This Harvard dropout and her brother launched a company to conserve liquids in factories
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 basically being kicked off campus and everything going virtual,” Lu, 22, told CNBC in a video interview in June. At the end of the spring semester in 2020, Lu’s sophomore year, she did not return to school.
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She hasn’t looked back since.
That’s because Lu, and her older brother David, 25, have since launched and are now growing their own company, H2Ok Innovations, which uses a combination of hardware and software to improve the efficiency of factories by reducing how much liquid they use.
“I can’t speak to what would have been, but what I can say is it was such an easy decision for me to make and it was so obvious,” Annie told CNBC. “The trade-off was virtually nothing.”
Leaving Harvard and becoming obsessed with improving factory efficiency with your older brother might seem like a surprising move.
But there is a deep family connection: Annie and David’s paternal grandfather started a factory in China that manufactured specialty fine chemicals, and their dad worked for the family’s chemical-manufacturing business. So did Annie and David’s uncles. And they were proud to do so. “As with every family business, everyone is involved in 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 passionate about chemistry, taught them chemical reactions and how various pieces of industrial equipment worked. Also as kids, Annie and David would tour their family’s factories and learn about chemical factory parts, like the distillation towers. The idea of “lean manufacturing” was also a topic of conversation in 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 in the sector,” Annie told CNBC. “That’s where our inspiration germinated from, I would 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 company 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 Year Award.”
Annie and David Lu at a Harvard Innovation Labs event, when they were still ideating.
Photo courtesy Annie and David Lu
The two started the company just as Covid-19 disrupted supply chains globally, bringing the importance of manufacturing into the spotlight.
“The pandemic exposing gaps within manufacturing and industrials … was an inspiration” for launching H20k, Annie said. “It was a perfect opportunity.”
From Techstars in Minnesota to setting up 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 love hacking and building things together,” David told CNBC. “We work really well with each other. There are so many projects we have built in our upbringing when we were growing up.”
Annie and David Lu at the Farm to Form TechStars Accelerator.
Photo courtesy Annie and David Lu
They came to Techstars with the idea of developing a low-cost technology to identify contamination in natural waterways and drinking water. But as part of the program, Annie and David got access to 120 executive leaders in various parts of food tech, and they asked those executives what their biggest headaches were.
Eventually, they decided to focus on improving the efficiency of liquid use in manufacturing processes.
“Liquids and fluids are at the heart of it in production process in so many different sectors,” Annie said, including food and beverage, pharmaceuticals, semiconductor making and cooling commercial buildings and factories. “It is such a large white space, and an area where there exists a lot of gaps.”
By the end of Techstars, Annie and David had their vision for H2Ok Innovations set and started to execute.
They came up with the idea of using a combination of physical sensors and software to measure and optimize both the use and composition of liquids and fluids in manufacturing. Their process involves collecting that data and using their software to combine the liquids data with other factory and facilities data in what Annie calls a “very, very versatile” internet-of-things system.
Conventionally, data that is gathered in a factory stays on premises. “We’re basically unlocking previously untapped data streams,” Annie said.
Improving the efficient use of liquids in manufacturing processes reduces waste and lost product, which means the factories are also operating more sustainably.
In 2021, David joined Annie in Boston worked out of a space called Artisan’s Asylum for about six months and then moved into Greentown Labs.
Annie and David Lu with members of the H2Ok Innovations team at the Unilever Ben and Jerry’s facility.
Photo courtesy Annie and David Lu
In fall of 2021 and early 2022, Annie and David participated in 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 growth of startups developing sustainability solutions including reducing energy used in supply chains. Through the partnership, we work directly with entrepreneurs to refine and test their new technologies in our businesses, to put 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 new packaging technologies, digital and geospatial solutions and new ways to upcycle product ingredients, that would otherwise be considered as waste,” Desai said.
As 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 cleaning, which increases productivity and lowers costs in the supply chain. We have also saved 40% of a cleaning cycle’s water consumption by using the technology,” Desai said. Unilever is working to implement the H2Ok solution at other non-ice cream facilities in the U.S. and Brazil, Desai said.
In spring 2021, the siblings raised their first round of funding, and added to that during summer of 2022. H2Ok Innovations now has 17 total employees.
For investors, H2Ok’s value proposition is especially timely, as more manufacturing is coming back to the United States, and those facilities face increasingly strict efficiency standards.
“The U.S. is rising again as a manufacturing powerhouse and there is a compression of the normal technology lifecycle adoption curve in industrial companies and a push to be both innovative and more efficient given decades of intense, global competition,” Jeff Bussgang from Flybridge Capital told CNBC. “U.S. manufacturers have a strong climate and sustainability mandate, compelling them to be even 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 all measurements and data will be provided in real time and used to optimize operations of plants, data centers, etc.,” Alex Iskold from 2048 Ventures told CNBC. “That’s exactly what H2Ok is building.”
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
All of the 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 companies, but still, the glowing accolades were notable and reflect the conviction the siblings share in building in the space their family has worked in for generations.
“They are exceptionally smart, visionary and courageous — the kind of founders investors dream to back,” Iskold told CNBC.
“We invested because they are incredible founders. Annie and David are relentless and incredibly smart, and this is the culture they have built out at H2Ok. They are the right and rare mixture of customer- and problem-oriented, and they have executed well to build a defensible technical solution that fits the customers’ needs,” Dayna Grayson from Construct Capital told CNBC.
“The founders are brilliant technologists and visionaries,” Bussgang from Flybridge Capital told CNBC.
Being siblings brings a level of inherent trust in that’s valuable to both Annie and David, who have been close to each other and the rest of their family their entire lives.
The H2Ok Innovations team at Greentown Labs in Boston, where they are 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 need to be had,” Annie said. “We can have these hard conversations in a very, very comfortable way, and hold each other accountable and push each other to be better.”
“We know how to fight, we know how to have hard conversations. We’ve been fighting our whole lives,” David said.
Both Annie and David giggled at this thought. It’s something of a joke, they said, but it’s also serious. Getting through hard conversations is “crucial for the success of a business,” David said.
Their complimentary skill set is a great boon, too.
Annie is creative and an “especially out-of-the-box thinker,” said David. And David is excellent at recognizing patterns across disciplines and executing on technical developments, Annie said.
They also share a philosophy on how to interact with people. They acknowledge that they’re young and that listening to others is important.
“I think this aspect of authenticity, and coming into every single conversation with customers, to users, to mentors, and beyond with deep humility and empathy is so critical to who we are as a team, but particularly who we are as founders,” Annie said.
Annealed neodymium iron boron magnets sit in a barrel at a Neo Material Technologies Inc. factory in Tianjin, China on June 11, 2010.
Bloomberg | Bloomberg | Getty Images
China’s exports of rare-earth magnets to the United States in June surged more than seven times from the prior month, as American firms clamor to get hold of the critical elements following a preliminary Sino-U.S. trade deal.
In April, Beijing placed restrictions on several critical magnets, used in advanced tech such as electric vehicles, wind turbines and MRI machines, requiring firms to receive licenses for export. The move was seen as retaliation against U.S. President Donald Trump’s steep tariffs on China.
Beijing has a stranglehold on the production of rare-earth magnets, with an estimated 90% of the market, as well as a similar hold on the refining of rare-earth elements, which are used to make magnets.
The U.S. received about 353 metric tons of rare-earth permanent magnets in June, up 660% from the previous month, data released by China’s General Administration of Customs showed, though the exports were about half that from June last year.
The U.S. was the second-largest destination for China’s rare-earth magnets, behind Germany, as it relies heavily on their imports for its large manufacturing sector, particularly automotive, electronics and renewable energy.
In total, China exported 3,188 metric tons of rare earth permanent magnets globally last month, up nearly 160% from May, but 38% lower compared with the same period last year.
The growth in exports came after Washington and Beijing agreed last month on a trade framework that included easing controls on Chinese rare-earth exports as well as a rollback of some American tech restrictions for shipments to China.
AI behemoth Nvidia said last week it was planning to resume shipments of its H20 AI chips to China, after the exports were restricted in April. Last month, controls on American AI chip software companies’ business in China had also been rolled back.
Chinese rare-earth magnet producers started announcing the approval of export licenses last month.
If exports continue to increase, it will be of great benefit to companies that have been suffering from shortages of magnets due to the lengthy time required to secure export licenses. For example, several European auto-parts suppliers were forced to halt production in recent months.
The magnet shortages had also hit emerging industries such as humanoid robotics. In April, Elon Musk said production of Tesla’s Optimus humanoid robots had been disrupted.
China’s controls on its rare-earths sector have prompted some global governments to reexamine their rare-earth supply chains and search for ways to support domestic mining of the minerals.
However, experts say that setting up alternatives to China’s rare-earth magnet supply chain could take years, as it requires an intricate process of rare-earth element refining and separation.
“The separation process is quite complex, and China has a lot of advantages in this after putting in decades of research into the processes,” Yue Wang, a senior consultant of rare earths at Wood Mackenzie, told CNBC last month.
One way that the U.S. has been trying to compensate for lack of rare-earth magnets is through increased recycling. Apple and miner MP Materials announced a $500 million deal last week for the development of a recycling facility that will reinforce the iPhone maker’s U.S. magnet supply chain.
Peter Alexander from financial consultancy Z-ben Advisors said that Washington’s latest concessions on tech restrictions were a reflection of just how much leverage China has in its trade relationship with the United States, speaking on CNBC’s “China Connection” on Monday.
The Huawei booth at the Mobile World Congress in Barcelona, 2025.
Arjun Kharpal | CNBC
Despite being beaten down by years of U.S. trade restrictions, China’s telecom giant Huawei has quietly emerged as one of the country’s fiercest competitors across the entire AI landscape.
Not only does the Shenzhen-based firm appear to represent Beijing’s answer to American AI chip darling Nvidia, but it has also been an early adopter of monetizing artificial intelligence models in industrial applications.
“Huawei has been forced to shift and expand its core business focus over the past decade… due to a variety of external pressures on the company,” said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group.
This expansion has seen the company get involved in everything from smart cars and operating systems to the technologies needed for the AI boom, such as advanced semiconductors, data centers, chips and large language models.
“No other technology company has been able to be competent in so many different sectors with high levels of complexity and barriers to entry,” Triolo said.
This year, Nvidia CEO Jensen Huang has become increasingly vocal in calling Huawei “one of the most formidable technology companies in the world.” He has also warned that Huawei will replace Nvidia in China if Washington continues to restrict U.S. chip firms’ exports to the Asian country.
Nvidia surpassed $4 trillion in market capitalization last week to become the world’s most valuable company. Its cutting-edge processors and a related “CUDA” computing system remain the industry standard for training generative AI models and applications.
But that moat may be narrowing, as Huawei proves that it not only does it all, it does it well. While challenging American AI stalwarts like Nvidia is a tall order, the company’s history shows why it can’t be counted out.
Telephone switches to national champion
Huawei, which now employs more than 208,000 people across over 170 markets, came from humble beginnings. Founded by ambitious entrepreneur Ren Zhengfei in 1987 out of an apartment in Shenzhen, the firm started as a small telephone switch distributor.
As it grew into a telecoms player, it gained traction by targeting less developed markets such as Africa, the Middle East, Russia and South America, before eventually expanding to places like Europe.
By 2019, Huawei would be well-positioned to capitalize on the global 5G rollout, becoming a leader in the market. Around this time, it had also blossomed into one of the world’s largest smartphone manufacturers and was even designing smartphone chips through its chip design subsidiary, HiSilicon.
But Huawei’s success also attracted increasing scrutiny from governments outside China, particularly the U.S., which has frequently accused Huawei’s technology of posing a national security threat. The Chinese company has refuted such risks.
The export controls have ironically pushed Huawei into the arms of the Chinese government in a way that CEO Ren Zhengfei always resisted.
Paul Triolo
partner and senior vice president for China at DGA-Albright Stonebridge Group
Huawei’s business suffered a major setback in 2019 when it was placed on a U.S. trade blacklist, preventing American companies from doing business with it.
As the impact of the sanctions kicked in, Huawei’s consumer business – once the company’s largest by revenue – halved to about $34 billion in 2021 from the year before.
The company still managed a breakthrough on AI chips, and pressed ahead despite additional U.S. restrictions in 2020 that cut the company off from chipmaker Taiwan Semiconductor Manufacturing Co. A year earlier, Huawei officially launched its Ascend 910 AI processing chip as part of a strategy to build a “full-stack, all-scenario AI portfolio” and to become a provider of AI computing power.
But the U.S. targeting of Huawei also had the effect of turning the company into a martyr-like figure in China, building upon attention it received in 2018 when Meng Wanzhou, Huawei’s CFO and daughter of Ren, was arrested in Canada for alleged violations of Iran sanctions.
As the U.S.-China tech war continued to expand and broad advanced chip restrictions were placed on China, Huawei was an obvious choice to become a national champion in the race, with more impetus and state backing for its AI plans.
“The export controls have ironically pushed Huawei into the arms of the Chinese government in a way that CEO Ren Zhengfei always resisted,” Triolo said. In this way, the restrictions also became “the steroids” for Huawei’s AI hardware and software stack.
The comeback
After another year of declining sales in the consumer segment, the unit started to turn around in 2023 with the release of a smartphone that analysts said contained an advanced chip made in China.
The 5G chip came as a shock to many in the U.S., who didn’t expect Huawei to reach that level of advancement so quickly without TSMC. Instead, Huawei was reportedly working with Chinese chipmaker SMIC, a company that has also been blacklisted by the U.S.
While semiconductor analysts said the scale that Huawei and SMIC could produce these chips was severely limited, Huawei nonetheless had proved it was back in the advanced chip game.
It was also around this time that reports began surfacing about Huawei’s new AI processor chip, the Ascend 910B, with the company looking to seize upon gaps left by export controls on Nvidia’s most advanced chips. Mass production of the next-generation 910C is reportedly already on the way.
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To fill the void left by Nvidia, Huawei “has been making big strides in replicating the performance of high-end GPUs using combinations of lower chips,” said Jeffrey Towson, managing partner at TechMoat Consulting.
In April, Huawei unveiled its “AI CloudMatrix 384”, a system that links 384 Ascend 910C chips in a cluster within data centers. Analysts have said CloudMatrix is able to outperform Nvidia’s system, the GB200 NVL72, on some metrics.
Huawei isn’t just catching up, “it’s redefining how AI infrastructure works,” Forrester analysts said in a report last month about CloudMatrix.
Meanwhile, Huawei has also developed its own “CANN” software system that acts as an alternative to Nvidia’s CUDA.
“Winning the AI race isn’t just about faster chips. It also includes delivering the tools developers need to build and deploy large-scale models,” Forrester’s report said, though authors noted that Huawei’s products are still not integrated enough with other commonly used tools for developers to switch over quickly from Nvidia.
The ‘Ascend Ecosystem Strategy’
While Huawei’s goal to surpass Nvidia is seen as a key development in China and the U.S.’s race for AI, it’s important to note that chips represent just one building block of Huawei’s broader AI plans.
Huawei now has its hands throughout the artificial intelligence value chain, from chips to computing, to AI models and AI applications. These different AI business avenues also leverage other areas of the company’s vast technology empire.
In fact, the company’s “ICT Infrastructure” business — which includes 5.5G cellular network deployment and AI systems for industrial use — became the company’s largest revenue driver at 362 billion yuan in 2023.
The company has been deploying its Ascend AI chips and AI CloudMatrix 384 at its growing portfolio of AI data centers, which are operated by its cloud computing unit, Huawei Cloud, established in 2017 to compete with the likes of Amazon Web Services and Oracle.
These data centers, in turn, have provided the training capabilities and computing power used by Huawei’s suite of AI models under its Pangu series.
Unlike other general-purpose AI models like OpenAI’s GPT-4 or Google’s Gemini Ultra 1.0, Huawei’s Pangu model is designed to support more industry-specific applications across the medical, finance, government, industrial and automotive sectors. Pangu has already been applied in more than 20 industries over the last year, the company said last month.
Rolling out such AI applications often involves having Huawei tech staff working for months at the project site, even if it’s in a remote coal mine, Jack Chen, vice president of the marketing department for Huawei’s oil, gas and mining business unit, which provides digital and intelligent solutions to transform these industries, told CNBC.
That research enabled the company in May to deploy more 100 electric-powered trucks that can autonomously transport dirt or coal using the telecom company’s 5G network, AI and cloud computing services.
And it’s not limited to China. The technology can “be replicated on a large scale in Central Asia, Latin America, Africa, and the Asia-Pacific,” Chen said.
Huawei has also open-sourced the Pangu models, in a move it said would help it expand overseas and further its “Ascend ecosystem strategy,” which refers to its AI products built around its Ascend chips.
Speaking to CNBC’s “Squawk Box Asia” on Thursday, Patrick Moorhead of Moor Insights & Strategy said he expected Huawei to push Ascend in countries part of China’s Belt and Road Initiative — an investment and development project aimed at emerging markets.
Over a period of five to 10 years, the company could begin to build serious market share in these countries, in the same way it once did with its telecommunications business, he added.
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