The chief executive of Factory AI said on Wednesday that the company had terminated an adviser’s role after learning he had been holding recurring conversations with executives at its chief rival, Cognition, while advising Factory on confidential matters, touching off a public feud between two of the best-funded A.I. coding startups.
The adviser, Chris Degnan, sat in on Factory board meetings as a board observer and is joining Cognition as chief revenue officer, the same title he once held at Snowflake. Both San Francisco startups build A.I. coding agents for enterprise customers: Cognition makes Devin, billed as an autonomous software engineer, and Factory sells tools that deploy A.I. agents across the development process.
“It feels as though ethics is being thrown out of the window in the AI era,” Matan Grinberg, Factory’s chief executive, wrote on X. “For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor.” Mr. Grinberg also accused Cognition employees of faking job interviews with Factory to obtain internal information, then recruiting people with knowledge of its confidential plans.
Mr. Degnan, who advises several startups, denied the accusations in his own X post. He said he had resigned from Factory this week and had told Mr. Grinberg he was joining Cognition, and that Mr. Grinberg had asked him to consider a full-time position at Factory, which he declined. “Cognition has never asked about information on Factory, nor would I ever give it,” he wrote.
Scott Wu, Cognition’s chief executive, disputed the account as well. “We would never ask our engineers or anyone on our team to collect info about any competitor under-the-table,” he wrote on X. Mr. Grinberg, Mr. Degnan and Cognition did not respond to requests for comment from Business Insider, which reported the dispute.
The clash arrives weeks after both companies announced major funding rounds. Factory said earlier this month that it had raised $200 million at a $5 billion valuation. Days before that, Cognition raised more than $2 billion at a $48 billion valuation.
The fight pulled in prominent investors, on opposite sides. Vinod Khosla, whose firm Khosla Ventures backed Cognition and led Factory’s previous round, wrote on X that Factory was a “struggling second tier competitor” acting out of desperation. Keith Rabois, a managing director at the same firm, took Factory’s side: “It is unethical per se to even interview at a competitor while attending Board meetings and Board dinners,” he wrote.
Board members in Silicon Valley have left over competitive conflicts before, though seldom this loudly. Eric Schmidt resigned from Apple’s board in 2009 as Google and Apple became direct competitors, and Reid Hoffman stepped down from OpenAI’s board in 2023, citing potential conflicts involving his other investments and A.I. startup activities.