Factory CEO Accuses Former Adviser of Sharing Confidential Information With Cognition

Factory CEO Matan Grinberg has accused former board adviser Chris Degnan of sharing confidential information with Cognition, one of Factory’s biggest AI coding competitors. Degnan denies the allegation and disputes Grinberg’s account of his departure from Factory.

In a post on X, Grinberg said he removed Degnan from his advisory role after learning that Degnan had been holding discussions with Cognition while still involved with Factory.

About two hours later, Degnan announced that he had joined Cognition as chief revenue officer. He later rejected Grinberg’s allegations, saying he resigned after informing Factory that he was taking the Cognition job and that he had not shared confidential information.

Factory and Degnan give conflicting accounts.

Degnan previously spent 11 years as Snowflake’s chief revenue officer and has been a partner at RPT Partners, an investor in Factory. He has also worked as a go-to-market adviser to startups through Iconiq Growth.

Factory, a San Francisco-based developer of autonomous coding agents, recently raised $200 million at a $5 billion valuation. Grinberg has described Cognition, developer of the Devin coding agent, as Factory’s largest competitor.

Grinberg said Degnan initially characterised his contact with Cognition as casual and indicated he was not interested in joining the company. According to Grinberg, Degnan later disclosed that the discussions had been ongoing, raising concerns about his access to Factory’s product roadmap and other board-level information.

Degnan offers a different timeline. He said the last Factory board meeting he attended occurred weeks before he first spoke with Cognition and maintained that he never shared Factory’s confidential information. He also said Factory offered him a full-time role after he disclosed his plans to leave, which he declined.

In his announcement about joining Cognition, Degnan said RPT Partners and managing partner Chad Peets would also work closely with Cognition.

Dispute draws responses from prominent investors.

The disagreement quickly expanded beyond Factory and Cognition. Khosla Ventures, which has invested in both companies, joined the public debate after founder Vinod Khosla and partner Keith Rabois took opposing positions.

In a post on X, Khosla accused Grinberg of misrepresenting Degnan’s departure and criticised Factory. Grinberg responded that he had emails supporting his account but did not publish them.

Rabois, meanwhile, argued that interviewing with a direct competitor while retaining access to board-level information presented an ethical problem. He criticised the idea of pursuing a competitor role while attending board meetings and said an adviser should resign before participating in such discussions.

Cognition CEO Scott Wu also addressed the dispute publicly, saying Cognition had no interest in Factory’s confidential information. Wu said Degnan resigned from Factory on Monday and expressed respect for the competing startup.

The dispute leaves several important facts contested, including when Degnan’s discussions with Cognition began, whether Factory fired him or he resigned, and whether they shared any confidential information. No evidence has been publicly disclosed that Factory information was transferred to Cognition.