If you start spotting Spider-Man in Glasgow, the Iron Man in Edinburgh, and Captain America in Aberdeen, rest assured you are not losing your marbles. The chances are they will be Marvel superhero fans wearing the latest Morphsuits developed by the Scottish company AFG Media. And with suits that have added ‘super powers’, this will surely take Morphsuits into the stratosphere and beyond.
In case you have been living on planet Zog, the Morphsuit is a tight-fitting, full-body garment of spandex and polyester that has become a fancy dress sensation. The core benefits - apart from the fun they create - are you can see through, breathe through and drink through the suits. Among the crazy facts about Morphsuits is the world record for drinking a pint of beer through the suit is 6.3 seconds.
Gregor Lawson, Fraser and Ali Smeaton, the three fun-loving founders of this global phenomenon, are super serious about their business. Neither wonder. The fancy dress industry worldwide is worth an estimated £3.5 billion and it is growing. Those who love dressing up for almost any given occasion have an insatiable demand for innovation – and that is keeping the Morphsuit men focusing on this big prize. The Morphsuit is already in a league of its own but some tantalising developments for the Edinburgh-based business are attempting to keep it way ahead of the pack.
Sitting in the modern Edinburgh office of AFG Media, near the former depot for the city’s cable-drawn tramcars, there is a buzz of activity. In the upstairs balcony, Ali and Gregor are modelling some of their latest creations, while downstairs the marketing and administrative teams are helping keep the vital social media chat up-to-the minute. For Morphsuits is an innovative and impactful business that has been propelled by the power of Facebook – and Morph fans have heard about a new range of licenced Marvel costumes with ‘augmented reality’, which will bring party-going ‘superpowers’ to mimic Spider-Man, Iron Man, Wolverine, Captain America and Deedpool.
“We’re aiming to be the first global brand in the fancy dress sector synonymous with awesome costumes incorporating smartphone technology,” says Gregor Lawson, the bearded co-founder, after returning to more customary jeans and T-shirt.
For four years, he explains, thousands of fans have been clamouring for Morphsuits to follow the success of their Power Rangers outfits and go for Marvel superheroes, especially Spider-Man. But such characters are licensing gold-dust, and AFG Media have had to spend time winning over Disney-Marvel.
“It was natural for people to ask for Spider-Man because he effectively wears a Morphsuit. It’s a no-brainer. But when it comes to working with a big company like Disney-Marvel, it takes a long time to get the licence and sort out all the legal work. Now we’ve done it and we’re incredibly excited,” says Gregor.
It is very early days with Disney-Marvel but with George Lucas’ Star Wars franchise also coming into the fold, there are some eye-watering prospects for Morphsuits, especially now that they are endowed with Super Powers.
In the meeting room, Gregor and Ali [Fraser is in a series of commercial sessions in London] are delighted to demonstrate how augmented reality is incorporated into the Iron-Man suit - by using a smart phone to identify a marker, Iron-Man appears to fire a laser-like beam from his hands. The mock ‘electricity charge’ can then be screen-grabbed and shared with friends who can ‘Like’ the image. The ‘augmented reality’ Zappar works with the free Morphsuits smartphone app integrated with the costume and brings the hero’s superpowers to life. Gregor then dons a monster’s head made from latex, fixing his iPhone into the head to create a moving Cyclop’s eye. It’s brilliantly inventive and generates hoots of laughter. It might well generate piles of cash too.
This is the new world of the Digital Dudz’ Cyclops Masks and Zappar Codes helping to bring superhero costumes to a higher plain of experience.
“We see this as the start of a costume revolution from two-dimension products to something with interactive 3-D,” says Gregor.
Morphsuits’ collaboration to create Marvel Super Heroes in Europe with patented wearable smartphone technology is the result of a hook-up in August 2013 with Mark Rober, a former NASA scientist, joining the founders. He is a creative brain behind Digital Dudz, who is using the disruptive technology of iPads, tablet and mobile phones to bring fancy dress alive – or in some cases, dead. One of Rober’s wackiest wearable inventions involves using duct tape to attach two iPads to his chest and back and, adding some fake blood to give the impression of looking straight through a zombie’s body.
“We’re all about innovation. That’s our mission to deliver the most impactful costumes the world has ever seen. Given the speed of technology, the potential for impact and innovation has never been greater. Mark now works with us and he’s a huge addition to the team. He tells you that the computer in an iPhone is more powerful than the one he used to land the Mars Rover. The potential of doing things with phones and making an impact to another level is massive,” says Gregor.
Gregor and Fraser are from Gullane, in East Lothian, while Ali is from Dollar in Clackmannanshire. All in their early thirties, they were great mates at Edinburgh University, dabbling with businesses ideas on the coffee table in the front room of their student flat.
However, they all went off to pursue professional careers. Before Morphsuits began, Gregor was working for P&G in fast-moving-consumer-goods for about eight years. He worked on brands including Gillette, Pantene, Olay, working in Dublin, London and Geneva.
“I thoroughly enjoyed my job. You were given a robust on-boarding into the world of marketing and brand-building. You are given theories and processes to apply to real-life business situations. It’s helped us along the journey. We’re incredibly focused on the consumer, that’s something we’ve learned from P&G with its ‘Consumer is Boss’ saying.”
Fraser Smeaton was working for BT and heading up their broadband department, which was marketing with more of a commercial focus. Today he is the commercial director and driving along many of the production issues.
Ali Smeaton, the operations director for AFG Media, worked for Ernst & Young where he trained as a chartered accountant in Glasgow. He joined Barclays Bank in leveraged finance as a director in Scotland and Dublin. With Ireland in the corporate doldrums, he decided to leave EY to become a full-time entrepreneur.
“In the early days it was a strength of ours that the three of us had generally complementary skills and shared a common goal. Our skills set fitted together really well.
“In the past four and a half years, we’ve found that our years in the corporate world have certainly helped us. We’ve all drawn on our experience, skills, qualifications to help grow our business,” says Ali.
Relationship building has been a key: the logistics firm that works with the business was introduced through contacts from Ali’s previous employment at Barclays Bank and a buying agent was found through similar introductions.
“Gregor and Fraser have tapped a huge wealth of knowledge of marketing,” says Ali, adding that two of the marketing department are former P&G hands.
Morphsuits was not AFG’s first business. There had been Pundit It, which was for sports lovers who wanted to offer their ‘expert’ assessments of football, rugby and other sports. It was an online forum taking sports stories and events and allowing amateur pundits to post and write their own reviews. It was up and running with several thousand pundits but it was taking time to monetise.
“During this time we stumbled on the Morphsuit idea, and we liked the thought of selling something, rather than a service and a forum,” says Gregor.
“When we founded the business we all had corporate jobs, so we made the AFG Media headquarters in Gullane, which is where Ali and Fraser’s parents live. Their mum still has a role in helping with some administrative tasks, such as returns,” adds Ali.
The guys are clearly innovators in the fancy-dress sector and nothing else touches
“We are constantly challenging ourselves to see what we can do with our products to stay ahead of the global costume industry. In the early days, the impact from the six coloured suits that we launched was amazing. That was enough to create the buzz.”
The first set of suits were put into production in January 2009 and by the summer of that year they were making a serious splash. Within six weeks, they had 10,000 Facebook fans.
“This was off the back of the plain suits and getting out and about. It was word of mouth.
People had not seen anything like it and they could see that it was good fun. Word just spread. Most people like a bit of attention from time to time. Morphsuits are about confidence, not body-type,” explains Gregor.
The three were still working in their full-on jobs when the buzz really took off.
“We could tell within the six weeks that something special was happening. The shock and awe effect that the suit created helped drive awareness. Gregor and Fraser went to the international rugby Sevens at Twickenham. Then I roped in some buddies in Edinburgh and we went to the Heineken Cup final at Murrayfield in May when Leinster beat Leicester. It was about showing people the fun they could have with Morphsuits,” says Ali.
The first year was predominantly online sales and AFG turned over £1.1 million, entirely through the website. The viral impact of social media has been immediate and remains paramount for Morphsuits.
Gregor said:“We then figured out the potential to be more than something that helped us pay for our ski holidays every year. The real tipping point was the run-up to Hallowe’en in 2009. One day we sold £20,000 worth of suits. That’s where it was like ‘Holy Smokes’. We knew that Hallowe’en was small fry in the UK compared to the US. That’s when we needed to get the websites going for various countries and tap the market for fun, outgoing fancy dress.”
With the initial hard work done and Morphsuits making an early impact, there was a deep-seated fear that being employed and running the business on a part-time basis meant they were missing out on opportunities. It was time for all three to go full-time. The first range of six suits was soon expanding with skeletons, flags and now a range of over 350 designs, including innovative costumes from the recently launched Morph Costume Co Foul Fashion brand golf clothing under the name Royal & Awesome.
“We had no experience of manufacturing garments, which is really what a Morphsuit is. We went to AliBaba.com, which does everything from crude oil to JCBs, and we worked with some guys who specialised in high-viz vests, rather than Morphsuits. We went back and forth to find out how to get it done,” explains Ali.
The fancy dress industry is riddled with tacky, poorly-made items that are disposable after an evening’s wear. For the AFG guys, quality was the bedrock. It had to be a wearable garment that could be washed and used again, without losing its colours and sheen. The wearer had to be able to see out through the fabric, but no-one would see in. With the face covered, the anonymity made it special.
“When people buy a Morphsuit they want to keep on wearing it. They buy it for a party but keep wearing it again and again. It took us time to get the perfect mixture of spandex and polyester so that it would stretch and fit perfectly,” explains Ali.
“We worked through our Chinese manufacturer and put a $1 million worth of business before meeting them face to face. Everything was done on Skype. This is the nature of global business in this day and age,” says Gregor.
The trio are passionate entrepreneurs who get along well, work hard and recognise they have had a few lucky bounces. They know there are copy-cat competitors watching them closely with the firepower to muscle into their market.
“We spend a great deal of time getting the design absolutely perfect. Disney-Marvel will share a style guide with us and we will work through adapting that with the Morphsuits construct. Then the digital mock-up goes back and forth to make sure it is perfect before
It is ready for sample production to look at how the colours blend, working with the Chinese team to bring the digital mock-up to life as a garment. Once the team in Edinburgh gives sign-off, it goes into production. The main design team, using Apple Mac, is based in Walsall.
“We’ve kept the fixed costs in the business very low by outsourcing everything,” says Ali.
“Where we don’t have the know-how, such as manufacturing and logistics, we get someone to help. We have to ensure that thousands of unsold suits are not languishing in a warehouse somewhere.”
The colour-fast suits are made in ten factories across different regions of China, including Shanghai, Schenzhen and Ningbo. The product has to be robust enough to be washed, especially the suits for children. It takes between four and six weeks to make up to 100,000 suits, and then around four weeks to ship to the UK or the United States.
For special launches, the suits, which weigh only a few kilograms, can be sent by air freight. A 40ft container can take 30,000 suits.
In 2013, the business was 50/50 online sales and sales through retailers, with the multiple retailers from Party City, Kmart, Argos, and supermarket chains, such as ASDA and Tesco now seeing the mainstream opportunities.
“In the early days we were building brand awareness through the website and keeping everything cool and new, which was about exclusivity for our products, but the demand has come strongly from the trade. If we hadn’t met that demand, someone else might have stepped in.”
Morphsuits had stolen a march on the other players, but the AFG guys know they need to diversify beyond spandex into other fancy dress, such as the Cyclops latex masks and suits.
“By the time that they locked onto us we were a year down the line and Morphsuits have become the category. This is exciting because we believe we are the biggest brand in fancy dress by some margin. It’s about building on this asset. We would not exist to the extent that we do without Facebook,” says Gregor.
Most businesses today extol the virtues of social media, buy Morphsuits created a clamour.
“We believe we were the first brand to launch using Facebook. That was borne out of necessity because we didn’t have any budget. Facebook was a different medium four years ago and it was easier to drive fans and engagement without spending a huge amount of money,” explains Gregor.
Facebook allowed AFG Media, then a tiny company in East Lothian, to tap a global audience where social credibility was at the heart of being accepted.
“What better way for someone to have social credibility than to be snowboarding down a mountain in a Morphsuit; or at a party wearing a suit and surrounded by hot-looking women; or doing a charity run or a school sports day? There was some very powerful imagery,” says Gregor.
The Morphsuit is so striking it markets itself. The initial feedback gave the guys confidence to trial in America and Australia where the potential markets were exponentially massive.
“We were able to test these markets by finding a distribution centre and then shipping in hundreds then thousands of suits. Once we were established we opened up Facebook advertising to them. You can soon tell through sales and interaction whether you have a win or not.”
The market to crack now is for children.
“Kids’ fancy dress makes loads of sense. Kids wear it seven-days a week and they continue to grow and the market is significant. The demand is there. We launched in earnest about two and half years ago and we’ve been advertising on the Cartoon Network to drive awareness. The kids’ market is great for us but it is highly dependent on licence. The kids want to be the people they watch on television. We are looking to extend our range of licenced Morphsuits in this category,” says Gregor.
Funding such meteoric growth has been part of the journey – and it sparked some early interest from a potential business.
The avenue to take was more funding. In June 2012, BGF, which is funded by the UK Government through UK banks, signed a £4.2 million deal with AFG Media which has helped fund the growth. The transaction was handled by Grant Thornton and DLA Piper for BGF and EY, Ignition Corporate Finance and Morton Fraser for AFG Media.
“We’ve got great partners in the BGF and in Barclays Bank, which is where I came from. Ally Scott and his team at Barclays have been very supportive, while Duncan Macrae, formerly of Dunedin Capital Partners, has joined our board from BGF,” says Ali.
Moreover, this has instilled a higher level of corporate discipline, with the likes of Ralph Kugler, formerly on the board of Mars, InterContinental Hotels and Unilever, also making an investment and coming on board.
“It’s been an overwhelmingly positive experience for us not just in terms of the cash that they have given us for our strategy, but also our young business needed shoring up in terms of the discipline of monthly board meetings and reporting structures. We’ve been encouraged to do this to improve our governance. I get a massive kick out of Ralph working with us. The business is better as a result,” says Gregor.
The company, with sales of £10.5 million, has also increased headcount from seven to over 25 to meet the demands. The team are all high-energy people who relish the kind of fun and games that go with the territory, including Friday evening workouts at Cross Fit, at Mission Training Systems in nearby Canonmills.
So Morphsuits, the future?
“We love what we do. We’re really passionate about it. We’ve worked hard - often to 2am - and played hard too.”
It is all about fun. That’s how serious these guys are.