Factory CEO Fires Board Advisor, Accuses Him of Spying for Cognition

Factory CEO Matan Grinberg fired venture capitalist Chris Degnan as a board advisor on Tuesday, accusing him of sharing confidential information with Cognition, Factory's largest competitor. Two hours later, Degnan announced on X and LinkedIn that he had joined Cognition as its chief revenue officer.

The allegations land at a sensitive moment for Factory. The three-year-old, San Francisco-based startup raised $200 million at a $5 billion valuation this month from Blackstone, Khosla Ventures, Sequoia Capital, Insight Partners and others. Its customers include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile.

Cognition, maker of the Devin coding agent, is the benchmark Grinberg measures himself against. It raised $2 billion at a $48 billion valuation earlier this month and counts Mercedes-Benz, NASA, Goldman Sachs and Citi among its customers.

What does Grinberg allege happened?

Grinberg laid out his account in a post on X on Wednesday. Degnan, he said, had earlier admitted to a "casual" conversation with a Cognition executive but assured Grinberg he had no interest in working there. According to Grinberg, Degnan said he had "made too much money" and was "too lazy to go work for Cognition" — claims Grinberg said he "trusted and believed."

On Monday, the story changed. Degnan disclosed he had actually been in ongoing talks with Cognition. Grinberg fired him from the board the next day.

"For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor," Grinberg wrote on X. "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."

Who is Chris Degnan?

Degnan was Snowflake's first sales hire and spent 11 years as the data company's chief revenue officer. He spent the last five months as a partner with RPT Partners, a Newport Beach, California-based investor in Factory. His LinkedIn profile also lists him as a go-to-market advisor to startups for the much larger venture firm Iconiq, a role dating back to October of last year.

His announcement post makes no mention of Factory. It does say that RPT Ventures and the firm's managing partner, Chad Peets, will now work 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.

Degnan, Peets and Factory did not immediately respond to a request for further comment.

Why does this matter beyond Factory?

Board-level conflicts of interest are drawing scrutiny across the venture industry. In the pre-AI era, VC firms were especially careful to avoid such conflicts. Today, many firms invest in direct competitors — OpenAI and Anthropic being a prominent example.

Regulators have taken notice. VC giant Andreessen Horowitz is reportedly the subject of a Justice Department probe into its partners serving on competitors' boards.

Grinberg framed the dispute as a warning about the foundations of startup governance. "Chris's conduct is unacceptable to me," he wrote. "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."

The episode leaves Factory's investors facing uncomfortable questions about oversight, even as the company banks a fresh $200 million. It also puts a spotlight on how much confidential roadmap information Degnan carried out the door — and straight into Cognition's revenue operation.