Key facts
- Factory CEO Matan Grinberg accused Cognition engineers of feigning interviews to learn about Factory's product.
- Grinberg alleged Degnan, while advising Factory, was confiding with Cognition executives.
- Degnan announced he was joining Cognition as chief revenue officer on September 30.
- Cognition CEO Scott Wu denied that Degnan shared any information or that Cognition solicited it.
- Sequoia partner Shaun Maguire, an investor in Factory, made public statements supporting Factory's claims.
Factory AI and Cognition AI Inc., two prominent AI coding startups, are engaged in a public dispute over allegations of unethical conduct. The conflict centers on Chris Degnan, a former adviser and board observer for Factory, who announced on September 30 that he was joining Cognition as chief revenue officer.
Factory CEO Matan Grinberg stated on X that Factory was terminating Degnan for unethical conduct involving Cognition. Grinberg alleged that Cognition engineers feigned job interviews to obtain information about Factory's product and that Degnan, while advising Factory, was also communicating with Cognition executives. Grinberg noted that Factory does not know the extent of information Degnan may have shared.
Less than an hour after Grinberg's announcement, Degnan stated he had resigned from Factory and informed Grinberg of his move to Cognition. Cognition CEO Scott Wu denied the allegations, asserting that Degnan had not shared and would not share any proprietary information about Factory, nor did Cognition solicit such information. Wu also stated Degnan had informed Grinberg of his resignation.
Sequoia partner Shaun Maguire, whose firm backs Factory, escalated the public exchange with posts on X, comparing Cognition to Infosys and suggesting Factory possessed significant leverage. Vinod Khosla, founder of Khosla Ventures, which has invested in both companies, publicly sided with Cognition, calling Factory a "struggling second tier competitor" and accusing its founder of lying out of desperation.
Both companies have recently secured substantial funding. Factory raised $200 million at a $5 billion valuation on September 15, while Cognition reported its run-rate revenue grew from $492 million to nearly $900 million since May.