 billion valuation earlier this month, and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi as customers. In his announcement, Degnan said RPT Ventures and managing partner Chad Peets will now work closely with Cognition, but he did not mention Factory.
Factory Momentum and Competitive Claims
Factory, a three-year-old San Francisco agentic coding startup, raised US$200 million at a US$5 billion valuation this month from investors including Blackstone, Khosla Ventures, Sequoia Capital, and Insight Partners. The company says its revenue has grown 100x year over year and its team has expanded 10x, with customers such as Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile. Grinberg also alleged that Cognition engineers previously feigned interviews with Factory to pry information about its product.
Investor Overlap and Public Tensions
The dispute has exposed overlapping investor relationships in the fast-moving AI sector, where venture firms increasingly back direct competitors. Khosla Ventures is an investor in both Factory and Cognition and was named as a major participant in Factory's latest round. Vinod Khosla publicly accused Grinberg of lying, calling Factory a struggling second tier competitor, while Grinberg replied that he has email records to verify his version of events.
Governance and Trust in the AI Era
Grinberg argued that startup founders must be able to rely on board members and that trust in board membership is a sacred element of Silicon Valley. He said competition is healthy, but obtaining advantage through confidential board access crosses an ethical line, and he called for the AI sector to compete with integrity. The episode arrives as the US Justice Department is reportedly examining governance conflicts involving venture investors serving on boards of competing companies.
The Factory and Cognition clash illustrates how quickly AI competition can produce governance disputes, especially when investors and advisors move between rival companies. Factory has not disclosed the extent of any confidential information it believes may have been shared, and Degnan's announcement did not mention Factory. The situation underscores the growing importance of clear conflict-of-interest safeguards as capital and talent flow rapidly across the artificial intelligence landscape.