Factory CEO just accused his VC board adviser of spying for Cognition

Grinberg publicly said Degnan, a former Snowflake CRO and current partner at RPT Partners, was advising Factory while simultaneously confiding with executives at Cognition, the maker of the Devin coding agent. Factory, a three‑year‑old San Francisco startup that raised $200 million at a $5 billion valuation, claims Degnan’s dual loyalty jeopardized its product roadmap. Degnan refuted the firing, stating he resigned before taking the Cognition job and that Factory even offered him a full‑time position, which he declined. The dispute quickly drew fire from Khosla Ventures founder Vinod Khosla, who labeled Factory a “struggling second‑tier competitor,” and from Andreessen Horowitz partner Keith Rabois, who called interviewing a rival while on a board “unethical.”

The clash underscores a growing tension in the AI‑driven software sector where venture firms often back multiple competing startups. Both Factory and Cognition count heavyweight customers—Factory counts Nvidia, Adobe and T‑Mobile, while Cognition lists Mercedes‑Benz, NASA and Goldman Sachs—and share investors such as Khosla Ventures. This overlap creates a gray area for board members who are also venture partners; the traditional expectation that board advisers keep proprietary information confidential is being tested by the rapid pace of AI talent moves and the lure of lucrative CRO roles at fast‑growing rivals.

The fallout could affect several fronts. Factory may face heightened scrutiny from existing investors, potentially complicating follow‑on financing despite its recent $200 million round. Degnan’s transition to Cognition raises questions about whether any trade‑secret claims could trigger litigation, especially given his prior fiduciary duties to Factory. Moreover, the public spat may prompt VC firms to tighten conflict‑of‑interest policies, as regulators have already signaled interest in board memberships that span competing AI firms. Watch for any formal cease‑and‑desist letters, adjustments in RPT Partners’ portfolio allocations, and whether Cognition’s board will address the perception of insider advantage.