Factory CEO just accused his VC board adviser of spying for Cognition

[upbeat music] This is TechCrunch.

Hey there, I'm Travis Hoyum, one of the hosts of Motley Fool Hidden Gems Investing. Each weekday on Motley Fool Hidden Gems Investing, we talk through the business news you need to know and the stories moving stocks on Wall Street. On weekends, we game plan personal finance strategies and dive into the industries shaping tomorrow and host the experts, authors, and executives that understand them. Tune in for insights and a long-term perspective on investing and, of course, stock ideas, plenty of them. To quote a listener, "It pays to listen." Check us out and subscribe wherever you listen to podcasts.

Matan Grinberg, co-founder and CEO of the AI coding startup Factory, said in a post on X on Wednesday that he fired VC Chris Denien from his role as a board advisor. Grinberg alleges that Denien shared confidential information with Factory's biggest competitor, Cognition. Two hours after Grinberg's post, Denien announced on both X and LinkedIn that he had joined Cognition as its chief revenue officer. He also subsequently refuted Grinberg's allegations, saying in a separate X post that he was not fired but resigned when he told Grinberg he was taking the job. Denien was Snowflake's first sales hire and later spent eleven years as the data company's chief revenue officer. For the past five months, he has been a partner with RPT Partners, a Newport Beach, California investor in Factory. Denien is also a go-to-market advisor to startups at the much bigger venture firm Iconic, a role that dates back to October of last year. Three-year-old San Francisco-based Factory is an agentic coding startup whose AI agents can carry out programming tasks largely on their own. The company raised two hundred million dollars at a five billion dollar valuation this month from Khosla Ventures, Blackstone, Sequoia Capital, Insight Partners, and others. Its customers include NVIDIA, Blackstone, Royal Bank of Canada, Palo Alto Networks, Adobe, and T-Mobile. Grinberg says he sees Cognition, the maker of the Devin coding agent, as his biggest competitor. Cognition raised another two billion dollars at a forty-eight billion dollar valuation earlier this month and counts Mercedes-Benz, NASA, Goldman Sachs, and Citi as customers. Grinberg said on X that Denien had earlier acknowledged having a casual conversation with a Cognition executive but had assured Grinberg that he had no interest in working for the competitor. According to Grinberg, Denien said he had made too much money and was too lazy to go work for Cognition, which Grinberg said he trusted and believed. Well, on Monday, Denien apparently disclosed that he had actually been in ongoing talks with Cognition. This caused Grinberg to grow concerned about how much confidential information Denien had about Factory and how much he had shared and might share in the future with his new employer. He says he fired Denien as a board advisor on Tuesday, writing, "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.