Matan Grinberg, co-founder and CEO of coding startup AI Factory, said in an article on X on Wednesday that he had fired VC Chris Degnan from his role as a board advisor. Grinberg alleges that Degnan shared confidential information with Factory’s largest competitor, Cognition.
Two hours after Grinberg’s post, Degnan announced on X and LinkedIn that he had joined Cognition as chief revenue officer. He also later refuted Grinberg’s allegations, saying in another X article that he was not fired but resigned when he told Grinberg he was accepting the job.
Degnan was Snowflake’s first sales employee and later spent 11 years as the data company’s chief revenue officer. For the past five months, he has been a partner with RPT Partners, a Newport Beach, Calif., investor in Factory. Degnan is also a go-to-market advisor to startups at the much larger venture capital firm Iconiq, a role that dates back to October last year.
Factory, based in San Francisco, is a three-year-old agent coding startup whose AI agents can perform programming tasks largely on their own. The company this month raised $200 million at a $5 billion valuation from Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners and others. Its clients include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile.
Grinberg said he considers Cognition, the maker of the Devin coding agent, to be its biggest competitor. Cognition raised another $2 billion at a valuation of $48 billion earlier this month and counts Mercedes-Benz, NASA, Goldman Sachs and Citi among its clients.
Grinberg said on According to Grinberg, Degnan said he had “made too much money” and was “too lazy to go work for Cognition”, which Grinberg said he “trusted and believed in”.
However, on Monday, Degnan seemingly revealed that he was in ongoing talks with Cognition.
This led Grinberg to worry about how much confidential information Degnan had about Factory, and what he had shared and might share in the future with his new employer. He said he fired Degnan as a board advisor on Tuesday, writing:
For weeks, while he attended our board meetings and advised our management team, he also confided in the executives of our largest competitor. Chris was subject to confidentiality obligations as part of his work at Factory. We don’t know the extent of the information he shared, but it puts his timely questions about our product roadmap and what the parity gap entails in a new light.
But Degnan also disputes this explanation. He says the last Factory board meeting he attended was weeks before he “spoke” to Cognition and that he did not share confidential information. Degnan also says that when he told Grinberg he was resigning to take the job at Cognition, Grinberg offered him a full-time job at Factory, which he declined.
Degnan’s post announcing his new job at Cognition does not mention Factory. Notably, it says that RPT Partners and the firm’s managing partner, Chad Peets, will now work with Cognition. “I am thrilled to have Chad and the RPT team working closely with me in our quest to build a generational business,” Degnan wrote.
In the old world, before AI, a venture capital firm was especially careful not to engage in activities involving conflicts of interest. In today’s world, many venture capitalists have invested in direct AI competitors, such as OpenAI and Anthropic.
In fact, Khosla Ventures is investing in both Cognition (since at least early 2025) and Factory.
That didn’t stop the venture capital firm’s founder, Vinod Khosla, from getting into the drama, apparently to defend his largest portfolio company, Cognition. That also didn’t stop Khosla Ventures partner Keith Rabois from weighing in as well – to defend Factory.
In an article on X, Khosla accused Grinberg of lying about Degnan’s firing. He called Factory a “troubled second-tier competitor” and said Grinberg had shown “no decency or sense of appropriate behavior,” which “shows your desperation.”
Grinberg responded that he had email receipts to verify his version of events, but had not shared them.
Meanwhile, Rabois expressed his opinion on X: “It is unethical in itself to interview a competitor while attending board meetings and dinners. He added that “even interviewing while having access to board level information and without resigning is absolutely insane.”
Following this back-and-forth, Cognition co-founder and CEO Scott Wu also weighed in on the X controversy. He politely expressed respect for the smaller competitor while insisting that his company has “no interest in Factory’s information.” Wu also claims that Degnan resigned on Monday, but did not refute that Degnan was in talks with Cognition before this happened.
Regardless, perceived conflicts of interest at the board level could have consequences. Venture capital giant Andreessen Horowitz is reportedly the subject of a Justice Department investigation into its partners serving on the boards of its competitors.
Grinberg argued that startup founders need to be able to rely on their board members. “Chris’ conduct is unacceptable to me. Trust in board members is one of the sacred bonds of Silicon Valley, one that helps the startup ecosystem thrive. With that comes enormous responsibility. That trust has been violated.”
Degnan, Peets, Factory and Khosla Ventures did not immediately respond to requests for additional comment.
Note: This story has been updated to include responses from Degnan, Khosla, Rabois and Wu.
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