Factory CEO just accused his VC board adviser of spying for Cognition

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Matan Grinberg, co-founder and CEO of the AI coding startup Factory, said in a post on X on Wednesday that he fired VC Chris Degnan from his role as a board adviser. 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. He also subsequently refuted Grinberg’s allegations, saying in a separate X post that he wasn’t fired but resigned when he told Grinberg he was taking the job.
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. Degnan is also a go-to-market adviser to startups at the much bigger venture firm Iconiq, a role that dates back to October of last year.
Three-year-old, San Francisco-based Factory is an agentic coding startup whose AI agents can carry out programming tasks largely on their own. The company raised $200 million at a $5 billion valuation this month from Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners, and others. Its customers include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile.
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.
Grinberg said on X that 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. According to Grinberg, Degnan said he had “made too much money” and was “too lazy to go work for Cognition,” which Grinberg said he “trusted and believed.”
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. “I am thrilled that Chad and the RPT team will be working closely with me in our pursuit of building a generational company,” Degnan wrote.
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.
In a post on X, Khosla accused Grinberg of lying about firing Degnan. He called Factory a “struggling second tier competitor” and said Grinberg showed “no decency or sense of proper behavior,” which “shows your desperation.”
Grinberg replied that he has email receipts to verify his version of events but did not share them.
Meanwhile, Rabois opined on X, “It is unethical per se to even interview at a competitor while attending Board meetings and Board dinners.” He added that “to even sit for an interview while having access to board level information and without resigning is absolutely insane.”
Tracking the back-and-forth, Cognition co-founder and CEO Scott Wu also weighed in on the controversy on X. He politely expressed respect for the smaller competitor while insisting that his company has “no interest in Factory’s info.” Wu also contends that Degnan resigned on Monday but didn’t refute that Degnan was in talks with Cognition before that happened.
Either way, there could be consequences for perceived board-level conflicts of interest. VC giant Andreessen Horowitz is reportedly the subject of a Justice Department probe into its partners serving on competitors’ boards.
Grinberg argued that startup founders must be able to rely on their board members. “Chris’s conduct is unacceptable to me. Trust in Board Membership is one of the sacred bonds in the Silicon Valley, one that helps the startup ecosystem thrive. With it comes an enormous responsibility. That trust was violated.”
Degnan, Peets, Factory, and Khosla Ventures did not immediately respond to requests for further comment.
Note: This story was updated to include responses from Degnan, Khosla, Rabois, and Wu.

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