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Vinny Zaldivar, owner of Coco Taps, is passionate about his product, a tapping system for coconuts. Coco Taps allow consumers to enjoy coconut water directly from the coconut while being able to reseal the tap and keep the coconut fresh for several weeks. Vinny recognizes the need for extensive help to manage his business and is on the hunt for a strategic partner to help expand and scale his business. In the past, Vinny tried to secure a partnership in the Shark Tank and failed to secure a deal and has now set his sights on investor Marcus Lemonis to help him learn the core business competencies that are needed to make Coco Taps successful.

Coco Taps was established in 2016 when Vinny designed the tap system to be able to capitalize on the coconut water craze and share the benefits of coconut water with the Las Vegas and LA consumer markets. Vinny is totally committed to the success of Coco Taps, even going so far as to change his legal name to Coco Vinny, because he believes in the value of coconut water and his tapping system. The coconut water itself is composed of electrolytes your body needs to produce energy such as potassium, magnesium, calcium, phosphorus, iron, and sodium. The tapping system, which comes pre-tapped into the coconut, allows the coconut to be resealed and refrigerated, keeping it fresh for up to 4 weeks.

Marcus is unclear if Coco Taps business model is that of a coconut importer, a tap manufacturer or distributor. He is very concerned about the tap design being protected by a patent. A proprietary product like this could be huge, but if it is not protected legally, it can be easily be reproduced and sold for a lower cost, eroding their business. Vinny shares that they have a utility patent and the product is patent-pending which helps to ease some of Marcus’ fears about the product.

One component of Coco Taps that Vinny feels particularly passionate about, is having a product that is zero waste. Because of the popularity of coconut water, there are many companies that are making synthetic or processed coconut water and packaging it in plastic bottles. Vinny wants to market that Coco Taps are placed directly into a coconut which will break down after being discarded. Marcus is concerned that they want to use this message and anchor to the concept of zero waste when their tap system is made of plastic and is not biodegradable. Marcus schedules a meeting with Beyond Green and quickly learns that they can manufacture a biodegradable tap for the same price as the current tapping system. Vinny agrees to move to the biodegradable design.

The more that Marcus continues to learn about Coco Taps and Vinny, the more concerned he becomes about the company. When asked to discuss the financials, Vinny has no concept of the company’s historical financial data. He brought only the current year-to-date financial information for Marcus to review. Marcus is concerned with his dismissive attitude toward the financial data and is afraid that he doesn’t want him to understand the financial picture of the company. Aside from the financial concerns, Marcus is also concerned about Vinny as a businessman. He can’t understand who he truly is and what is truly important to him.

Before he will invest in the company, Marcus wants to put Vinny through “Coco Bootcamp” to understand what he is investing in. He needs to understand the viability of the product and the market as well as understand if Vinny will be a good business partner and leader of this organization. In order to learn about the company and the market simultaneously, Marcus would like to have a proof-of-concept test market outside of the Vegas area where Coco Taps are widely known. He decides to head to Key West to see if the Coco Tap system can be as successful in another market as they are in LA.

After setting Coco Taps up with one of his businesses in Key West, Marcus becomes increasingly more frustrated with Vinny when he doesn’t show up on time, does not complete the tasks the Marcus asks him to complete and does not commit himself to learning the financial information of the test market. He is also frustrated that they have no official training modules to give to the test market to help them learn the business, the price point, how to properly tap and sell the product, etc. Marcus is very frustrated at his lack of precision and focus with the business side of the company.

Although Marcus gives Vinny many opportunities to develop proper training modules, strategize for growth and scalability through territories throughout the United States, look into what is delaying his patent and most importantly understanding the financial picture and health of the company, he does not take these opportunities. Very frustrated by his lack of initiative and effort, Marcus sets up a meeting with a patent attorney where he learns that Vinny hasn’t been quite honest with him in relation to the patents they have filed. They learned that someone else already has a patent on a coconut tapping mechanism and that Coco Taps patent has been sent back to them 4 times with rejections for responses.

After learning that there is nothing legally preventing someone from entering this business space Marcus is upfront with Vinny that he can not invest in Coco Taps. Marcus notes that he was never able to help Vinny fully recognize and appreciate the essential building blocks for running and owning a business. Vinny has surrounded himself with a good team, but he needs to put effort and commitment into more than the self-marketing and self-promotion before Coco Taps can be a successful business.

Do you think Marcus Lemonis and the Sharks in the Shark Tank were wise to walk away from investing in Coco Taps? What advice would you give to Vinny in light of the issues that Marcus has uncovered? Do you feel that Coco Taps is an investible business? Start the dialog in the comments below!

“The Profit” airs Tuesday at 10 p.m. on CNBC.

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