David and Annie Lu, siblings and co-founders of H20k Innovations
Photo courtesy David and Annie Lu
Annie Lu was a student at Harvard when Covid-19 brought the world to a screeching halt, including her own college experience.
“I remember in March of 2020 mainly being kicked off campus and every little thing going virtual,” Lu, 22, told CNBC in a video interview in June. At the tip of the spring semester in 2020, Lu’s sophomore yr, she didn’t return to highschool.
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She hasn’t looked back since.
That is because Lu, and her older brother David, 25, have since launched and are actually growing their very own company, H2Ok Innovations, which uses a mix of hardware and software to enhance the efficiency of factories by reducing how much liquid they use.
“I can not speak to what would have been, but what I can say is it was such a simple decision for me to make and it was so obvious,” Annie told CNBC. “The trade-off was virtually nothing.”
Leaving Harvard and becoming obsessive about improving factory efficiency along with your older brother might appear to be a surprising move.
But there’s a deep family connection: Annie and David’s paternal grandfather began a factory in China that manufactured specialty positive chemicals, and their dad worked for the family’s chemical-manufacturing business. So did Annie and David’s uncles. They usually were proud to accomplish that. “As with every family business, everyone seems to be involved within the family business,” Annie told CNBC.
David was born in Saskatoon, Canada, and at age 1 moved to the Bay Area, where Annie was born. Their parents are immigrants from China.
Annie Lu visiting her family’s factory in China when she was younger.
Photo courtesy Annie Lu
When Annie and David were young, their grandfather, who was deeply obsessed with chemistry, taught them chemical reactions and the way various pieces of commercial equipment worked. Also as kids, Annie and David would tour their family’s factories and study chemical factory parts, just like the distillation towers. The thought of “lean manufacturing” was also a subject of conversation within the family.
“I remember in elementary and middle school spending summers touring factories, and having exposure to large scale industrial equipment, understanding how they work. We grew up within the sector,” Annie told CNBC. “That is where our inspiration germinated from, I’d say.”
Since officially launching their sibling enterprise in March 2021, H20k Innovations has raised $6.8 million from investors including Construct Capital, Flybridge Capital, Techstars, 1517 Fund and 2048 Ventures. The corporate is headquartered out of Greentown Labs in Boston, and is booking revenue. Annie and David were recognized as 2022 Forbes 30 Under 30 and in March, H20k Innovations was recognized at Unilever’s annual supplier summit and granted the “Start-up of the Yr Award.”
Annie and David Lu at a Harvard Innovation Labs event, after they were still ideating.
Photo courtesy Annie and David Lu
The 2 began the corporate just as Covid-19 disrupted supply chains globally, bringing the importance of producing into the highlight.
“The pandemic exposing gaps inside manufacturing and industrials … was an inspiration” for launching H20k, Annie said. “It was an ideal opportunity.”
From Techstars in Minnesota to establishing shop in Boston
In fall 2020, Annie and David moved to Minneapolis for the Techstars Farm to Fork program, which accepted them based on previous projects.
“Annie and I like hacking and constructing things together,” David told CNBC. “We work very well with one another. There are such a lot of projects now we have inbuilt our upbringing after we were growing up.”
Annie and David Lu on the Farm to Form TechStars Accelerator.
Photo courtesy Annie and David Lu
They got here to Techstars with the thought of developing a low-cost technology to discover contamination in natural waterways and drinking water. But as a part of this system, Annie and David got access to 120 executive leaders in various parts of food tech, and so they asked those executives what their biggest headaches were.
Eventually, they decided to give attention to improving the efficiency of liquid use in manufacturing processes.
“Liquids and fluids are at the guts of it in production process in so many alternative sectors,” Annie said, including food and beverage, pharmaceuticals, semiconductor making and cooling industrial buildings and factories. “It’s such a big white space, and an area where there exists numerous gaps.”
By the tip of Techstars, Annie and David had their vision for H2Ok Innovations set and commenced to execute.
They got here up with the thought of using a mix of physical sensors and software to measure and optimize each the use and composition of liquids and fluids in manufacturing. Their process involves collecting that data and using their software to mix the liquids data with other factory and facilities data in what Annie calls a “very, very versatile” internet-of-things system.
Conventionally, data that’s gathered in a factory stays on premises. “We’re mainly unlocking previously untapped data streams,” Annie said.
Improving the efficient use of liquids in manufacturing processes reduces waste and lost product, which suggests the factories are also operating more sustainably.
In 2021, David joined Annie in Boston worked out of an area called Artisan’s Asylum for about six months after which moved into Greentown Labs.
Annie and David Lu with members of the H2Ok Innovations team on the Unilever Ben and Jerry’s facility.
Photo courtesy Annie and David Lu
In fall of 2021 and early 2022, Annie and David participated within the 100+ Accelerator program, a virtual accelerator program run by Unilever in partnership with AB InBev, the Coca Cola Co. and Colgate-Palmolive.
“The aim of the 100+ Accelerator program is to rapidly fuel the expansion of startups developing sustainability solutions including reducing energy utilized in supply chains. Through the partnership, we work directly with entrepreneurs to refine and test their recent technologies in our businesses, to place their solutions on an accelerated path to deliver a positive impact towards our sustainability goals,” Sandeep Desai, the Unilever ice cream chief product supply officer, told CNBC in a written statement.
“These startups operate across many fields including recent packaging technologies, digital and geospatial solutions and recent ways to upcycle product ingredients, that may otherwise be regarded as waste,” Desai said.
As a part of this partnership, Unilever tested the H2Ok Innovations solution at its Ben & Jerry’s facility in Waterbury, Vermont.
“At our Waterbury Ice Cream Sourcing Unit, our partnership has allowed for an 18% reduction in downtime during cleansing, which increases productivity and lowers costs in the provision chain. We’ve also saved 40% of a cleansing cycle’s water consumption by utilizing the technology,” Desai said. Unilever is working to implement the H2Ok solution at other non-ice cream facilities within the U.S. and Brazil, Desai said.
In spring 2021, the siblings raised their first round of funding, and added to that in summer of 2022. H2Ok Innovations now has 17 total employees.
For investors, H2Ok’s value proposition is very timely, as more manufacturing is coming back to america, and people facilities face increasingly strict efficiency standards.
“The U.S. is rising again as a producing powerhouse and there’s a compression of the conventional technology lifecycle adoption curve in industrial firms and a push to be each modern and more efficient given a long time of intense, global competition,” Jeff Bussgang from Flybridge Capital told CNBC. “U.S. manufacturers have a powerful climate and sustainability mandate, compelling them to be much more precise with their usage of liquids and energy.”
Plus, some investors see an inevitability to the sensor technology H2Ok Innovations is using.
“We found the H2Ok’s vision of replacing monolith-based water measurement with a swarm of sensors very compelling. Our thesis is that each one measurements and data will likely be provided in real time and used to optimize operations of plants, data centers, etc.,” Alex Iskold from 2048 Ventures told CNBC. “That is exactly what H2Ok is constructing.”
Annie and the H2Ok Innovations team at a customer facility, point up at their technology deployed in a factory.
Photo courtesy Annie Lu
The sibling bond runs deep
The entire investors who spoked to CNBC commented on how impressed they were with Annie and David, which is to be expected of investors doting on their portfolio firms, but still, the glowing accolades were notable and reflect the conviction the siblings share in constructing within the space their family has worked in for generations.
“They’re exceptionally smart, visionary and courageous — the sort of founders investors dream to back,” Iskold told CNBC.
“We invested because they’re incredible founders. Annie and David are relentless and incredibly smart, and that is the culture they’ve built out at H2Ok. They’re the precise and rare mixture of customer- and problem-oriented, and so they have executed well to construct a defensible technical solution that matches the shoppers’ needs,” Dayna Grayson from Construct Capital told CNBC.
“The founders are sensible technologists and visionaries,” Bussgang from Flybridge Capital told CNBC.
Being siblings brings a level of inherent trust in that is invaluable to each Annie and David, who’ve been close to one another and the remainder of their family their entire lives.
The H2Ok Innovations team at Greentown Labs in Boston, where they’re currently headquartered.
Photo courtesy David and Annie Lu.
That trust is invaluable because running a business with employees, partners and customers can get stressful.
“There are hard conversations that must be had,” Annie said. “We will have these hard conversations in a really, very comfortable way, and hold one another accountable and push one another to be higher.”
“We all know methods to fight, we all know methods to have hard conversations. We have been fighting our whole lives,” David said.
Each Annie and David giggled at this thought. It’s something of a joke, they said, but it surely’s also serious. Getting through hard conversations is “crucial for the success of a business,” David said.
Their complimentary skill set is an ideal boon, too.
Annie is creative and an “especially out-of-the-box thinker,” said David. And David is great at recognizing patterns across disciplines and executing on technical developments, Annie said.
In addition they share a philosophy on methods to interact with people. They acknowledge that they are young and that listening to others is vital.
“I feel this aspect of authenticity, and coming into each conversation with customers, to users, to mentors, and beyond with deep humility and empathy is so critical to who we’re as a team, but particularly who we’re as founders,” Annie said.
