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.
Jakub Porzycki | Nurphoto | Getty Images
Mark Zuckerberg’s announcement this week that Meta would pivot its moderation policies to allow more “free expression” was widely viewed as the company’s latest effort to appease President-elect Donald Trump.
More than any of its Silicon Valley peers, Meta has taken numerous public steps to make amends with Trump since his election victory in November.
That follows a highly contentious four years between the two during Trump’s first term in office, which ended with Facebook — similar to other social media companies — banning Trump from its platform.
As recently as March, Trump was using his preferred nickname of “Zuckerschmuck” when talking about Meta’s CEO and declaring that Facebook was an “enemy of the people.”
With Meta now positioning itself to be a key player in artificial intelligence, Zuckerberg recognizes the need for White House support as his company builds data centers and pursues policies that will allow it to fulfill its lofty ambitions, according to people familiar with the company’s plans who asked not to be named because they weren’t authorized to speak on the matter.
“Even though Facebook is as powerful as it is, it still had to bend the knee to Trump,” said Brian Boland, a former Facebook vice president, who left the company in 2020.
Meta declined to comment for this article.
In Tuesday’s announcement, Zuckerberg said Meta will end third-party fact-checking, remove restrictions on topics such as immigration and gender identity and bring political content back to users’ feeds. Zuckerberg pitched the sweeping policy changes as key to stabilizing Meta’s content-moderation apparatus, which he said had “reached a point where it’s just too many mistakes and too much censorship.”
The policy change was the latest strategic shift Meta has taken to buddy up with Trump and Republicans since Election Day.
A day earlier, Meta announced that UFC CEO Dana White, a longtime Trump friend, is joining the company’s board.
And last week, Meta announced that it was replacing Nick Clegg, its president of global affairs, with Joel Kaplan, who had been the company’s policy vice president. Clegg previously had a career in British politics with the Liberal Democrats party, including as a deputy prime minister, while Kaplan was a White House deputy chief of staff under former President George W. Bush.
Kaplan, who joined Meta in 2011 when it was still known as Facebook, has longstanding ties to the Republican Party and once worked as a law clerk for the late conservative Supreme Court Justice Antonin Scalia. In December, Kaplan posted photos on Facebook of himself with Vice President-elect JD Vance and Trump during their visit to the New York Stock Exchange.
Joel Kaplan, Facebook’s vice president of global policy, on April 17, 2018.
Niall Carson | PA Images | Getty Images
Many Meta employees criticized the policy change internally, with some saying the company is absolving itself of its responsibility to create a safe platform. Current and former employees also expressed concern that marginalized communities could face more online abuse due to the new policy, which is set to take effect over the coming weeks.
Despite the backlash from employees, people familiar with the company’s thinking said Meta is more willing to make these kinds of moves after laying off 21,000 employees, or nearly a quarter of its workforce, in 2022 and 2023.
Those cuts affected much of Meta’s civic integrity and trust and safety teams. The civic integrity group was the closest thing the company had to a white-collar union, with members willing to push back against certain policy decisions, former employees said. Since the job cuts, Zuckerberg faces less friction when making broad policy changes, the people said.
Zuckerberg’s overtures to Trump began in the months leading up to the election.
Following the first assassination attempt on Trump in July, Zuckerberg called the photo of Trump raising his fist with blood running down his face “one of the most badass things I’ve ever seen in my life.”
A month later, Zuckerberg penned a letter to the House Judiciary Committee alleging that the Biden administration had pressured Meta’s teams to censor certain Covid-19 content.
“I believe the government pressure was wrong, and I regret that we were not more outspoken about it,” he wrote.
After Trump’s presidential victory, Zuckerberg joined several other technology executives who visited the president-elect’s Mar-a-Lago resort in Florida. Meta also donated $1 million to Trump’s inaugural fund.
On Friday, Meta revealed to its workforce in a memo obtained by CNBC that it intends to shutter several internal programs related to diversity and inclusion in its hiring process, representing another Trump-friendly move.
The previous day, some details of the company’s new relaxed content-moderation guidelines were published by the news site The Intercept, showing the kind of offensive rhetoric that Meta’s new policy would now allow, including statements such as “Migrants are no better than vomit” and “I bet Jorge’s the one who stole my backpack after track practice today. Immigrants are all thieves.”
Recalibrating for Trump
Zuckerberg, who has been dragged to Washington eight times to testify before congressional committees during the last two administrations, wants to be perceived as someone who can work with Trump and the Republican Party, people familiar with the matter said.
Though Meta’s content-policy updates caught many of its employees and fact-checking partners by surprise, a small group of executives were formulating the plans in the aftermath of the U.S. election results. By New Year’s Day, leadership began planning the public announcements of its policy change, the people said.
Meta typically undergoes major “recalibrations” after prominent U.S. elections, said Katie Harbath, a former Facebook policy director and CEO of tech consulting firm Anchor Change. When the country undergoes a change in power, Meta adjusts its policies to best suit its business and reputational needs based on the political landscape, Harbath said.
“In 2028, they’ll recalibrate again,” she said.
After the 2016 election and Trump’s first victory, for example, Zuckerberg toured the U.S. to meet people in states he hadn’t previously visited. He published a 6,000-word manifesto emphasizing the need for Facebook to build more community.
The social media company faced harsh criticism about fake news and Russian election interference on its platforms after the 2016 election.
Following the 2020 election, during the heart of the pandemic, Meta took a harder stand on Covid-19 content, with a policy executive saying in 2021 that the “amount of COVID-19 vaccine misinformation that violates our policies is too much by our standards.” Those efforts may have appeased the Biden administration, but it drew the ire of Republicans.
Meta is once again reacting to the moment, Harbath said.
“There wasn’t a business risk here in Silicon Valley to be more right-leaning,” Harbath said.
While Trump has offered few specific policy proposals for his second administration, Meta has plenty at stake.
The White House could create more relaxed AI regulations compared with those in the European Union, where Meta says harsh restrictions have resulted in the company not releasing some of its more advanced AI technologies. Meta, like other tech giants, also needs more massive data centers and cutting-edge computer chips to help train and run their advanced AI models.
“There’s a business benefit to having Republicans win, because they are traditionally less regulatory,” Harbath said.
Meta’s CEO Mark Zuckerberg reacts as he testifies during the Senate Judiciary Committee hearing on online child sexual exploitation at the U.S. Capitol in Washington, U.S., January 31, 2024.
Evelyn Hockstein | Reuters
Meta isn’t alone in trying to cozy up to Trump. But the extreme measures the company is taking reflects a particular level of animus expressed by Trump over the years.
Trump has accused Meta of censorship and has expressed resentment over the company’s two-year suspension of his Facebook and Instagram accounts following the Jan. 6 attack on the Capitol.
In July 2024, Trump posted on Truth Social that he intended to “pursue Election Fraudsters at levels never seen before, and they will be sent to prison for long periods of time,” adding “ZUCKERBUCKS, be careful!” Trump reiterated that statement in his book, “Save America,” writing that Zuckerberg plotted against him during the 2020 election and that the Meta CEO would “spend the rest of his life in prison” if it happened again.
Meta spends $14 million annually on providing personal security for Zuckerberg and his family, according to the company’s 2024 proxy statement. As part of that security, the company analyzes any threats or perceived threats against its CEO, according to a person familiar with the matter. Those threats are cataloged, analyzed and dissected by Meta’s multitude of security teams.
After Trump’s comments, Meta’s security teams analyzed how Trump could weaponize the Justice Department and the country’s intelligence agencies against Zuckerberg and what it would cost the company to defend its CEO against a sitting president, said the person, who asked not to be named because of confidentiality.
Meta’s efforts to appease the incoming president bring their own risks.
After Zuckerberg announced the new speech policy Tuesday, Boland, the former executive, was among a number of users who took to Meta’s Threads service to tell their followers that they were quitting Facebook.
“Last post before deleting,” Boland wrote in his post.
Before the post could be seen by any of his Threads followers, Meta’s content moderation system had taken it down, citing cybersecurity reasons.
Boland told CNBC in an interview that he couldn’t help but chuckle at the situation.
“It’s deeply ironic,” Boland said.
— CNBC’s Salvador Rodriguez contributed to this report.
WATCH: Meta is returning to free speech tradition, says Facebook’s former chief privacy officer Chris Kelly
Jaap Arriens | Nurphoto | Getty Images
Apple is losing market share in China due to declining iPhone shipments, supply chain analyst Ming-Chi Kuo wrote in a report on Friday. The stock slid 2.4%.
“Apple has adopted a cautious stance when discussing 2025 iPhone production plans with key suppliers,” Kuo, an analyst at TF Securities, wrote in the post. He added that despite the expected launch of the new iPhone SE 4, shipments are expected to decline 6% year over year for the first half of 2025.
Kuo expects Apple’s market share to continue to slide, as two of the coming iPhones are so thin that they likely will only support eSIM, which the Chinese market currently does not promote.
“These two models could face shipping momentum challenges unless their design is modified,” he wrote.
Kuo wrote that in December, overall smartphone shipments in China were flat from a year earlier, but iPhone shipments dropped 10% to 12%.
There is also “no evidence” that Apple Intelligence, the company’s on-device artificial intelligence offering, is driving hardware upgrades or services revenue, according to Kuo. He wrote that the feature “has not boosted iPhone replacement demand,” according to a supply chain survey he conducted, and added that in his view, the feature’s appeal “has significantly declined compared to cloud-based AI services, which have advanced rapidly in subsequent months.”
Apple’s estimated iPhone shipments total about 220 million units for 2024 and between about 220 million and 225 million for this year, Kuo wrote. That is “below the market consensus of 240 million or more,” he wrote.
Apple did not immediately respond to CNBC’s request for comment.
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