Factory fires Chris Degnan after alleging Cognition-related misconduct

Factory said it was firing board observer and adviser Chris Degnan over alleged conduct involving Cognition, after accusing him of discussing a job at the company while he had access to Factory board-level discussions. TechCrunch reported the allegation and the company’s stated reason for the move. Factory described the matter as “unethical conduct involving Cognition.”

Degnan disputed Factory’s account of his status, saying he had already resigned. He also denied sharing confidential information. He later announced that he was joining Cognition as chief revenue officer. The available account does not establish whether Degnan shared confidential material; the claim that he discussed a job while privy to board discussions is Factory’s allegation. The dispute sits alongside a broader concern raised by Benchmark partners about venture capital’s unwritten convention against backing companies that compete directly. Speaking to TechCrunch Disrupt, the partners said the AI boom is weakening that convention. The article describes the rule as an informal pact, rather than a formal restriction. Eric Vishria said rapid changes at companies are producing conflicts between portfolio businesses. He characterized those conflicts as part of the current environment, rather than as an exceptional preference. Vishria also said Benchmark remains committed to each founder and keeps confidential what it learns through its relationships with companies. Vishria addressed the limits of what venture investors can contribute to competing businesses, saying, “We are not product or technology experts.” He also said Benchmark had avoided what he called “that type of insane direct conflict,” seemingly referring to the Factory-Cognition dispute. That characterization was Vishria’s; the article does not establish that Benchmark was involved in the dispute. Chetan Puttagunta said artificial intelligence is accelerating the problem. Taken together, the comments describe a tension between maintaining founder relationships and investing in companies whose businesses may conflict as they change. The article does not specify a formal industry rule or a process for resolving such conflicts. Factory’s allegation, Degnan’s denial and resignation account, and his subsequent move to Cognition remain the central documented positions in the dispute.