Factory and Cognition CEOs Feud Over ‘Unethical Conduct’ Claims

The head of artificial intelligence coding startup Factory is publicly feuding with the top executive at larger rival Cognition AI Inc. over allegations that a Factory adviser was involved in what he described as “unethical conduct” allegedly connected to Cognition.

The public spat between these two companies, both with multi-billion dollar valuations, underscores the intense rivalry among startups that develop automated coding tools — one of the most potentially lucrative areas of the AI race. In September, Cognition closed a new funding round at a $48 billion valuation; that same month Factory also raised money at a $5 billion valuation.

Some of Silicon Valley’s most prominent and outspoken venture capitalists joined the online feud, including Khosla Ventures founder Vinod Khosla — whose firm has backed both startups — and Sequoia Capital’s Shaun Maguire — who has invested in Factory.

Factory Chief Executive Officer Matan Grinberg said in an X post Wednesday that he terminated his company’s arrangement with Christopher Degnan, who had been an adviser at the firm for about a year. Degnan had been in informal talks with executives at Cognition while being privy to confidential conversations about Factory’s business, Grinberg alleged.

“It is sad to sever a relationship with someone who has been a trusted advisor - and even a close friend - for over a year. But Chris’s conduct is unacceptable to me,” Grinberg wrote.

Degnan refuted Grinberg’s claims in a post also shared on X, saying that he resigned from his role at Factory on Monday and declined an offer for a full-time position at the company. “Cognition has never asked about information on Factory, nor would I ever give it,” Degnan wrote.

Later that day, Cognition’s CEO, Scott Wu, also dismissed Grinberg’s claims. Wu said on X that he and his startup “have no interest in Factory’s info and Chris has never brought it up. He has not shared and would never share any information about you or Factory with our team, nor would we ever ask.”

Khosla soon joined the fray, posting on X that Grinberg’s comments show his “desperation.” That day, Maguire also posted, writing, “What Cognition doesn’t understand is that we’re sitting on a nuclear weapon to end them.”

Maguire didn’t provide comment, and representatives for Khosla didn’t respond to a request for comment.

Grinberg aired the allegations on social media shortly before Degnan, who had previously worked as chief revenue officer at Snowflake Inc., announced he had joined Cognition as its chief revenue officer.

Cognition’s Chief Legal and Global Affairs Officer, Paul Grewal, said in a statement, “We have never tried to get confidential information on Factory. We hired Chris for the obvious reason that he is widely known as one of the world’s best sales leaders.”

A representative for Factory didn’t reply to a request for comment. Grinberg and Degnan also didn’t reply to requests for comment.