Factory CEO accuses Cognition's new CRO of sharing confidential information

Why it matters

Factory and Cognition are competing for enterprise coding-agent budgets while sharing an investor, Khosla Ventures. Their dispute exposes the governance risks when advisers with access to confidential roadmaps move between rivals, without establishing that information was shared.

Factory co-founder and CEO Matan Grinberg (@matanSF) accused former board observer Chris Degnan of sharing confidential information with Cognition, setting off a public dispute over whether Degnan was fired or resigned before joining Factory's coding-agent rival as chief revenue officer. Degnan denies sharing confidential information and says he resigned before taking the job. The allegations have not been independently established.

The two accounts went public on September 30th. Grinberg said he ended Degnan's roles as Factory board observer and adviser after learning that Degnan had been in recurring discussions with Cognition while advising Factory. Degnan's response, reported by TechCrunch, was that he resigned on Monday, told Grinberg he was joining Cognition, and had not shared confidential information. He also said he had not attended a recent Factory board meeting while speaking with Cognition. Cognition CEO Scott Wu said his company had no interest in Factory's information.

In his account, Grinberg said Degnan had first described a conversation with a Cognition executive as casual, then disclosed that discussions were formal and recurring. Grinberg said Degnan had advised Factory on confidential board matters during that period and that questions Degnan asked about Factory's product roadmap now looked different to him. Grinberg also alleged that Cognition employees had feigned interviews to obtain product information. Those are allegations from Factory's CEO, not verified findings. The disagreement over the departure itself remains unresolved in the public accounts.

Khosla Ventures investor Vinod Khosla took Grinberg to task on X, calling Factory a "struggling second tier competitor" and accusing its CEO of lying about firing Degnan. Khosla Ventures has invested in both Factory and Cognition. Khosla Ventures partner Keith Rabois, meanwhile, argued that interviewing with a direct competitor while attending board meetings and holding board-level information was unethical. The exchange turned a contested executive transition into an argument among the founder and senior investors whose firms have money in the same market. Kris Kostelecky (@KristopherBryce) summarized the clash in an October 1st post, which also linked to Khosla's criticism.

https://x.com/KristopherBryce/status/2105465512281157826

The timing gives the disagreement unusually high stakes. Factory said in September it raised $200 million at a $5 billion valuation, with Khosla Ventures, Blackstone, Sequoia Capital and other investors participating. Cognition announced a Series E of more than $2 billion at a $48 billion valuation earlier that month, led by Andreessen Horowitz and Accel. Those sums do not settle the competing product claims Grinberg made about cost, quality and security; they show how much capital is now backing both companies' efforts to sell autonomous coding agents to large software teams.

Factory's product, Droid, is positioned as a model-agnostic agent for software-development work. Its public plans range from $20 a month for individual users to custom enterprise agreements. Cognition sells Devin, which it describes as an AI software engineer. The products compete for access to codebases, engineering workflows and enterprise customers. That makes a board adviser with access to product-roadmap discussions a particularly sensitive point of contact, even without proof that any confidential material changed hands.

Grinberg left a string-theory Ph.D. program at UC Berkeley to start Factory in 2023 after studying at Princeton, according to his professional profile. His bet has been that autonomous agents can take on an expanding share of software engineering. The fight now puts a governance problem alongside that product bet: founders need advisers who can contribute experience and capital, while investors often back competing companies in a fast-forming market. Factory's public claim centers on what Degnan knew and when; Degnan's denial centers on what he shared and when he left. The public record described so far does not establish that confidential information was passed to Cognition.