Factory CEO Fires Board Advisor Over Alleged Cognition Leak

Factory CEO Matan Grinberg fired venture capitalist Chris Degnan from his board advisor role on Tuesday, alleging that Degnan shared confidential information with Cognition, Factory's biggest competitor. Two hours later, Degnan announced on X and LinkedIn that he had joined Cognition as its chief revenue officer.

The allegations cut deep into Factory's inner circle. Degnan spent the last five months as a partner with RPT Partners, a Newport Beach, California-based investor in Factory. Before that, he was Snowflake's first sales hire and served 11 years as the data company's chief revenue officer. His LinkedIn account also lists him as a go-to-market advisor to startups at Iconiq, a far larger venture firm, a role dating to October of last year.

The three-year-old, San Francisco-based Factory builds agentic coding software whose AI agents can carry out programming tasks largely on their own. This month it raised $200 million at a $5 billion valuation 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, raised $2 billion at a $48 billion valuation earlier this month. It counts Mercedes-Benz, NASA, Goldman Sachs and Citi among its customers. Grinberg has named Cognition as his biggest competitor.

The sequence of events, as Grinberg tells it, began with an admission. Grinberg said on X that Degnan had earlier admitted to a "casual" conversation with a Cognition executive but assured Grinberg 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," a claim Grinberg said he "trusted and believed."

On Monday, the picture changed. Degnan disclosed that he had actually been in ongoing talks with Cognition, Grinberg wrote. That admission raised concerns about how much confidential information Degnan held, how much he had already shared, and what he might share with his new employer.

Grinberg fired him from the board on Tuesday and laid out the stakes in a public post:

"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."

Degnan's announcement of his Cognition role does not mention 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.

The episode lands at a moment when venture firms increasingly invest in direct AI competitors — a practice once considered off-limits. TechCrunch has reported that at least a dozen OpenAI investors also back Anthropic.

Board-level conflicts still carry risk. Andreessen Horowitz is reportedly the subject of a Justice Department probe into its partners serving on competitors' boards.

Grinberg framed the dispute as a test of a foundational startup norm. "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 and Factory did not immediately respond to a request for further comment.

With Factory valued at $5 billion and Cognition at $48 billion, and both now entangled through a shared advisor and investor, the dispute tests how much confidentiality norms still bind the boards of competing AI startups.