Factory fires board observer after he secretly joined rival Cognition as CRO

Factory fires board observer after discovering he secretly joined rival Cognition

Factory CEO Matan Grinberg terminated Christopher Deignan as board observer and adviser after learning Deignan had been in recurring conversations with Cognition executives while attending Factory board meetings. Deignan has since joined Cognition as Chief Revenue Officer, with the move announced on LinkedIn roughly an hour after Grinberg's termination notice.

Grinberg's statement claimed Cognition engineers "feigned interviews" with Factory to extract product information and that the company, falling behind on cost, quality, and security, decided to "throw their weight and money at people with direct knowledge of our most confidential plans." He framed the move as symptomatic of an erosion of ethics unique to the AI era.

Cognition CEO Scott Wu denied the allegations in a direct response. Wu said Cognition has no interest in Factory's information, that Deignan has never shared any and would never share it, and that Cognition does not ask employees to collect competitor intelligence. Wu acknowledged wanting to hire Deignan—"a living legend with unmatched reputation for results"—and noted that Deignan had told Grinberg he was resigning as adviser on Monday. Wu also pointed out that Deignan advises at least 10 companies, positioning the move as normal executive mobility rather than poaching.

The disputed timeline and the real issue

The sequence matters. Grinberg told Deignan he had spoken casually with Cognition, accepted his reassurance that he was too comfortable financially to leave, and then on Monday—during a board meeting—Deignan confessed the casual conversation had actually been formal and recurring for weeks. Grinberg terminated him the next day and announced it publicly. Deignan's LinkedIn change went live roughly an hour before or after the termination announcement, depending on timing—creating the impression of a counter-move ("You're not quitting, I fire you").

What's explicitly unresolved: there is no smoking gun. No evidence in the transcript shows that confidential Factory information was actually shared. Both Cognition and Factory are operating in the same market and almost certainly have accounts with each other's products, interview customers of competitors, and test feature parity. The competitive intelligence gathering that Grinberg describes as unethical is standard practice across the category.

The real vulnerability

What changes when an adviser becomes a full-time CRO is contact leverage. As a part-time adviser, Deignan could introduce Factory to a customer and claim limited bandwidth. As Cognition's Chief Revenue Officer, he can now work those same relationships with his full resources, institutional backing, and title. That's the concrete loss Factory faces—not necessarily stolen secrets, but mobilized networks.

Both companies are scaling rapidly in code generation. The market is large enough that Grinberg and Wu both noted this need not be zero-sum. Yet the public dispute and the timing of the announcement suggest Grinberg felt compelled to fire Deignan before Deignan could control his own narrative—a move that backfired when Wu's response was measured, factual, and notably more disciplined than Grinberg's ethical scolding. Wu did not deny competition; he denied wrongdoing and took the higher rhetorical ground.