The Harvard dropout and his brother launched H2Ok for factory sustainability

David and Annie Lou, siblings and founders of H20k Innovations

Image courtesy of David and Annie Lou

Annie Lou was a Harvard student when Covid-19 brought the world to a complete halt, including her college experience.

“I remember in March 2020 the campus was launched and everything went virtual,” Lu, 22, told CNBC in a video interview in June. At the end of the spring term in 2020, Lu’s sophomore year, she did not return to school.

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Haven’t looked back since.

That’s because Lou and her older brother David, 25, launched and are now developing their own company, H2Ok Innovations, which uses a combination of hardware and software to improve plant efficiency by reducing the amount of fluid they use.

“I can’t speak for what it could have been, but what I can say is that it was an easy decision for me and it was very clear,” Annie told CNBC. “The trade-off was almost nothing.”

Leaving Harvard and obsessing over factory efficiency with your older brother may seem like a surprising move.

But there is a deep family connection: Annie and David’s paternal grandfather started a factory in China making specialty fine chemicals, and their father worked for the family chemical manufacturer. 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 moved at the age of 1 to the Bay Area, where Annie was born. Their parents are immigrants from China.

Annie Lu visits her family’s factory in China when she was young.

Image courtesy of Annie Lou

When Annie and David were young, their grandfather, who was very passionate about chemistry, taught them chemical reactions and how various pieces of industrial equipment work. Also as a child, Annie and David would tour their family’s factories and learn about the parts of chemical plants, such as distillation towers. The idea of ​​”lean manufacturing” was also a topic of discussion in the family.

“I remember summers in elementary and middle school walking around factories, getting to know industrial equipment extensively, understanding how they work. We grew up in this sector,” Annie told CNBC. “That’s where our inspiration came from, I think.”

Since officially launching 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 outside Greentown Labs in Boston, and books revenue. Annie and David were honored as the 2022 Forbes 30 Under 30 In March, H20k Innovations was honored at the annual Unilever Supplier Summit and awarded the ‘Start-up of the Year Award’.

Annie and David Le at a Harvard Innovation Labs event, when they were still thinking big.

Image courtesy of Annie and David Law

The two started the company as the Covid-19 virus disrupted supply chains globally, highlighting the importance of manufacturing.

“The pandemic, which exposed gaps within manufacturing and the industry… was the inspiration” for the launch of the H20k, Annie said. “It was the perfect opportunity.”

From Techstars in Minnesota to setting up shop in Boston

In the fall of 2020, Annie and David moved to Minneapolis for the Techstars Farm to Fork program, which they accepted based on previous projects.

“Annie and I love hacking and building things together,” David told CNBC. “We work so well with each other. There are so many projects we built growing up when we were growing up.”

Annie and David Law are at the farm making TechStars Accelerator.

Image courtesy of Annie and David Law

They came to Techstars with the idea of ​​developing a low-cost technology for identifying pollution in natural waterways and drinking water. But as part of the program, Annie and David reached out to 120 executive leaders in different parts of food technology, and asked those executives what their biggest problems were.

Ultimately, they decided to focus on improving the efficiency of using liquid in manufacturing processes.

“Liquids and liquids are at the heart of the production process in many different sectors,” Annie said, including food and beverage, pharmaceuticals, the semiconductor industry, and the cooling of commercial buildings and factories. “It’s a big white space and an area where there are a lot of gaps.”

By the end of Techstars, Annie and David had their vision for the H2Ok Innovations suite and it started to execute.

They came up with the idea of ​​using a combination of physical sensors and software to measure and optimize the use and formulation of liquids and liquids in manufacturing. Their process includes collecting that data and using their software to combine liquids data with data from plants and other facilities in what Annie calls a “very diverse” IoT system.

Traditionally, the data collected in the factory remains on the premises. “We’re basically opening up previously untapped data streams,” Annie said.

Improving the efficient use of fluids in manufacturing processes leads to less waste and lost product, which means that factories also operate more sustainably.

In 2021, David joined Annie in Boston and worked out of a space called Artisan’s Asylum for six months and then moved to Greentown Labs.

Annie and David Law with members of the H2Ok Innovations team at the Unilever Ben and Jerry’s facility.

Image courtesy of Annie and David Law

In the 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 Company, and Colgate-Palmolive.

“The aim of the Accelerator 100+ program is to foster the growth of startups developing sustainability solutions, including reducing energy used in supply chains,” Sandeep Desai, Unilever Ice Cream Product Supply Officer, told CNBC in a written statement.

“These startups are working in many areas including new packaging technologies, digital and geospatial solutions, and new ways to recycle product components, which otherwise can be considered waste,” said Desai.

As part of this partnership, Unilever tested H2Ok Innovations’ solution at Ben & Jerry’s facility in Waterbury, Vermont.

“At Waterbury’s Ice Cream Sourcing unit, our partnership allowed for an 18% reduction in downtime during cleaning, which increases productivity and reduces costs in the supply chain. We also saved 40% in water consumption for the cleaning cycle with the technology,” said Desai. Desai said Unilever is working on implementing the H2Ok solution in facilities other than ice cream in the United States and Brazil.

In the spring of 2021, the siblings raised their first round of funding, and added to that during the summer of 2022. H2Ok Innovations now has 17 employees in total.

For investors, H2Ok’s value proposition is especially timely, as more manufacturing returns to the US, and these facilities face increasingly stringent efficiency standards.

“The US is rising again as a manufacturing powerhouse and there is pressure to normalize the technology lifecycle adoption curve in industrial firms and push to be innovative and more efficient amid decades of intense global competition,” Jeff Bosgang of Flybridge Capital told CNBC. “US manufacturers have a strong climate and sustainability mandate, which forces them to be more careful with their fluid and energy use.”

Additionally, some investors see an imperative to the sensor technology used by H2Ok innovations.

“We found H2Ok’s vision to replace monolith-based water metering with a swarm of sensors very compelling,” Alex Iskold of 2048 Ventures told CNBC. “Our thesis is that all measurements and data will be provided in real time and used to improve plant operations, data centers, etc.” “That’s exactly what H2Ok is about.”

Annie and the H2Ok Innovations team at the client’s facility point out the technology used in the factory.

Image courtesy of Annie Lou

The bond of siblings runs deep

All of the investors who spoke to CNBC commented on how much they liked Annie and David, which is expected of investors who share portfolio companies, but even so, the glowing accolades were remarkable and reflect the conviction the siblings share in building in the space their families have operated in for generations.

“They are exceptionally smart, visionary, and courageous — the kind of founders investors dream of backing,” Iskold told CNBC.

“We invested because they are amazing founders. Annie and David are relentless and incredibly smart, and that’s the culture they’ve built at H2Ok. They’re the rare right mix of customer and problem-oriented people, and they’ve executed so well to build a defensible tech solution that fits clients’ needs,” Construct Capital’s Dayna Grayson told CNBC.

“The founders are brilliant technologists and visionaries,” Busgang of Flybridge Capital told CNBC.

Being siblings brings a level of trust inherent in that is 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 is at Greentown Labs in Boston, where they are currently based.

Image courtesy of David and Annie Lou.

This trust is invaluable because running a business with employees, partners, and customers can be stressful.

“There are tough conversations to have,” Annie said. “We can have these difficult conversations in a very relaxed way, holding each other accountable and pushing each other to be better.”

“We know how to fight, we know how to have tough conversations. We’ve been fighting all our lives,” said David.

Annie and David both laughed at the thought. It’s a joke, they said, but also dangerous. Engaging in difficult conversations, David said, is “crucial to a successful business.”

Their free skill set is also a great blessing.

David said that Annie is creative and “a particularly out-of-the-ordinary thinker”. Annie said David is excellent at recognizing patterns across disciplines and implementing technical developments.

They also share a philosophy on how to interact with people. They admit that they are young and that listening to others is important.

“I think that aspect of authenticity, going into every single conversation with customers, users, mentors, and beyond with deep humility and empathy is critical to who we are as a team, but especially to who we are founders,” Annie said.

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