Factory CEO Matan Grinberg has accused former board adviser Chris Degnan of sharing confidential information with rival AI coding company Cognition while advising Factory. Degnan denies the allegation and says he resigned from Factory after accepting a job as Cognition’s chief revenue officer.
Grinberg announced Degnan’s departure on Wednesday, saying he had fired the adviser a day earlier. Around two hours later, Degnan announced that he was joining Cognition and subsequently disputed Grinberg’s account of how his Factory role ended.
Factory and Degnan Give Conflicting Accounts
Grinberg said Degnan had initially described his contact with Cognition as a casual conversation and told him he was not interested in working for the company. According to Grinberg, Degnan disclosed on Monday that he had instead been engaged in ongoing discussions with Factory’s competitor.
Grinberg alleged that Degnan had access to confidential Factory information while communicating with Cognition executives, including during a period when he participated in board meetings and advised company leadership. He said Factory does not know whether confidential information was shared or, if so, how much.
Degnan denied sharing confidential information and said he was not fired. He said his last Factory board meeting occurred weeks before he first spoke with Cognition and that he resigned after telling Grinberg about his decision to join the rival company.
Degnan also claimed Grinberg offered him a full-time position at Factory after learning about the Cognition role, which Degnan said he declined. Grinberg responded that he has emails supporting his version of events but did not publicly release them.
Dispute Draws in Investors and Cognition
Degnan previously spent 11 years as chief revenue officer at Snowflake after joining the data company as its first sales hire. More recently, he became a partner at RPT Partners, an investor in Factory, and has served as a go-to-market adviser to startups at Iconiq.
Factory raised $200 million at a $5 billion valuation in September from investors including Khosla Ventures, Blackstone, Sequoia Capital, and Insight Partners. The San Francisco company develops autonomous coding agents and lists Nvidia, Adobe, T-Mobile, Palo Alto Networks, and Royal Bank of Canada among its customers.
Cognition, which develops the Devin coding agent, raised $2 billion at a $48 billion valuation earlier in September. Cognition CEO Scott Wu said his company had no interest in obtaining Factory’s confidential information while confirming that Degnan had been in discussions with Cognition before his resignation.
The disagreement also exposed divisions at Khosla Ventures, which has invested in both companies. Founder Vinod Khosla publicly challenged Grinberg’s account, while partner Keith Rabois argued that interviewing with a competitor while retaining access to board-level information would represent a serious conflict.
No public evidence has yet established that Degnan transferred Factory’s confidential information to Cognition. Degnan, RPT Partners managing partner Chad Peets, Factory, and Khosla Ventures had not provided further comment at the time of the original report.
Featured image credits: Magnific.com
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