Factory CEO accuses VC board adviser of leaking secrets to rival Cognition
Factory CEO Matan Grinberg publicly accused former board adviser Chris Degnan of sharing confidential information with competitor Cognition, a claim Degnan denies, saying he resigned rather than was fired.
Matan Grinberg, co-founder and CEO of AI coding startup Factory, announced on X on Wednesday that he had removed venture capitalist Chris Degnan from his role as board adviser, alleging Degnan shared confidential company information with Factory's biggest rival, Cognition.
About two hours later, Degnan revealed he had joined Cognition as chief revenue officer. He subsequently disputed Grinberg's version of events, saying he wasn't fired but had resigned once he told Grinberg about his new job — and that Grinberg had then offered him a full-time position at Factory, which he turned down.
Degnan previously spent years as chief revenue officer at data company Snowflake and, for the past five months, has been a partner at RPT Partners, an investor in Factory. He has also advised startups at the larger venture firm Iconiq.
Three-year-old Factory recently raised $200 million at a $5 billion valuation. Cognition, maker of the Devin coding agent and seen by Grinberg as his top competitor, raised $2 billion this month at a $48 billion valuation.
Grinberg says Degnan initially claimed to have no interest in joining the rival firm, but it later emerged that talks with Cognition had been ongoing for some time, raising Grinberg's concerns about how much sensitive information may have been disclosed.
Dispute spills into public view
The disagreement drew in Khosla Ventures founder Vinod Khosla, who accused Grinberg of lying and called Factory a "struggling second tier competitor," while his partner Keith Rabois sided with Factory, arguing it was unethical to interview with a rival while sitting on its board. Khosla Ventures is an investor in both Factory and Cognition.
Cognition CEO Scott Wu said his company has no interest in Factory's information. Grinberg maintained that trust between founders and board members is a foundational principle of the startup ecosystem that he says was violated in this case.
