Vinod Khosla, founder of Khosla Ventures, drew criticism after publicly siding with Cognition against Factory AI, two rival AI coding startups in which his firm has invested. Khosla called Factory a "struggling second tier competitor" and accused its founder of lying out of "desperation" after Factory CEO Matan Grinberg said the company was terminating Chris Degnan, its board observer and advisor, over "unethical conduct involving Cognition." Degnan said he had resigned before any termination and denied sharing Factory information with Cognition before joining Cognition as chief revenue officer. Cognition CEO Scott Wu also denied asking employees to gather competitor information "under-the-table." The dispute unfolded on X, prompting criticism from founders and investors and highlighting the increasingly common practice of venture firms backing competing AI companies.