Factory CEO Says Former Adviser Had Confidentiality Concerns After Joining Cognition

Factory CEO Matan Grinberg alleged that former board adviser Chris Degnan shared confidential information with Cognition, a rival AI coding company that hired Degnan as chief revenue officer on Wednesday.

Grinberg said he removed Degnan from the adviser role Tuesday after Degnan disclosed that he had been in ongoing talks with Cognition. Degnan announced the new position two hours after Grinberg’s post.

Grinberg said Degnan had previously acknowledged a casual conversation with a Cognition executive but told him he was not interested in joining the company. Degnan also allegedly said he had made too much money and was too lazy to work for Cognition, Grinberg said.

The Factory CEO said Degnan had confidentiality obligations and that Factory did not know how much information, if any, he had shared. Grinberg described Cognition, the maker of the Devin coding agent, as Factory’s biggest competitor.

Degnan’s announcement did not mention Factory. It said RPT Ventures and managing partner Chad Peets would work with him at Cognition.

Factory, a San Francisco-based AI coding startup, raised $200 million at a $5 billion valuation earlier in September. Its customers include Nvidia, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe and T-Mobile.

Cognition raised $2 billion earlier in September at a $48 billion valuation. Its customers include Mercedes-Benz, NASA, Goldman Sachs and Citi.

Grinberg said the dispute damaged the trust expected of board advisers and startup leaders.