Factory co-founder and CEO Matan Grinberg has publicly accused Chris Degnan, a former adviser to his board, of talking to rival Cognition while still advising Factory, and of sharing confidential information with it, TechCrunch reported Wednesday. Degnan, who announced the same day that he had joined Cognition as chief revenue officer, rejects the account, and the fight quickly drew in investors on both sides.

What Happened

According to Grinberg, Degnan sat in Factory's board meetings and advised its leadership team during a period when he was in discussions with Cognition. Grinberg said that questions Degnan had asked about Factory's product roadmap now looked suspicious in hindsight, and that Degnan had previously told him he had no interest in working for the competitor. Grinberg said he fired Degnan Tuesday. He said he has emails that back up his version of events but did not share them.

Degnan disputes both the firing and the alleged leak. In a public reply addressed to Grinberg, he said he had not been terminated but had resigned from the adviser role Monday and told Grinberg he was going to Cognition. He said his last Factory board meeting took place weeks before his conversations with Cognition began, and that he passed on no confidential information. Degnan also said that when he disclosed the move, Grinberg asked him to consider a full-time role at Factory, which he declined.

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Degnan's announcement that he had joined Cognition came about two hours after Grinberg's post, TechCrunch reported. Degnan was Snowflake's first sales hire and later spent 11 years as the data company's chief revenue officer.

Investors Take Sides

The dispute became unusual when two people from the same venture firm landed on opposite sides. Khosla Ventures is an investor in both Factory and Cognition. Its founder, Vinod Khosla, backed Cognition, accused Grinberg of lying about the firing and described Factory as a struggling second-tier competitor. Keith Rabois, a partner at the same firm, sided with Factory, arguing that interviewing with a competitor while attending a company's board meetings is unethical in itself.

Cognition CEO Scott Wu said he respects Factory but that Cognition has no interest in Factory's information.

Why It Matters

Factory and Cognition both sell AI agents for software development, one of the most heavily funded categories in the current AI cycle. Both raised large rounds in September: Factory took in $200 million at a $5 billion valuation, and Cognition raised $2 billion at a $48 billion valuation, according to TechCrunch. At those valuations, enterprise sales leadership and product roadmaps are competitive assets, which is why an adviser moving between the two drew such a sharp reaction.

The episode also highlights a structural feature of venture-backed AI: the same firms often fund several companies chasing the same market. TechCrunch noted that the Justice Department is reportedly examining Andreessen Horowitz over board seats at competing companies, a sign that overlapping investor roles are drawing regulatory attention beyond this one dispute.

What to Watch

The central factual disagreement, whether Degnan resigned Monday or was fired Tuesday and when his talks with Cognition began, may only be settled if Grinberg publishes the emails he says he holds. No lawsuit or formal complaint has been announced by either company. Also worth watching is whether Khosla Ventures addresses the public split between its founder and partner as two of its portfolio companies trade accusations.