Billionaire investor Vinod Khosla has publicly accused Factory, a $5 billion AI coding startup he backs, of lying about the departure of adviser Chris Degnan. Factory CEO Matan Grinberg claimed Degnan was terminated for "unethical conduct" involving rival Cognition, where Degnan was allegedly having secret discussions. Degnan disputed this, saying he resigned to join Cognition. Khosla, who invests in both companies, defended Degnan and called Factory "a struggling second tier competitor" lacking decency. The dispute highlights fierce competition for talent in AI coding agents. Factory raised $200 million in September at a $5 billion valuation, whilst Cognition secured $2 billion at a $48 billion valuation with a nearly $900 million revenue run rate.

Two AI startups, Factory AI and Cognition, are feuding over Chris Degnan's departure from Factory to join Cognition as chief revenue officer. Factory CEO Matan Grinberg alleges Degnan held conversations with Cognition executives while advising Factory on confidential matters and claims Cognition employees faked interviews to access internal information. Degnan denied the allegations, stating he resigned and informed Grinberg about joining Cognition. Cognition CEO Scott Wu rejected claims that employees posed as candidates to gather information. The dispute follows major funding rounds for both companies. Factory recently raised $200 million at a $5 billion valuation, whilst Cognition secured over $2 billion at a $48 billion valuation. Both San Francisco-based startups build AI coding agents for enterprise customers.

Matan Grinberg, CEO of AI coding startup Factory, accused board advisor Chris Degnan of sharing confidential information with competitor Cognition. Grinberg fired Degnan on Tuesday after learning he had been in ongoing talks with Cognition while attending Factory board meetings. Two hours after Grinberg's announcement on X, Degnan revealed he joined Cognition as chief revenue officer. Degnan was a partner at RPT Partners, an investor in Factory. Factory raised $200 million at a $5 billion valuation this month from Blackstone, Khosla Ventures, Sequoia Capital and others. Cognition recently raised $2 billion at a $48 billion valuation. Degnan had allegedly assured Grinberg he wasn't interested in joining Cognition, claiming he had "made too much money" and was "too lazy" to work for the competitor. Degnan's announcement notably stated that RPT Ventures would now work with Cognition.