Factory CEO Matan Grinberg said on Wednesday that he fired venture investor Chris Degnan from a board advisor role, accusing him of sharing confidential information with rival Cognition. Two hours later Degnan announced he had joined Cognition as chief revenue officer. The dispute matters because board advisors see roadmaps and sales plans that directly shape competition in agentic coding.
How the conflict between Factory and Cognition unfolded
Degnan had spent the previous five months as a partner at RPT Partners, a Newport Beach investor in Factory, and also lists a go-to-market advisor role for Iconiq dating to October of last year. Before that he was Snowflake's first sales hire and spent 11 years as its chief revenue officer. Factory, a three-year-old San Francisco startup building AI agents that carry out programming tasks largely on their own, raised $200 million at a $5 billion valuation this month from Blackstone, Khosla Ventures, Sequoia Capital, Insight Partners and others.
Grinberg said Degnan had earlier admitted a casual conversation with a Cognition executive but assured him he had no interest in joining the competitor, saying he had made too much money and was too lazy to work there. On Monday Degnan disclosed he had actually been in ongoing talks with Cognition. Grinberg said he then grew concerned about how much confidential information Degnan held and might share, and fired him from the board on Tuesday.
According to Grinberg, Degnan sat in board meetings and advised Factory leadership for weeks while confiding with executives of its largest competitor. Degnan was subject to confidentiality obligations in connection with his work with Factory, Grinberg wrote. He added that he does not know the extent of information shared, but said Degnan's questions about the product roadmap and the parity gap now look different. Degnan's announcement did not mention Factory.
What the dispute means for AI startups
For companies buying or deploying agentic coding tools, the episode underlines how fast vendor leadership and sales strategy can change. Factory lists Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile as customers, while Cognition, maker of the Devin coding agent, counts Mercedes-Benz, NASA, Goldman Sachs and Citi. Cognition raised another $2 billion at a $48 billion valuation earlier this month. A change in chief revenue officer can affect pricing discussions, enterprise support and partnership priorities.
For startups, the case shows the risk of giving commercially sensitive detail to advisors who also maintain outside investment roles. Degnan wrote that RPT Ventures and managing partner Chad Peets will now work closely with him at Cognition in building a generational company. Grinberg called trust in board membership one of the sacred bonds in Silicon Valley and said that trust was violated. Founders will need to define confidentiality duties, recusal rules and exit procedures before granting board access.
The marker to watch is whether confidentiality claims lead to formal action or new governance disclosures by Factory, Cognition or RPT. Venture giant Andreessen Horowitz is reportedly subject to a Justice Department probe into partners serving on competitors' boards. If investors begin to restrict overlapping AI bets such as OpenAI and Anthropic, founders will gain a clearer signal that board independence is tightening across the industry.
