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Two rival AI companies in Silicon Valley fight over poaching of an employee.
Cognition and Factory AI, two rival AI coding startups of Silicon Valley, made a public spectacle when the CEOs fought it out on X over an employee, Chris Degnan. FactoryAI announced that they fired Chris as he was passing information to rival Cognition.
Cognition's CEO said it never happened; he is not after rivals' sensitive information. Chris Degnan served as a Board Observer and Advisor to Factory AI.The announcement was a detailed statement made by Factory CEO Matan Grinberg who took a potshot at Cognition and accused Cognition of getting his company's information secretly. Grinberg said Cognition is a much larger competitor, but the company has fallen behind Factory AI and now they are feigning interviews to pry for information.
"Not finding what they were looking for, Cognition has decided to throw their weight and money at people with direct knowledge of our most confidential plans," the allegation read."It feels as though ethics is being thrown out of the window in the AI era. People are willing to do anything, including exploiting privileged information and violating ethical boundaries. I think this is unique to our time, and I don’t think it’s right.
Integrity still matters," it said.
What is the case of Chris Degnan who claimed to 'have made too much money'?
Going by Matan's version, Chris informed him that he had a casual conversation with the rival company. Matan said he asked whether he wanted to leave Factory and join Cognition. Chris apparently told him that he had already made too much money and was too lazy to go work for Cognition.But then Chris informed his boss that his talks with Cognition had turned serious."For weeks, while he sat in our board meetings and advised our leadership team, he was also confiding with executives of our largest competitor.
Chris was subject to confidentiality obligations in connection with his work with Factory. We do not know the extent of the information he shared, but it puts his timely questions about our product roadmap and what the parity gap involves into a new light," Chris's boss wrote."Competition is good. I respect and in many cases admire our competitors. San Francisco is a beautiful, singular place where the bold and ambitious go to defy the norms and precedents of the past.
But certain principles that must remain. Violating ethics to seek advantage turns what should be positive-sum into zero-sum."
Reply from rival Cognition
Scott Wu, the CEO of Cognition, issued a rejoinder to the allegations leveled against his startup and said they never asked for any secret information. They wanted to work with Chris for good reason. "We have no interest in Factory’s info and Chris has never brought it up. He has not shared and would never share any information about you or Factory with our team, nor would we ever ask.
Similarly, we would never ask our engineers or anyone on our team to collect info about any competitor under-the-table.
Chris is an advisor to at least 10 companies, and he told you he was resigning as an advisor on Monday," Wu said."The truth is we both wanted Chris and for good reason - he is a living legend with an unmatched reputation for results and integrity. Not only is he the only person who has built a sales org from the first sales hire to over 3B, he also has built incredible teams that he cares deeply about.
His people love working for him," Wu added.
Vinod Khosla rebukes Factory AI CEO
As the online fight gained steam, Vinod Khosla stepped in and delivered a slap on the wrist to Cognition's CEO. "You are a struggling second tier competitor that is more unethical and lying just because you have no decency or sense of proper behavior and shows your desperation. Straight out lying about if Chris being fired I thought would be below even you," Khosla wrote to Matan.Social media users were shocked as Khosla is a key investor in Factory. But then, he is also an investor in Cognition.
'Living legend' speaks up
Chris Degnan, the man referred to as 'living legend' with two companies sparring over him spoke out amid the row. He said he was not fired from Factory, he resigned and he informed his boss that he was going to Cognition. He said Matan asked him to consider a full-time role in Factory which he declined."You claim that I sat through a board meeting while ‘confiding’ in executives at Cognition. The last board meeting I attended was weeks before I had ever spoken to Cognition. Cognition has never asked about information on Factory, nor would I ever give it," Degnan said.
