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Factory's CEO says a board observer leaked to Cognition before becoming its revenue chief

Factory CEO Matan Grinberg says board observer Chris Degnan passed confidential information to Cognition, the $48 billion rival that made him revenue chief. Degnan denies it, and the accounts published so far do not establish that anything changed hands.

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What happened

  • Grinberg says he removed Degnan as Factory's board observer and adviser after learning Degnan had been in recurring discussions with Cognition.
  • Cognition employees feigned interviews to obtain product information, Grinberg also alleges, though that claim has not been verified.
  • Degnan spent 11 years as Snowflake's chief revenue officer before taking the Cognition job.
  • Factory said in September it raised $200 million at a $5 billion valuation, with Khosla Ventures, Blackstone and Sequoia Capital among its investors.

Why it matters

  • What doesn't add up contradiction Khosla Ventures' founder is attacking Grinberg while one of its partners condemns the overlap, so Factory cannot treat the investor it shares with Cognition as a neutral party in settling this.
  • What it sets up precedent If Rabois's standard holds, keeping a board seat while interviewing with a rival is a breach in itself, and future disputes of this kind will turn on when an adviser disclosed the talks.
  • Who has to decide decision Founders who take advisers from investors that also back rivals now have to decide when board access ends, since a confidentiality promise left Grinberg unable to say how much information went out.

Run this as an incident review and it needs three timestamps: Degnan's first contact with Cognition, the day he told Factory the talks were formal, and the last confidential board material he saw. The public accounts, both posted on September 30 [14], fix only the end of that sequence. Degnan says he resigned on Monday and told Grinberg he was joining Cognition [15]. He announced the chief revenue officer job on Wednesday, according to mezha.net's summary of TechCrunch's reporting [4].

The disputed window sits before those dates. Grinberg says Degnan first described a conversation with a Cognition executive as casual, then disclosed that the talks were formal and recurring [25]. In mezha.net's Ukrainian rendering of his post, Grinberg wrote that for weeks Degnan sat in board meetings and advised Factory's leadership while sharing information with executives at its biggest competitor [5]. Degnan's answer covers one meeting. He says he did not attend a recent Factory board meeting while speaking with Cognition [16].

During those weeks, the control Factory had was a contract. Grinberg wrote that Degnan was bound by confidentiality obligations as part of his work with the company [13]. He also said he does not know how much Degnan passed on, or whether he could disclose more later [6]. His case for a leak rests on hindsight: Degnan's questions about the product roadmap, and about where Factory trailed its rival, now look different to him [7]. Cognition CEO Scott Wu said his company had no interest in Factory's information [17].

Whether Degnan was fired or quit matters mostly to Degnan and Grinberg. For other boards, the more useful exchange is the one between two people at Khosla Ventures, which has invested in both companies [10]. Partner Keith Rabois argued that interviewing with a direct competitor while attending board meetings and holding board-level information was unethical [8]. That test does not need a proven leak; the overlap itself is the breach. Vinod Khosla took the other side, calling Factory a "struggling second tier competitor" and accusing Grinberg of lying about firing Degnan [9].

Khosla's label has a basis in price. Cognition's valuation is 9.6 times Factory's [23]. The products are also close enough for a roadmap to matter. Factory sells Droid as a model-agnostic coding agent, on plans from $20 a month up to custom enterprise agreements [19]. Cognition sells Devin as an AI software engineer, and the two compete for access to the same codebases, engineering workflows and enterprise customers [20].

According to mezha.net, Degnan's post about the new job did not mention Factory. It said the RPT team and managing partner Chad Peets would work with Cognition [12]. Degnan, Peets and Factory did not respond to TechCrunch's requests for comment, mezha.net reported [22].

What to watch

  • Whether Factory takes legal action or publishes records showing what board material Degnan received during his weeks of talks with Cognition.
  • Whether Cognition answers Grinberg's allegation that its employees feigned interviews to gather Factory product information.
  • Whether Khosla Ventures changes how its people hold observer or adviser seats at portfolio companies that compete with each other.

Clarity's read

What the record supports and how the coverage leans. The claims behind it follow.

Reality

Evidence35
Adoption
Not scored
Hype gap+30
Incentives75
Confidence55
Why these scores

Claim ledger

Ranked by verification strength, evidence, and original report placement.

  1. [1]

    Factory co-founder and CEO Matan Grinberg accused former board observer Chris Degnan of sharing confidential information with Cognition.

    Reported Supported Source: Matan Grinberg on X, as reported by runtimewire.comView cited source
  2. [2]

    Degnan joined Cognition, Factory's coding-agent rival, as chief revenue officer.

    Reported Supported Source: runtimewire.comView cited source
  3. [3]

    Cognition announced a Series E of more than $2 billion at a $48 billion valuation in September, led by Andreessen Horowitz and Accel.

    Reported Supported Source: runtimewire.comView cited source
  4. [4]

    On Wednesday Degnan announced he would take the chief revenue officer post at Cognition.

    Reported Supported Source: mezha.net, citing TechCrunchView cited source
  5. [5]

    Grinberg wrote that for weeks Degnan took part in Factory board meetings and advised the leadership team while sharing information with executives of Factory's biggest competitor.

    Reported Supported Source: Grinberg's X post, in mezha.net's Ukrainian renderingView cited source
  6. [6]

    Grinberg said he does not know how much information Degnan may have passed on or whether he could disclose it later.

    Reported Supported Source: Grinberg, as reported by mezha.net citing TechCrunchView cited source
  7. [7]

    Grinberg said Degnan's persistent questions about Factory's product roadmap and the gap between Factory and its competitor now look different to him.

    Reported Supported Source: Grinberg, as reported by mezha.net citing TechCrunchView cited source
  8. [8]

    Khosla Ventures partner Keith Rabois argued that interviewing with a direct competitor while attending board meetings and holding board-level information was unethical.

    Reported Supported Source: Keith Rabois, as reported by runtimewire.comView cited source
  9. [9]

    Vinod Khosla called Factory a "struggling second tier competitor" and accused its CEO of lying about firing Degnan.

    Reported Supported Source: Vinod Khosla on X, as reported by runtimewire.comView cited source
  10. [10]

    Khosla Ventures has invested in both Factory and Cognition.

    Reported Supported Source: runtimewire.comView cited source
  11. [11]

    Factory said in September it raised $200 million at a $5 billion valuation, with Khosla Ventures, Blackstone, Sequoia Capital and other investors participating.

    Reported Supported Source: Factory, as reported by runtimewire.comView cited source
  12. [12]

    Degnan's post about his new job did not mention Factory but said the RPT team and managing partner Chad Peets would work with Cognition.

    Reported Supported Source: mezha.net, citing TechCrunchView cited source
  13. [13]

    Grinberg wrote that as part of his work with Factory, Degnan was required to comply with confidentiality obligations.

    Reported Supported Source: Grinberg's X post, in mezha.net's Ukrainian renderingView cited source
  14. [14]

    The two accounts went public on September 30.

    Reported Supported Source: runtimewire.comView cited source
  15. [15]

    Degnan denies sharing confidential information and says he resigned on Monday and told Grinberg he was joining Cognition.

    Reported Supported Source: Degnan, as reported by TechCrunch and cited by runtimewire.comView cited source
  16. [16]

    Degnan said he had not attended a recent Factory board meeting while speaking with Cognition.

    Reported Supported Source: Degnan, as reported by TechCrunch and cited by runtimewire.comView cited source
  17. [17]

    Cognition CEO Scott Wu said his company had no interest in Factory's information.

    Reported Supported Source: Scott Wu, as reported by runtimewire.comView cited source
  18. [18]

    The public record described so far does not establish that confidential information was passed to Cognition.

    Reported Supported Source: runtimewire.comView cited source
  19. [19]

    Factory's Droid is positioned as a model-agnostic agent for software development, with public plans from $20 a month for individuals to custom enterprise agreements.

    Reported Supported Source: runtimewire.comView cited source
  20. [20]

    Cognition sells Devin, which it describes as an AI software engineer; the products compete for access to codebases, engineering workflows and enterprise customers.

    Reported Supported Source: runtimewire.comView cited source
  21. [21]

    Degnan previously worked at Snowflake, where he was chief revenue officer for 11 years.

    Reported Supported Source: mezha.net, citing TechCrunchView cited source
  22. [22]

    Degnan, Peets and Factory did not respond to requests for comment.

    Reported Supported Source: mezha.net, citing TechCrunchView cited source
  23. [23]

    Cognition's $48 billion valuation is 9.6 times Factory's $5 billion valuation.

    Derived Supported
  24. [24]

    Grinberg said he ended Degnan's roles as Factory board observer and adviser after learning Degnan had been in recurring discussions with Cognition while advising Factory.

    Reported Contested Source: Grinberg, as reported by runtimewire.comView cited source
  25. [25]

    Grinberg said Degnan first described a conversation with a Cognition executive as casual, then disclosed that the discussions were formal and recurring.

    Reported Contested Source: Grinberg, as reported by runtimewire.comView cited source
  26. [26]

    Grinberg alleged that Cognition employees had feigned interviews to obtain product information; these are allegations, not verified findings.

    Reported Insufficient Source: Grinberg, as reported by runtimewire.comView cited source

Sources

2 independent publishers whose own reporting we read for this story.

  1. mezha.net

    1 article · September 30, 2026

    Співзасновник Factory усунув інвестора через звинувачення у передаванні даних конкуренту
  2. runtimewire.com

    1 article · September 30, 2026

    Factory CEO accuses Cognition's new CRO of sharing confidential information

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