Business

The multi-million pound business started as a laugh

the three founders Image copyright MorphCostumes
Image caption MorphCostumes founders Fraser Smeaton (far left), Gregor Lawson (middle) and Ali Smeaton all went to Edinburgh University

As with so many good ideas, inspiration came to them after a few beers. At the time, the three co-founders of MorphCostumes had successful corporate careers. But nevertheless, the notion of starting a business to sell top-to-toe spandex bodysuits seemed like a good plan.

Edinburgh University graduates Gregor Lawson, 36, and the Smeaton brothers Fraser, 36, and Ali, 34, went on to create fancy dress and party fashion company Morphsuits, now rebranded MorphCostumes. Beer or no beer, their instinct was right because the business achieved sales of £1.2m ($1.8m) in its first year.

The first business plan stated their aim to sell 20,000 suits because they reckoned that was the maximum number of people who'd want to wear one.

They were wrong. To date, they have sold some 2.5 million.

Image copyright MorphCostumes
Image caption A friend tried going top-to-toe blue on a night out in Dublin

They first came across the suits - the trio called them morphsuits because wearers morph into a more fun version of themselves - when a friend turned up to a get-together wearing one that he'd bought on eBay. When he wore it out in Dublin, street performers lost their audience as he walked by.

"Hundreds of people wanted a photo with him and so many people were buying him drinks," says Fraser.

Keen to replicate the attention and free drinks, Fraser, Ali and Gregor, went onto eBay to acquire suits of their own. But they found the material was very thick, making it hard for the wearer to see much, and, after a night out in them in January 2009, they decided they could improve the existing design and sell them.

"We thought, 'we could try this. It's a bit of fun outside work - let's see how many we can sell'," says Fraser.

Soon after, they began work on a prototype. They put their request on Alibaba, a website which links small and medium-sized firms to manufacturers and traders across the globe, and found a manufacturer in China. The suits are still made there today.

Image copyright MorphCostumes
Image caption The first suits the firm made were all solid colours
Image copyright Anthony Hunt
Image caption More recently, topical trends, such as Power Rangers, have helped drive sales

They perfected the suit so that, although the wearer's face remained obscured, he or she could see properly and even take a drink through it. A key move was putting their brand name on the backside of the suit so that everyone knew who had made it and, therefore, how to buy their own.

Each co-founder put in £1,000 and they ordered 200 suits in six solid colours, which were stockpiled in Fraser's bedroom, taking up a third of the space.

"Gregor would read out the addresses and I'd write them on envelopes," says Fraser. "I'd then take them to work in a massive sports bag and pop to the post office at lunchtime to ship them. It obviously wasn't sustainable so we soon found a warehouse."

'Wow'

They set up their first website for $700 (£459) and used Facebook to advertise the business. In May 2009, they sold their first morphsuit. Within two weeks, they'd sold out so ordered another 2,500 suits.

Image copyright MorphCostumes
Image caption Suit wearers can see, drink and even bungee jump while wearing the outfit

The point at which they realised the scale of their potential success was in the run up to Halloween. Although it had been just a few months since their first sale, they could barely keep up with demand.

"We got new stock on sale at 4 or 5pm on the Monday and we sold £5k in that one evening and £25k the next day. We thought: 'Wow!'", says Fraser.

Just a year after the beered-up idea in January 2010, the company went global after they took out Facebook ads in Australia and the US.

Image copyright MorphCostumes
Image caption Some of their costumes now include digital tricks, such as this cyborg mask which uses a phone app to make the laser eye flicker

But, although the success was encouraging, it was hard work. All three had established careers alongside the new business. Fraser was head of marketing for BT Broadband, Gregor was a brand manager for Procter and Gamble, and Ali was an accountant working at Barclays.

"We were all working full time in corporate jobs, getting home at 7.30pm and starting work on the business until 2am and then getting up and doing it all again," says Fraser.

By mid-2010, it became apparent that the day jobs were no longer needed and the three left work to concentrate on the business.

Stripped down business

They discovered that, although their idea was niche, there was a huge market. According to the National Retail Federation, the costume market is worth $2bn in the US alone. MorphCostumes now has a turnover of £10m per year.

Now, Fraser is chief executive, Gregor is marketing director and Ali is operations director, roles that were decided according to their individual strengths in commercial, creative and financial areas. Regardless of job title, each founder holds the same amount of the company. They still own the majority, with investors and some other team members having minority stakes.

Image copyright MorphCostumes
Image caption The firm has now moved into doing more traditional costumes
Image copyright MorphCostumes
Image caption Superheroes are always popular

But working with friends and family has not always been easy.

"There have often been differences of opinion on strategy, but we have always managed to have a good debate or argument and agree on a course of action for us all to get behind without it becoming a long-term disagreement," says Fraser. "Good debate is really important because it ensures you have really thought about the question."

Imitation game

They have a trademark on the name Morphsuits but, of course, can't stop copycats.

Three months after they started, the first copies came to market and Fraser estimates that there have been about 50 companies that have imitated their morphsuits.

"At first, we were outraged but then realised every new product spawns competitors. It forces you to stay on top of your game and continually create better products to stay ahead," says Fraser.

Image copyright MorphCostumes
Image caption The company has sold some 2.5 million suits

MorphCostumes now has offices in Edinburgh and London, employs 29 people and sells in 25 countries, with the US the biggest market. The most popular suit across the globe is black, although best sellers are often topical, such as current favourite Stormtroopers.

Digital tricks

In 2012, £4.2m funding from investment firm the Business Growth Fund allowed them to grow by moving into the more traditional non-Spandex costume market.

Then, a year later, they began incorporating digital trickery into their costumes. This involved acquiring a costume company that was developed by a NASA scientist, Digital Dudz, on which there is a patent pending. Last year, they relaunched the brand to become MorphCostumes to reflect the diversity of product on offer.

The plan now is to continue the growth and much of their revenue is reinvested in the business to make this happen.

Not bad for an idea that came about after a few beers on a night out.

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