Key Takeaways

  • Khosla Ventures backed both Factory and Cognition, sparking an open dispute when talent moved between the competing AI coding startups.
  • Vinod Khosla attacked Factory on social media, calling the team a “struggling second tier competitor” over statements about an advisor's exit.
  • Keith Rabois argued that interviewing with a competitor while attending board meetings and dinners is unethical per se.
  • John Coogan backed Rabois on board governance rules, while Jordi Hays pointed out that constant talent poaching with zero IP protection is already standard across AI research labs.

The Disagreement

When an advisor shifted from AI coding startup Factory to competitor Cognition, venture capitalist Vinod Khosla went on the attack. He blasted Factory publicly on social media, claiming the company lied about whether the departure was a firing. As Jordi Hays noted, “What really got people up in arms was Venode coming in and saying 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.”

The tension escalated because Khosla Ventures had money on both sides of the table. “It only took about 20 seconds for people to put it together that Coastal Ventures is of course an investor in factory and cognition and like a pretty big one,” Hays pointed out.

The spat split tech observers into two camps: board governance purists versus operational talent realists.

On the governance side, Keith Rabois took a hard line against insiders playing both sides during high-stakes hiring moves. John Coogan agreed with that standard: “Keith said it is unethical per se to even interview at a competitor while attending board meetings and board dinners. And I read this and I was like, 'Yeah, I think that's right. I think I agree with that.'” For Coogan and Rabois, sitting in a boardroom gives an insider access to product roadmaps, pipeline data, and runway figures. Taking interviews with a direct rival while holding that trust crosses an ethical line.

Hays viewed the clash through the reality of aggressive tech hiring. In his view, an advisor jumping between two coding startups is minor compared to the poaching wars happening inside research labs. Hays pointed out that “when you look at what's happening on the research side where aggressive constant aggressive poaching around truly like companies developing truly novel IP that basically have no protections where you can work at a company for 5 years learn a bunch about what they do get poached and bring all of that knowhow over to a new company within the same 24-hour period.” Because researchers jump ship daily with unreleased architecture in their heads, Hays argued that “an adviser that gets poached doesn't feel like a big deal at all to me in the context of everything else that's been happening.”

Who's Right (and When They're Wrong)

Rabois and Coogan are right about formal governance, but Hays is right about early-stage market dynamics.

If someone holds a formal board seat or observer rights, Rabois is correct. You cannot sit in a closed strategy session on Monday and interview with a direct competitor on Tuesday. Fiduciary duty exists precisely to stop corporate espionage disguised as casual career exploration. Historical board disputes at Apple and Google proved decades ago that shared board presence across competing platforms creates toxic conflicts.

Where the governance view fails is when founders confuse formal board directors with informal advisors. Advisors rarely sign strict fiduciary agreements, and many early startups hand out advisor equity loosely to industry operators.

If you run an AI company, you must assume every non-board advisor and engineer is a flight risk. Pretending that venture etiquette will protect your product plans is naive. In AI tooling, distribution velocity and shipping speed protect you, not angry social media posts from your lead investor.

What to Do With This

Audit your cap table and advisor roster by Friday afternoon. Identify anyone who holds advisor equity or attends team syncs while advising or interviewing across competing teams. Send them an updated agreement with an explicit conflict-of-interest carveout, or pull their access to internal product roadmaps and pipeline metrics immediately.