Runlayer and Rippling drop dueling lawsuits, but the fight is a warning for founders

Rippling marked the moment by immediately releasing its own MCP gateway — the product at the center of the dispute, and one that now competes directly with Runlayer’s. An MCP gateway sits between AI agents and a company’s other software systems, securely routing requests for data (say, a hiring manager asking an AI agent for details on top candidates) rather than granting agents direct access, while adding features like role-based access control and usage logging.

The backstory: Runlayer, an early-stage startup that launched out of stealth in November 2025 and has raised $42 million from investors including Khosla Ventures’ Keith Rabois and Felicis, is led by third-time founder Andrew Berman, whose past companies include baby-monitor maker Nanit and video-conferencing tool Vowel, sold to Zapier in 2024. Rippling tested Runlayer’s gateway for more than a year, with the two engineering teams working closely together, but never signed on as a customer, according to Runlayer’s lawsuit. Instead, Berman received a text from a Rippling employee saying the company was building its own MCP gateway for release as a product — one the employee described as a clone of Runlayer’s. Runlayer sued, alleging Rippling violated contractual terms covering the testing period; Rippling countersued, alleging Runlayer infringed some of its patents, a move Runlayer saw as pressure to drop its case while running up legal costs. Runlayer dropped its suit after three weeks in discovery, and Rippling dropped its own without collecting a settlement either.

The larger lesson for founders: in an AI landscape where building software has become comparatively trivial, a long enterprise technical evaluation can end with the prospective customer emerging as a competitor instead. In the span of weeks, Rippling — historically a payroll and benefits company — has entered both the AI-gateway market (competing with Stripe, Ramp, and Databricks) and the AI-security market via its role-based MCP gateway (competing with Runlayer, Docker, and Amazon Bedrock). Runlayer, for its part, is pitching a broader bundle of agent-security services built around its gateway, including spotting AI agents running inside an enterprise without IT’s knowledge.

Why it matters

The episode is a case study in how quickly a well-resourced enterprise customer can absorb a vendor’s core idea during a prolonged pilot — a risk any startup running a long technical evaluation with a large potential customer now has to weigh.