The high-stakes artificial intelligence coding race has erupted into a bitter public feud. Matan Grinberg, co-founder and CEO of the San Francisco-based startup Factory, publicly accused his former board adviser, Chris Degnan, of sharing confidential company secrets with primary competitor Cognition. The explosive accusations, broadcast across X on Wednesday, September 30, 2026, have sent shockwaves through Silicon Valley. This dispute has drawn sharp divisions among prominent venture capitalists and highlighted growing anxieties over conflicts of interest in the tech sector.
- The Competing Narratives: Fired or Resigned?
- High Stakes in the Autonomous Coding Market
- Venture Capital Heavyweights Clash Online
- Frequently Asked Questions
- Who is Matan Grinberg?
- What accusations were made against Chris Degnan?
- How did Chris Degnan respond to the allegations?
- What are the valuations of Factory and Cognition?
- Which venture capital firms are involved?
The public dispute centers around Degnan’s sudden transition to Cognition-the developer behind the viral AI coding agent Devin-where he assumed the role of chief revenue officer. According to Grinberg, the fallout began when leadership discovered that Degnan had been holding ongoing discussions with Cognition executives while simultaneously sitting in on sensitive board meetings and advising Factory’s leadership team.
Grinberg stated that Degnan had previously acknowledged having only a “casual” conversation with a Cognition representative. Degnan had assured Factory leadership that he had “made too much money” and was “too lazy to go work for Cognition.” Trusting these assurances, Grinberg kept Degnan in his advisory role. However, on Monday, September 28, 2026, Degnan reportedly disclosed that he had been in active talks with the rival firm, leading Grinberg to formally terminate his advisory and board observer position on Tuesday.
“For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor,” Grinberg wrote on X. “Chris was subject to confidentiality obligations in connection with his work with Factory. We do not know the extent of the information he shared, but it puts his timely questions about our product roadmap and what the parity gap involves into a new light.”
The Competing Narratives: Fired or Resigned?
The narrative put forward by Factory’s leadership is fiercely disputed by Degnan and other industry figures. Just two hours after Grinberg’s initial post, Degnan took to X and LinkedIn to announce his new position as Cognition’s chief revenue officer, while vehemently denying the corporate espionage claims.
Degnan stated that he was not fired by Grinberg. Instead, he chose to resign on Monday when he informed the CEO that he was accepting the position at Cognition. Degnan claimed that Grinberg subsequently offered him a full-time executive role at Factory during their conversation-an offer Degnan says he declined.
Regarding the timeline of events, Degnan maintained that the last Factory board meeting he attended took place weeks before he had ever spoken with Cognition. He firmly asserted that he never shared any proprietary data or confidential company information with his new employer, adding that Cognition never requested such information.
Cognition co-founder and CEO Scott Wu also weighed in on the unfolding controversy to defend his company’s integrity. While expressing professional respect for Factory, Wu insisted that Cognition has “no interest in Factory’s info.” He stated that the firm would never ask anyone on its team to covertly gather competitor intelligence.
High Stakes in the Autonomous Coding Market
The bitter clash underscores the immense financial stakes and cutthroat competition within the burgeoning market for autonomous AI coding agents. These software tools are designed to handle complex programming tasks with minimal human intervention.
Factory recently completed a major funding cycle, securing $200 million in September 2026 at a $5 billion valuation. It operates with backing from prominent venture capital firms including Khosla Ventures, Blackstone, Sequoia Capital, and Insight Partners. The startup serves heavy-hitting enterprise clients such as Nvidia, Blackstone, the Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile.
Meanwhile, its primary rival, Cognition, stands as a massive industry heavyweight. The company achieved a staggering $48 billion valuation following a $2 billion funding round earlier in September. It boasts enterprise customers like Mercedes-Benz, NASA, Goldman Sachs, and Citi.
Degnan brings considerable pedigree to Cognition, having spent 11 years as the chief revenue officer at data giant Snowflake. There, he built and scaled the company’s enterprise sales machine. His move to Cognition also brings along RPT Partners, a Newport Beach-based investor in Factory where Degnan serves as a partner, alongside managing partner Chad Peets.
Venture Capital Heavyweights Clash Online
The dispute quickly drew commentary from some of Silicon Valley’s most prominent venture capitalists. It exposed deep ideological fractures regarding venture investments in competing AI startups.
Vinod Khosla, founder of Khosla Ventures-which is an investor in both Factory and Cognition-jumped into the online debate. Khosla accused Grinberg of fabricating claims that Degnan was fired. He labeled Factory a “struggling second tier competitor” and argued that Grinberg’s public outbursts demonstrated desperation and a lack of proper decorum.
Conversely, Khosla Ventures partner Keith Rabois strongly defended Factory. He wrote on X that “It is unethical per se to even interview at a competitor while attending Board meetings and Board dinners.” Rabois added that maintaining access to board-level secrets while holding active employment discussions with a rival is completely unacceptable.
Grinberg maintained that foundational trust between founders and board members is a sacred pillar of the Silicon Valley ecosystem. As regulatory scrutiny mounts over potential conflicts of interest-such as reported Department of Justice probes into venture capitalists serving on competing startup boards-the Factory-Cognition fallout serves as a stark warning about the fragile boundaries of corporate governance in the age of generative AI.
Frequently Asked Questions
Who is Matan Grinberg?
Matan Grinberg is the co-founder and CEO of Factory, an artificial intelligence startup specializing in agentic coding solutions.
What accusations were made against Chris Degnan?
Factory CEO Matan Grinberg accused Chris Degnan-a former board observer and adviser to Factory-of sharing confidential company information and product roadmap details with rival firm Cognition before taking a job there as chief revenue officer.
How did Chris Degnan respond to the allegations?
Degnan denied all allegations of sharing confidential information. He stated that he resigned from Factory voluntarily rather than being fired, and noted that his last board meeting took place weeks before he entered discussions with Cognition.
What are the valuations of Factory and Cognition?
Factory is valued at $5 billion following a $200 million funding round, while Cognition holds a $48 billion valuation after securing a $2 billion funding round.
Which venture capital firms are involved?
Khosla Ventures is an investor in both Factory and Cognition. Other notable backers include Blackstone, Sequoia Capital, Insight Partners, and RPT Partners.
