Factory CEO Accuses Former Advisor of Corporate Espionage
Matan Grinberg, the CEO of Factory AI, has made serious allegations against former board advisor Chris Degnan, accusing him of breaching confidentiality by maintaining communications with rival Cognition AI. Degnan has recently accepted a position as Cognition's chief revenue officer, a move that has sparked controversy and raised questions about the ethical boundaries in the fast-paced AI industry.
On September 30, 2026, Grinberg terminated Degnan's role as a board observer and advisor at Factory, citing concerns over potential breaches of confidentiality linked to Degnan's interactions with Cognition. Degnan had been serving in this advisory capacity since November 2025, which provided him with significant insight into Factory's strategic plans and competitive positioning.
Grinberg's primary concern revolves around the access Degnan had to sensitive information. He alleges that Degnan participated in high-level discussions regarding Factory's product roadmap and market strategy, leaving the company uncertain about the extent of information that may have been disclosed to Cognition.
In response to the allegations, Degnan has firmly denied any wrongdoing. He asserts that he resigned from Factory prior to accepting the offer from Cognition, framing his departure as voluntary rather than a dismissal. Furthermore, Degnan claims that he did not share any proprietary information with Cognition, stating that the company did not request such information from him.
Degnan's Professional History and Impact
Degnan's background adds another layer to this unfolding drama. Before his tenure at Factory, he gained recognition at Snowflake, where he played a pivotal role in scaling the sales team to a leading position in the market. This experience made him a valuable asset for both Factory and Cognition, with the latter evidently eager to leverage his expertise by appointing him as chief revenue officer.
Final Assessment
Both Factory and Cognition are engaged in developing autonomous coding agents, software designed to perform programming tasks with minimal human intervention. Factory has recently gained momentum, having raised $200 million in September 2026, achieving a valuation of $5 billion and bringing its total funding to over $400 million. Notable clients of Factory include major players such as Nvidia, Blackstone, and Palo Alto Networks.
Cognition, on the other hand, was founded in 2023 and quickly reached unicorn status in 2024, boasting a valuation of at least $1 billion, largely attributed to its Devin AI coding agent. The competitive landscape in the AI sector is intensifying, and the allegations of espionage highlight the ethical dilemmas that can arise in such a rapidly evolving industry.
