A bitter public feud has erupted between two of the most prominent players in the AI coding space after Matan Grinberg, the CEO of Factory, accused a former board adviser of spying for his primary rival. Taking to social media on Wednesday, Grinberg claimed he fired Chris Degnan from his advisory role after discovering that Degnan had allegedly leaked confidential company secrets to Cognition. The timing of the accusation was particularly pointed, coming just two hours before Degnan publicly announced he had joined Cognition as its new chief revenue officer.
The dispute centers on whether Degnan played a double game while accessing sensitive strategic data. Grinberg alleges that Degnan previously dismissed any interest in joining the competition by claiming he was too wealthy and lazy to seek a new job, only to reveal later that he had been in active negotiations with Cognition all along. This betrayal left Grinberg questioning why Degnan had recently pressed for specific details regarding Factory’s product roadmap and competitive gaps. However, Degnan has firmly denied these claims, asserting that he resigned voluntarily and that his last interaction with the Factory board occurred long before he ever spoke with Cognition executives.
The drama quickly escalated beyond a simple personnel dispute, drawing in some of the heaviest hitters in venture capital. Vinod Khosla, founder of Khosla Ventures and an investor in both companies, waded into the fray by calling Factory a struggling second tier competitor and accusing Grinberg of lying about firing Degnan. Conversely, fellow Khosla partner Keith Rabois defended Factory, arguing that interviewing with a direct competitor while sitting on a company board is fundamentally unethical and insane behavior regardless of when the actual resignation occurs.
While Cognition CEO Scott Wu attempted to dampen the fire by stating his company has no interest in Factory’s internal information, the clash highlights growing tensions over corporate governance in the AI era. As firms race toward massive valuations like those seen at Cognition and Factory, the traditional boundaries preventing venture capitalists from juggling conflicting interests are blurring. With federal regulators already scrutinizing similar conflicts at other major VC firms, this public fallout serves as a cautionary tale about trust and loyalty within the high stakes environment of Silicon Valley.