Factory CEO Fires Board Adviser Over Alleged Spying for Rival Cognition

The race to build AI coding agents just produced its ugliest boardroom fight yet — Matan Grinberg, the co-founder and CEO of three-year-old AI coding startup Factory, announced on X this week that he had fired venture investor Chris Degnan from his role as a board adviser, accusing him of holding "recurring conversations" with Factory's biggest competitor, Cognition, while sitting on confidential board meetings.

About two hours after Grinberg's post, Degnan announced on X and LinkedIn that he had joined Cognition as its chief revenue officer — and flatly disputed Grinberg's account.

Grinberg alleges that Degnan — who spent 11 years as Snowflake's chief revenue officer after joining as its first sales hire, and had been a partner at Factory investor RPT Partners for the past five months — first acknowledged having a "casual" conversation with a Cognition executive but assured Grinberg he had no interest in working for the rival. According to Grinberg, Degnan told him he had "made too much money" and was "too lazy to go work for Cognition," which Grinberg said he "trusted and believed."

In his own X post, he said he resigned from the adviser role on Monday after telling Grinberg he was taking the Cognition job — and that Grinberg then offered him a full-time Factory role, which he declined. "Cognition has never asked about information on Factory, nor would I ever give it," he wrote, according to Business Insider, adding that the last Factory board meeting he attended was weeks before he had ever spoken to Cognition.

The dispute pits two of the most valuable startups in the AI coding race against each other. Factory, based in San Francisco, raised $200 million at a $5 billion valuation this month from Khosla Ventures, Blackstone, Sequoia Capital, and Insight Partners, and counts Nvidia, Adobe, Palo Alto Networks, and T-Mobile among its customers. Cognition, the maker of the Devin coding agent, raised another $2 billion at a $48 billion valuation earlier this month and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi as customers.

Grinberg went further, alleging that Cognition employees had posed as Factory job candidates to extract internal product information — a claim Cognition CEO Scott Wu rejected, according to Business Insider. Notably, Degnan's announcement did not mention Factory at all, but said RPT Partners and its managing partner Chad Peets would now work with Cognition. Grinberg, Degnan, and Cognition did not respond to Business Insider's requests for comment.

The public spat underlines how the competition between AI coding companies has escalated from product races to direct battles over people and secrets. With AI agents that write and ship software autonomously now commanding tens of billions in venture backing, every roadmap detail has become a strategic asset — and every departure a potential flashpoint. Whether it ends up in a courtroom or fades into industry gossip, the case has already sent a message to startups everywhere: as the AI coding wars intensify, the line between a boardroom ally and a rival's asset is getting harder to police.