Matan Grinberg, CEO of Factory AI, accused rival Cognition of employing unethical tactics to poach board observer Chris Degnan, alleging the larger competitor feigned job interviews to pry into Factory’s confidential plans. Grinberg stated that Degnan, who served as a board observer and advisor, was fired after revealing he had engaged in serious talks with Cognition executives while still holding privileged access to Factory’s strategic discussions.
The dispute erupted into a public shouting match on X, with Grinberg characterizing the incident as a violation of ethical boundaries unique to the current AI era. "It feels as though ethics is being thrown out of the window," Grinberg wrote, claiming Cognition was exploiting the competitive gap to gain an unfair advantage. He emphasized that while competition is healthy, violating confidentiality obligations turns a positive-sum market into a zero-sum game.
Scott Wu, CEO of Cognition, issued a sharp rebuttal, denying any attempt to solicit Factory’s information. Wu described Degnan as a "living legend" with a proven track record of building sales organizations, stating that Cognition sought him for his expertise and integrity, not his insider knowledge. "We have no interest in Factory’s info and Chris has never brought it up," Wu asserted, adding that Degnan had formally resigned his advisory role on Monday before the public dispute began.
The controversy drew the attention of Vinod Khosla, a prominent investor in both companies. Khosla took to social media to rebuke Grinberg, labeling him a "struggling second-tier competitor" who resorted to lying due to desperation. Khosla’s intervention highlighted the complex web of financial interests in Silicon Valley, where investors often hold stakes in direct rivals, complicating public disputes between founders.
Degnan himself entered the fray, clarifying that he resigned voluntarily rather than being fired. He denied attending board meetings while concurrently negotiating with Cognition, stating his last board appearance occurred weeks before any contact with his new employer. "Cognition has never asked about information on Factory, nor would I ever give it," Degnan stated, reinforcing Wu’s defense.
The incident underscores the intense talent wars in the AI coding sector, where key personnel often hold stakes in multiple competing ventures. As the companies continue to compete for market share, the public nature of this dispute may draw regulatory scrutiny regarding non-compete agreements and the handling of confidential information in the tech industry.