Pathfounders Interview: Yaroslav Azhnyuk, founder/CEO, The Fourth Law

0:00Yaroslav Azhnyuk:Hello and welcome to Path Founders with me, Mike Butcher. Now, we all know that the VCs have been scrambling to get into AI. But the other thing they've been trying to get into, especially if they weren't into it before, is defense technology. The world is under attack right now from Russia. There's threats from China and there's enormous amounts of interest in technology which can combat this threat. But many of the companies playing this sector aren't in Ukraine, which is where the hot war is going on right now in Europe. So today we're going to be joined by a defense tech company, a dual use tech company, which is in Ukraine.

0:47Yaroslav Azhnyuk:not only is it in Ukraine, but it's flying its systems and deploying its systems in the battlefield. And so I'm delighted to be welcomed to the show Yaroslav Azniuk, founder and chief executive of 4th Law. Welcome to Path Founders. Thanks so much, Mike. Great to be here. Well, Yaroslav, I really wanted to get you on the show for a while. And up came a new story, which has definitely put you back into the headlines. You've just raised a new funding round backed by Axon, which is the U.S. public safety technology group. It's a large company. Now, first of all, you didn't actually announce the fundraise, did you?

1:33Yaroslav Azhnyuk:You announced the fundraise, but not the amount. Was there a reason behind that? Yeah, sure. I mean, defensive business is slightly different from the more classical software SaaS businesses. So we have reasons to announce only the parts that we want to announce. Well, fair enough. I have to ask, unfortunately. But what's so interesting about your company, I think, is that you've been doing it for, you know, since the day of the full scale of invasion. but you also have a prior history as a technology entrepreneur in something completely different and you were part of the team that created PetCube which was actually a pet tech startup back in the day didn't you?

2:15That's right yeah it's a very ironic right we've been making devices which fling treats to dogs. And now I moved to make devices which fling explosives to the people who came to occupy our land. So there's definitely irony in that. In fact, it's not only explosives that we can fling. And there are plenty of use cases, as you mentioned, in the dual-use space. And partnership with Axon is also about that because Axon is probably one of the leaders, if not the leader in the US public safety space. So for us, this is not only about using the funding to advance the defensibility of Ukraine and the free world, which is our mission, but it's also about making steps towards public safety solutions and making steps towards our entry to the US markets.

3:21Yaroslav Azhnyuk:Fantastic. And what other kinds of investors have you got into the company so far? Yeah, it's various investors, mostly from the EU and the US. And obviously, my prior entrepreneurial experience helps. However, I would say that the global sort of private capital investment community is still sort of slow to look into the companies which were born in Ukraine. I wouldn't say Ukrainian companies because 99 % of those companies are actually internationally registered. They're like Delaware C Corps, British organizations, corporations. But yeah, what's going on here is remarkable. I lived in Silicon Valley for six years and worked while building Pecube.

4:11We went through Y Combinator. And now what I'm seeing here happening in Kyiv is I cannot use other words than the Defense Valley because you have founders meeting, bumping into each other randomly in cafes, working on different defense-related technologies. And everyone who's anyone in this space is here. And in fact, if your technology doesn't work on the Ukrainian battlefield, what the hell are you doing?

4:40Yaroslav Azhnyuk:Well, that's right. Yeah, that's where it's all being tested right now. And I was reading that the U.S. has got a so-called Defense Valley in El Secundo near Los Angeles. But I guess Defense Valley would definitely be Ukraine for sure, 100%. You know, it's like in the VC world, they ask you, what's your unfair advantage? Well, the unfair advantage for Ukraine is that we've been at war with Russia for 12 years. And no other country in the world wants to take that unfair advantage away from us, unfortunately. So there are millions of people who are very close to the craft, who are either veterans who went through this or are going through this, or who are volunteers or who are government officials or who have been in supply chains, etc., etc.

5:28So there is no other place in the world like that in terms of talent. And there is no other place in the world where you can have the speed of iteration as fast. You know, you can ship a drone to the military overnight with a post service. And then you get feedback, you know, 24 hours later about how your technology performed on the actual battlefield, not on some, you know, testing ground. Testing ground, you know, everyone can say their technology works on testing ground, but you try using it in the battlefield and using it in hundreds of thousands of units and discovering all the edge cases and all the ways that the end users, the military, use this tech.

6:07Then it's a completely different ballgame.

6:09Yaroslav Azhnyuk:Yeah. And so let's unpack a little bit more about what the 4th Thor is actually doing. And I know that you've developed some very sophisticated video software, autonomous software. Just for the listeners and the viewers, tell us more about how the fourth law operates and what kinds of systems it deploys. Yeah, well, if you go to our website, you'll see the world's first video of basically AI-equipped drones performing in a systematic fashion in a battlefield and destroying the targets. and we've developed this system which we call TFL1, which is what we call a first-level autonomy system, which can be equipped onto any drone and enables it with a terminal guidance solution where once the pilot of the drone has locked into the target, the drone will chase the target and will hit it.

7:01So the complexity of these things in real circumstances, not in some marketing demo videos, is that you have just thousands and tens of thousands of edge cases different weather, different drone, different payload, different battery charge, different wind, different targets, different season, etc. And you've got to make sure that your technology works reliably enough so that it outperforms that sort of human pilot performance in such conditions. And some of the challenges that this solves is not just that human pilots are not as good hitting the targets. They're pretty damn good. But you have all the counter measures that the Russians use, such as electronic warfare, and then, you know, even the landscape.

7:49When you're behind the landscape, you lose the radio link, direct line of sight, and then you cannot hit the target in the last 50 or 100 meters. So this kind of technology resolves that. And then there are all bunch of long lists of different challenges, such as radio interference when there's too many drones in this space or um i won't go in into that but like things that need to be solved with with these kind of things but this is what we call uh the first level autonomy and what we're working on is sort of a much larger sort of autonomous battlefield conception which includes first the full individual autonomy where the drone can from the start to finish uh perform the task autonomously once it was set into it by the officer or soldier who uses it.

8:39So that's one part of it. And then moving this technology between different platforms, between quadcopters and fixed wings and UGVs and sea vehicles and even missiles, and then doing simulations that allow you to predict and test those systems, and then integrating that into command and control. Many, many other steps are all sort of part of the work that we're doing while building the most advanced devices for the autonomous battlefield.

9:08Yaroslav Azhnyuk:It's a fascinating subject. And many people have been talking about how autonomous systems and autonomous drones had totally changed the nature of warfare in the modern era. What's your opinion about autonomy on the battlefield? There are lots of people talking about how it's quite scary and autonomous robots and Terminator, what would you say to them? Well, you certainly got to be careful with these things. And in a large scale of things, like when we're talking about decades, but decades start now, belt-field autonomy is the Manhattan Project of our era. It's probably the single most impactful technology that the 21st century military world will have.

9:59And, you know, same can be said about sort of advanced or AGI or super intelligence in general. But even without AGI, just applied to the military domain, autonomy is incredibly powerful and is capable of multiplying the capabilities of existing assets by a factor of thousand, maybe 10 ,000 times. That's like serious stuff. But then I think also there's a lot of sort of moral panic around using AI in defense, which is, in my opinion, is not really justified. Because, look, for now, all the weapons are like super dumb. And if you have like some autonomous elements, like the thing can recognize a picture and be slightly more precise.

10:51you know, a warehouse of Sage drones is no more capable of a Skynet appraising than a warehouse of 155 caliber artillery shells. So we're still very far away from there. And then when we're talking about like five to ten years, I think it's actually going to be unethical to use weapons without AI, because those weapons will be more likely to cause collateral damage and have unnecessary effects as compared to the sort of classic weapons. If you have an artillery or mortar shot, do you stop the shell like 500 meters away from the target and ask for human confirmation? No, the decision is being made in the moment the shot is being made.

11:30So that's a very similar thing here. And then finally, look, you can tell whatever you want about the dangers of atomic weapons and how maybe they shouldn't have ever been developed. But imagine if Russia had the atomic bomb and the United States didn't. Do we want to live in that world? I don't think so. So if we just like put everything aside and do nothing, our enemies will just eat us alive because they will not subscribe to same sort of ethical dilemmas and decisions as we could. So I think this is the most morally correct thing to do is to develop the weapons of deterrence so that we can protect democracies and protect freedom.

12:17Yaroslav Azhnyuk:Very well said. And I think also that the technologies you're developing in Ukraine are so advanced now that they're going to have multiple uses, not just in the battlefield, but also in civilian settings. I'm not talking about killing civilians. I'm talking about the dual use capabilities, such as the things you're all going to be doing with fourth floor, such as fleet management, such as slight boring things like tracking lorries and trucks. So you're actually actively looking at how you deploy these very sophisticated systems, especially such as in computer vision, into a sort of a normal environment, right?

13:01Yeah, absolutely. And, you know, if you look at the history of technology, a lot of very sophisticated technology we currently use has been developed by the military technology sector and World War I, World War II, and then have evolved into very useful things in sort of civilian life, which save lives or improve the quality of lives. And I would say there are sort of two sets of opportunities. One is sort of things that we could suspect, you know, like drones delivering pizza or, you know, border patrol drones, which can help protect the borders and, you know, things like that, sort of public safety space.

13:44the other set of opportunities are sort of still unknown to us. And they won't be known until we invent them. So it's like everyone could have predicted the proliferation of personal cars in the US in the 60s or whatnot, but no one has predicted Walmarts. So that's the same kind of thing. And in general, I think it's pretty obvious that a number of major trends are in move. One of those is the federalization of supply chains. So globally, the world is changing. The old world order is gone. The continents will be more reliant on their own internal production rather than the global trade. So that's going to be changing.

14:37And by the way, our other businesses sort of that does thermal cameras called Odd System, they're focusing on actually gaining that capacity on European continent and making sure we can make as many of these sensors as possible. The second major trend is obviously sort of autonomous robotics that will be changing like a dozen multi-trillion industries. Defense is just one of those, but you have transportation and construction and agriculture, etc. And then obviously the third one is that the world is going to be rearming for next couple of decades. So as much as I think that there can be lots of profound uses of our technology in this sort of civilian sector, I think we'll have to focus heavily on the defense use cases for the foreseeable five to ten years because you know we want to be if we want to be safe we got to be prepared and we got to be a formidable force.

15:46Yaroslav Azhnyuk:Exactly right yeah but it is also such an interesting journey you've been on because you know you obviously a guy who's got into technology you know got into startups we were y combinator at one point and of course when the russia invaded many years ago and and since then and of course since uh 2022 you've been full on 100 or all over uh the fourth floor with the uh these uh battlefield systems um tell us a little bit about what it's been like for you personally as an entrepreneur having to switch from say just producing software or you know doing a sas startup or whatever it was you were doing um into into defense well yeah that's you know that's the journey that many ukrainians unfortunately have went through right when when overnight your world for world changes completely and you know i remember that um february 24 2022 when russia invaded uh then it was completely unclear you know, whether they'll capture Kyiv, whether we'll have the country, how long this will last, whether we will have a fighting chance, etc.

16:58And for me, I basically, I was never in the military, you know, I basically grabbed together my family, my parents, my wife, and we got into the car, and we just drove west for 17 hours straight. And that was completely like this scene from an an apocalyptic movie, you know, that Hollywood knows how to make. So that is something that I think our viewers and listeners can really relate to. That was exactly like in that scene. You're reading the news, you're seeing, you know, smoke going up from rocket strikes, etc. And it's like you completely don't know what to expect. And then slowly, thanks to the many courageous men and women in the Ukrainian army and our leadership, we're able to withstand the initial attack.

17:49We're able to fight back. And along with many other people around the world and in Ukraine, so I realized that, okay, we can have a fighting chance. And then it became at some point obvious that this is not going to end soon and that this is the beginning of just a new global era. Right. Like I think like the whole that was one of the things that started another interesting process. The whole world will be nuclear re-arming because the Budapest Memorandum didn't work. So therefore, you only have to rely on yourself. So based on that, I figured that the only thing I can do as a man, as a citizen of my country is to apply all of my skills and knowledge to protect what's dear to me.

18:38And at some point, I had to make this sort of mental decision that, okay, I will make things that help our warriors to fight back and to kill the bad guys. And that mental switch, it happened after some serious internal dialogue. But in the end of the day, if you have people invading your country, ruining the buildings, destroying property, abducting children, raping women, doing the whores they did in Buchan, there is only one way to respond to this. This is evil. This is a bacteria. This is a disease. This is a threat to your life and to your values. And it has to be exterminated, destroyed, localized, removed from the organism, which is your country or your neighborhood or whatnot.

19:34And if you're not fighting back, there is something morally wrong with you. So that was sort of a pretty obvious conclusion that I came to eventually. And I think what is super, super important to understand for our listeners in the UK, EU and the US, that unfortunately, this is just the beginning. unfortunately the world is changing and unfortunately the western world is actually behind it's behind on drones it's behind in defense it's behind on manufacturing capabilities it's behind on materials access and we really got to catch up if we want to have at least something similar to the world we're used to back.

20:25So we really need to wake up. And I don't see enough activity in that way. And I don't see enough truthfulness to that way. You know, in one of our videos, we have this phrase, we don't have cartoons about AI. And then we only have the actual battlefield usage of our systems, I think.

20:48Yaroslav Azhnyuk:When you say you don't have cartoons about AI, you're saying it's not made up, you're actually deploying real systems on the real battlefield. Yeah, it's not like we have fancy, very polished marketing videos and expensive advertising agencies who are pushing those forward. So I would really encourage all of our Western peers to work hard to make sure that your technology is being used on Ukrainian battlefield, is being useful. And if it's not, iterate really fast to make it useful. Otherwise, you might win a contract or two from your Department of Defense in your country. But when the real situation starts, you know, you get a regret that you didn't take all the lessons you could from Ukrainian fighters.

21:40So it's just my call for everyone to really get serious about this.

21:45Yaroslav Azhnyuk:It seems like a daunting prospect for technology entrepreneurs in sitting in an office in London or Berlin or Paris to try and get into this space. Do you have any kind of quick advice about the best way of doing it? I mean, I went to Ukraine last year, late last year, and, you know, took a 12 hour car ride and it wasn't super easy. But certainly once I was in Kiev, it was it was OK. what do you think your advice is? Just to go over and talk to people or what? Yeah, if you're serious about it if you already run a defense business obviously come to Kiev, set up an office have engineers here, have team here have at least a VP here some of the really strong companies have CEOs moving here or coming here very often talk to the end users, talk to actual soldiers attend industry events here the defense shows in Kyiv are just something.

22:45And you can learn on like amount of stuff. You can learn one of those shows is more than anything. And then...

22:52Yaroslav Azhnyuk:Yeah, because there are actually still conferences going on. I went to a couple while I was there. Of course, look, Kyiv just lives a very chill life. It's like it's a megapolis that nothing changed except for planes don't fly. But the railways are functioning on schedule, actually better schedule than the German train sometimes. And then, yeah, there are electricity interruptions, but people do okay with generators and stuff. So just come here if you're just a founder or entrepreneur. Come here, rent an apartment. I'll live here for a few months. Talk to people, work with Brave One, which is this cluster of defense tech technologies.

23:32And you will find a way to make yourself useful both to your country, to yourself personally. you'll do well. This is a very, very hot industry. And then you won't be sorry and you won't be ashamed when you're talking about your children, about what you were doing when it was 2026.

23:53Yaroslav Azhnyuk:Very, very words of gravity there. Absolutely. Finally, I started the show talking about how a lot of VCs are trying to get into defense at the moment as well. And obviously, you've just taken this investment and you have some other investors, but your investment is from the US. What would you say to VCs, especially in Europe, who are either trying to get into defense or maybe in defense already, but trying to find the hot startups? What's your advice to those investors? Yeah, I think they should just get serious. I think they're very unserious about it and that they're not hungry. And they're also much more valuation conscious than the US VCs.

24:38And that's what prevents them from investing in the best companies. So in the venture business, you make all your returns from your top winners. So if you're like, you're not willing to, you know, be on the market with your US peers, you won't have those winners. You won't have those outcomes. And, you know, Europe keeps lagging behind China and the US big times. And I think that's that the lack of the scale of startup ecosystem of the kind of China or the U.S. in Europe is on itself a threat to not national but continental security.

25:12Yaroslav Azhnyuk:What was your experience talking to VCs either from Europe or the U.S.? What was was there a difference or what kind of response did you get? Yeah, I think I would say they are not as educated about the space as they could be. And sorry, I'll have to run to 444 for my next thing. Oh, no, no. You can't leave us that. Just give us a little, one more, one more little bit of advice for the investors or reflections. Yeah, just get educated. You go, if you're serious about defense, like go to Ukraine, spend some time here, talk to the companies.

25:53And yeah, and do stuff. It's just like the amount of investment into Ukraine in defense was ridiculously low. It's like, you know, on the order of$100 million over these four years, that's ridiculous. That's like one round for a European company, which has stuff that doesn't even work.

26:09Yaroslav Azhnyuk:Well, there you go. That's probably a good challenge to the investors. There's low investment. That's usually that as soon as you say that, they think, right, there's a good opportunity. I need to get a. So that's great. Well, we will definitely spread the word because I think it's so important what you're doing. And congratulations on the investment from Axon, from a U.S. large company. And Jaroslav Aznik from the fourth floor. Thanks for coming to Path Founders.