The Accusation
It’s giving messy board meeting energy. Matan Grinberg, the CEO and co-founder of AI coding startup Factory, dropped a bombshell on X Wednesday. He claims he fired Chris Degnan, a VC board adviser, for allegedly feeding confidential info to Factory’s biggest competitor, Cognition. Factory and Cognition are both major players in the agentic coding space, which is basically the new frontier of AI doing the heavy lifting in programming.
He Said, He Said
Grinberg alleges that Degnan had been having "casual" talks with Cognition execs for weeks while sitting in on Factory’s confidential board meetings. When Grinberg confronted him, he claims Degnan dismissed the idea of working for the rival, saying he had "made too much money" and was "too lazy" to take the job.
Fast forward to this week, and the plot thickens: Degnan confirmed he’s joining Cognition as their Chief Revenue Officer. Degnan is pushing back hard on the "fired" narrative. He insists he resigned on Monday and claims Grinberg actually tried to pivot and offer him a full-time gig at Factory instead—an offer he says he turned down. Degnan maintains he never shared any secret sauce.
The Silicon Valley Pile-On
Things got weirdly heated on social media. Vinod Khosla—whose firm, Khosla Ventures, somehow backs both companies—stepped into the fray. He went after Grinberg, calling Factory a "struggling second tier competitor" and accusing him of lying about the termination. Meanwhile, Factory backer and Khosla Ventures partner Keith Rabois took the opposite stance, calling it "unethical per se" to interview with a competitor while holding a board seat.
Even Cognition CEO Scott Wu joined the discourse, politely insisting his company has no interest in Factory’s internal data.
Why it matters
This isn't just spicy boardroom drama; it’s a massive L for professional trust. Startups rely on board members as a "sacred bond" to guide them safely. If that trust is broken by people playing both sides—or just job-hunting at the competition—the whole ecosystem gets shaky. Plus, with the DOJ already eyeing how VCs serve on multiple competitor boards, this kind of behavior is only going to bring more heat to the Valley.
