A New York-based AI startup is suing Rippling – a Silicon Valley software giant that got a $3 million tax break from Gov. Kathy Hochul – for allegedly stealing its trade secrets to “build essentially a clone” of its safety and governance product, The Post has learned.
Runlayer – an AI security firm backed by tech billionaire Vinod Khosla – alleged Rippling violated its confidentiality agreements during a nearly year-long commercial partnership, according to a lawsuit filed Tuesday in the Southern District of New York.
Talks to extend their partnership fell apart earlier this summer when Rippling refused to pay “a market rate” for Runlayer’s platform – while in the background, it was “secretly building” its own competing AI product using Runlayer’s confidential information, the lawsuit alleged.
Runlayer alleged it was tipped off on June 12 when an insider at Rippling texted Runlayer CEO Andrew Berman: “There’s some things happening on the Rippling side that you should probably know about but I didn’t want to put them in Slack.”
“There’s been a project internally to build essentially a clone o[f] Runlayer,” the insider wrote, according to the lawsuit. “It’s not feature complete by any means but it’s almost a 1 to 1 copy of Runlayer.”
According to the suit, the insider also suggested that Rippling CEO Parker Conrad was potentially behind the duplicate product, writing: “it smells like a Parker thing.”
“Runlayer’s panicked effort to avoid competition by fabricating claims is not an effective way to deal with its business failures,” a spokesperson for Rippling told The Post.
“Rippling is launching a superior product for connecting AI tools to business data using only our proprietary information – we have every reason to win in this market.”
Runlayer is seeking a jury trial, along with damages, attorney’s fees and a preliminary injunction blocking Rippling from developing or selling a product designed with its trade secrets.
Anysource, Inc., which does business as Runlayer and claims to help companies securely become AI natives, has raised $42 million from investors including Khosla Ventures and Felicis, a Californian venture capital firm, since it was founded just under a year ago.
Despite substantial backing, the New York City startup – which at the time employed just five workers – allegedly jumped at the chance to partner with Rippling, a software company worth roughly $16 billion, the lawsuit said.
Rippling is based in San Francisco but also has New York offices. In December 2025, it was awarded $3.4 million in tax credits from Hochul to support its plans to expand its Manhattan presence, adding 371 new full-time jobs.
During their nearly year-long partnership, Runlayer disclosed extensive trade secrets, including its source code and “Gateway deployment architecture,” subject to strict confidentiality agreements that prevented Rippling from using the information to “copy” or “create derivative works,” according to the suit.
After negotiations to continue their relationship failed, Runlayer suspended services to Rippling on June 12 – alleging it learned later that day that the company was building a competing AI governance platform of its own, the suit said.
The lawsuit alleged Rippling is specifically preparing to launch a competing MCP Gateway, based on an unsolicited screenshot from a third party sent to Runlayer on July 1.
A Gateway sits between AI models and their MCP servers, allowing AI agents access to plenty of tools and data while maintaing a secure governance layer.
Since it suspended access to its pilot products, Runlayer alleged it has identified a series of Rippling job postings that align with some of the confidential information Runlayer had spent nearly a year disclosing, according to the suit.
