A plan for media management in Drupal 8

Today, when you install Drupal 8.2, the out-of-the-box media handling is very basic. For example, you can upload and insert images in posts using a WYSIWYG editor, but there is no way to reuse files across posts, there is no built-in media manager, no support for "remote media" such as YouTube videos or tweets, etc. While all of these media features can be added using contributed modules, it is not ideal.

This was validated by my "State of Drupal 2016 survey" which 2,900 people participated in; the top two requested features for the content creator persona are richer image and media integration and digital asset management (see slide 44 of my DrupalCon New Orleans presentation).

This led me to propose a "media initiative" for Drupal 8 at DrupalCon New Orleans. Since then a dedicated group of people worked on a plan for the Drupal 8 media initiative. I'm happy to share that we now have good alignment for that initiative. We want to provide extensible base functionality for media handling in core that supports the reuse of media assets, media browsing, and remote media, and that can be cleanly extended by contributed modules for various additional functionality and integrations. That is a mouthful so in this blog post, I'll discuss the problem we're trying to solve and how we hope to address that in Drupal 8.

Problem statement

While Drupal core provides basic media capabilities, contributed modules have to be used to meet the media management requirements of most websites. These contributed modules are powerful — look at Drupal's massive adoption in the media and entertainment market — but they are also not without some challenges.

First, it is hard for end-users to figure out what combination of modules to use. Even after the right modules are selected, the installation and configuration of various modules can be daunting. Fortunately, there are a number of Drupal distributions that select and configure various contributed modules to offer better out-of-the-box experience for media handling. Acquia maintains the Lightning distribution as a general purpose set of components including media best practices. Hubert Burda Media built the Thunder distribution and offers publishers strong media management capabilities. MD Systems created the NP8 distribution for news publishers which also bundles strong media features. While I'm a big believer in Drupal distributions, the vast majority of Drupal sites are not built with one of these distributions. Incorporating some of these media best practices in core would make them available to all end-users.

Second, the current situation is not ideal for module developers either. Competing solutions and architectures exist for how to store media data and how to display a library of the available media assets. The lack of standardization means that developers who build and maintain media-related modules must decide which of the competing approaches to integrate with, or spend time and effort integrating with all of them.

The current plan

In a way, Drupal's media management today is comparable to the state of multilingual in Drupal 7; it took 22 or more contributed modules to make Drupal 7 truly multilingual and some of those provided conflicting solutions. Multilingual in Drupal 7 was challenging for both end-users and developers. We fixed that in Drupal 8 by adding a base layer of services in Drupal 8 core, while contributed modules still cover the more complex scenarios. That is exactly what we hope to do with media in a future version of Drupal 8.

The plan for the Drupal 8 media initiative is to provide extensible base functionality for media handling in core that supports the reuse of media assets, media browsing, and remote media, and that can be cleanly extended by contributed modules for various additional functionality and integrations.

In order to do so, we're introducing a media entity type which supports plugins for various media types. We're currently aiming to support images and YouTube videos in core, while contributed modules will continue to provide more, like audio, Facebook, Twitter, etc. To facilitate media reuse, WYSIWYG image embedding will be rebuilt using media entities and a media library will be included to allow selecting from pre-existing media.

We consider this functionality to be the minimum viable product for media in Drupal 8 core. The objective is to provide a simple media solution to make Drupal 8 easy to use out of the box for basic use cases. This would help users of sites large and small.

Media library prototype
A work-in-progress prototype of the proposed media library.

Expected timeline and call for help

We believe this could be achieved in a relatively short time — to be included in Drupal 8.3 or Drupal 8.4 as experimental modules. To help make this happen, we are looking for organizations to help fund two dedicated code sprints. The existing contributors are doing an amazing job but dedicated in-person sprints would go a long way to make the plans actually happen. If you are willing to help fund this project, let me know! Looking to help with the implementation itself? The media team meets at 2pm UTC every Wednesday. I also recommend you follow @drupalmedia for updates.

I tried to make a list of all people and organizations to thank for their work on the media initiative but couldn't. The Drupal 8 initiative borrows heavily from years of hard work and learnings on media related modules from many people and organizations. In addition, there are many people actively working on various aspects of the Drupal 8 media initiative. Special thanks to everyone who has contributed now and in the past. Also thank you to Gábor Hojtsy, Alex Bronstein and Janez Urevc for their contributions to this blog post.

I got into the paint business

I got into the paint business last week! Sherwin-Williams (SHW) is a 150 year old company selling paints and coatings. I first got interested in Sherwin-Williams 9 months ago, and have been watching the stock since.

A business selling paint sounds boring, but Sherwin-Williams might have one of the best business models in the world. The reason for my interest is that over the past 10 years Sherwin-Williams' annualized return was 17%. Put differently, someone who invested $10,000 in Sherwin-Williams 10 years ago, would have seen that money grow to $50,000 today. The past 20 years, between 1995 and 2016, Sherwin-Williams returned on average 15% per year and the past 30 years, between 1985 and 2016, Sherwin-Williams returned on average 15% per year as well. In other words, if you invested $10,000 in Sherwin-Williams 30 years ago, it would have grown to be over $700,000 today. When it comes to investing, boring can be good. People will always paint things, in good times and bad times, and they don't mind paying extra for quality.

Shw vs spy
The past 10 years, Sherwin-Williams has significantly outperformed the S&P 500. The past months, Sherwin-Williams has fallen about 20% from its all-time high.

Past performance is no guarantee for future results. I've been waiting to invest in Sherwin-Williams for about 9 months, and finally started half a position last week at $249 a share. The share price of Sherwin-Williams declined by about 21% from its all-time high, in part because of a disappointing third-quarter earnings report. At $249, Sherwin-Williams might not be a screaming buy -- the P/E of 21 remains relatively high. If you're a more patient investor, it might be worth waiting a bit longer. The price could fall further, especially if the Federal Trade Commission blocks the Valspar acquisition or if the market corrects more broadly. At the same time, there is no guarantee the stock will go lower and Sherwin-Williams might not trade 21% of its all-time high for long. If the stock were to drop another 10% or more, I would almost certainly buy more and cost-average into a full position.

Understanding past returns

The first thing I like to do is study how a company achieved such returns.

Between 2006 and 2016, Sherwin-Williams grew revenues 4% annually from 7.8 billion to 11.7 billion. Earnings grew faster than revenues as the result of profit margins improving from 7.4% to 9.5%. Specifically, earnings grew 6.8% annually from 576 million in 2006 to 1.1 billion in 2016.

Earnings growth of 6.8% isn't something to write home about. Fortunately, earnings growth isn't the whole story. What makes Sherwin-Williams an interesting business is that it gushes cash flow to the tune of 1.1 billion a year on 11.7 billion of sales. The company used its cash flow to buy back 31% of its shares between 2006 and 2016. This has allowed earnings per share to grow by an additional 3.8% annually.

Shw components
Three components working together to improve earnings per share: revenue growth, margin expansion and share count reduction.

Next we can add in the dividend. Sherwin-Williams has a history of raising its dividend for 38 years. The past 10 years, Sherwin-Williams had an average dividend yield of 1.6%.

So we have 6.8% earnings per share growth as the result of growing sales and margin expansion, and 3.8% earnings per share growth thanks to a reduction in share count. This equates to 10.6% earnings per share growth. Add a 1.6% dividend yield, and investors are looking at 12.2% annual returns. That is a great return, especially for a 150 old business selling paint.

In addition to revenue growth, margin expansion, a significant share count reduction and a small dividend, Sherwin-Williams also saw significant price to earnings (P/E) expansion. In 2006, Sherwin-Williams was trading at a P/E of 14 while it is trading at a P/E of 21 today. On average, the P/E expanded by 4.1% per year. While some of the P/E expansion could be justified by the quality of the sales improving (higher margins), it is fair to say that the P/E got ahead of itself.

Modeling future returns

The second thing I like to do is evaluate a company's future prospects.

The reason Sherwin-Williams has been so successful over the past decade is because it had all these components working together -- sales growth, margin expansion, share count reduction, a small dividend and a growing valuation. Understanding the different components is important to help us evaluate Sherwin-Williams' prospects.

Because of Sherwin-Williams' healthy cash flow, I believe the company should be able to keep growing revenues (through acquisitions), keep retiring shares, and grow their dividend for the foreseeable future. I'm more concerned about the margins and valuation components. Sherwin-Williams won't be able to improve margins forever -- in fact, an increase in input costs could have negative impact on margins. And despite a 22% drop in price and growing earnings, the P/E remains high at 21.

For illustration purposes, let's assume that Sherwin-Williams' earning per share will grow 6% for the next 5 years instead of the 10.6% it grew the last decade. After five years, earnings per share would grow from $11.16 in 2015 to roughly $14.9 in 2020. Next, let's factor in the possibility for a P/E contraction. Let's say that after five years, the P/E contracted almost 30% from 21 to 15. In this scenario, shares of Sherwin-Williams would be trading at $224 in 2020. This is $20 below today's share price of $244. That said`, the next 5 years a shareholder of Sherwin-Williams will collect something in the order of $25 in dividends for every share owned. This would bring the total return up to $249. I consider this scenario to be pessimistic but certainly in the realm of possibilities.

In a more optimistic scenario, Sherwin-Williams might be able to maintain a 10% earnings per share growth rate at a P/E of 18. Here, we're looking at a 2020 share price of $323, good for an annual compound growth rate of almost 6%.

Needless to say, this is a very rough model. The idea is not to create a perfect model, but to understand a range of possibilities.

Long-term passive income

Shw dividends
The dividend is low but has been growing fast. At the same time the dividend actually became safer as the dividend payout ratio went down sharply.

While I don't think I will lose money on my investment, I also don't expect that Sherwin-Williams will be a home run in the next 5 years. Why then did I decide to invest? The reason is that I prefer to think in terms of decades, rather than a 5 year horizon. What excites me about Sherwin-Williams is not its prospects over the next 5 years, but its potential for income generation 20 to 30 years from now.

Sherwin-Williams appears to be a well-run company. It has been in business for 150 years and continues to grow at a healthy pace. It has increased dividends each year for the last 38 years. During the past 10 years, the dividend growth rate was almost 13% annually, well above the S&P 500's 10 year average of 4%. Last week Sherwin-Williams announced a 25% increase in its quarterly dividend from $0.67 a share to $0.84. Even with that generous increase, the company's payout ratio -- the percentage of profits it spends on paying out its dividend -- remains low at around 30%.

Sherwin-Williams's starting dividend of 1.3% is not impressive, but its dividend growth rate is. Should Sherwin-Williams continue to increase its dividend by 13% annually, after 20 years, each share would produce $39 in annual income. After 30 years the annual dividend would amount to $132 per share. The yield on cost would be 16% and 54% respectively. Given the low payout ratio, strong share buyback program, and the 30 year track record of 15%+ returns, I believe that could be a possibility. Time will tell. If you plan to hold Sherwin-Williams for 20 to 30 years, I believe it could be among the best stocks for both wealth building and dividend income.

Disclaimer: I'm long SHW with a cost basis of $249 per share. Before making an investments, you should do your own proper due diligence. Any material in this article should be considered general information, and not a formal investment recommendation.

Nasdaq using Drupal 8 for new Investor Relations websites

Nasdaq using drupal

I wanted to share the exciting news that Nasdaq Corporate Solutions has selected Acquia and Drupal 8 as the basis for its next generation Investor Relations Website Platform. About 3,000 of the largest companies in the world use Nasdaq's Corporate Solutions for their investor relations websites. This includes 78 of the Nasdaq 100 Index companies and 63% of the Fortune 500 companies.

What is an IR website? It's a website where public companies share their most sensitive and critical news and information with their shareholders, institutional investors, the media and analysts. This includes everything from financial results to regulatory filings, press releases, and other company news. Examples of IR websites include http://investor.starbucks.com, http://investor.apple.com and http://ir.exxonmobil.com -- all three companies are listed on Nasdaq.

All IR websites are subject to strict compliance standards, and security and reliability are very important. Nasdaq's use of Drupal 8 is a fantastic testament for Drupal and Open Source. It will raise awareness about Drupal across financial institutions worldwide.

In their announcement, Nasdaq explained that all the publicly listed companies on Nasdaq are eligible to upgrade their sites to the next-gen model "beginning in 2017 using a variety of redesign options, all of which leverage Acquia and the Drupal 8 open source enterprise web content management (WCM) system."

It's exciting that 3,000 of the largest companies in the world, like Starbucks, Apple, Amazon, Google and ExxonMobil, are now eligible to start using Drupal 8 for some of their most critical websites. If you want to learn more, consider attending Acquia Engage in a few weeks, as Nasdaq's CIO, Brad Peterson, will be presenting.

Personalization takes flight with the new Acquia Lift

Last week, we launched a new version of Acquia Lift, our personalization tool. Acquia Lift learns about your visitors' interests, preferences and context and uses that information to personalize and contextualize their experience. After more than a year of hard work, Acquia Lift has many new and powerful capabilities. In this post, I want to highlight some of the biggest improvements.

Intuitive user experience

To begin, Acquia Lift's new user interface is based on the outside-in principle. In the case of Acquia Lift, this means that the user interface primarily takes the form of a sidebar that can slide out from the edge of the page when needed. From there, users can drag and drop content into the page and get an instant preview of how the content would look. From the sidebar, you can also switch between different user segments to preview the site for different users. Personalization rules can be configured as A/B tests, and all rules affecting a certain area of a page can easily be visualized and prioritized in context. The new user interface is a lot more intuitive.

Unifying content and customer data

Having a complete view of the customer is one of the core ideas of personalization. This means being able to capture visitor profiles and behavioral data, as well as implicit interests across all channels. Acquia Lift also makes it possible to segment and target audiences in real time based on their behaviors and actions. For example, Acquia Lift can learn that someone is more interested in "tennis" than "soccer" and will use that information to serve more tennis news.

It is equally important to have a complete view of the content and experiences that you can deliver to those customers. The latest version of Acquia Lift can aggregate content from any source. This means that the Acquia Lift tray shows you content from all your sites and not just the site you're on. You can drag content from an ecommerce platform into a Drupal site and vice versa. The rendering of the content can be done inside Drupal or directly from the content's source (in this case the ecommerce platform). A central view of all your organization's content enables marketers to streamline the distribution process and deliver the most relevant content to their customers, regardless of where that content was stored originally.

Content can also be displayed in any number of ways. Just as content in Drupal can have different "display modes" (i.e. short form, long form, hero banner, sidebar image, etc), content in Acquia Lift can also be selected for the right display format in addition to the right audience. In fact, when you connect a Drupal site to Acquia Lift, you can simply configure which "entities" should be indexed inside of Acquia Lift and which "display modes" should be available, allowing you to reuse all of your existing content and configurations. Without this capability, marketers are forced to duplicate the same piece of content in different platforms and in several different formats for each use. Building a consistent experience across all channels in a personalized way then becomes incredibly difficult to manage. The new capabilities of Acquia Lift remedy this pain point.

The best for Drupal, and beyond

We've always focused on making Acquia Lift the best personalization solution for Drupal, but we realize that customers have other technology in place. The latest version of Acquia Lift can be installed on any Drupal or non-Drupal website through a simple JavaScript tag (much like the way you might install Google Analytics). So whether it's a legacy system, a JavaScript application, a decoupled Drupal build with custom front end, or a non-Drupal commerce site, they can all be personalized and connected with Acquia Lift.

In addition, we've also taken an API-first approach. The new version of Acquia Lift comes with an open API, which can be used for tracking events, retrieving user segments in real time, and showing decisions and content inside of any application. Developers can now use this capability to extend beyond the Lift UI and integrate behavioral tracking and personalization with experiences beyond the web, such as mobile applications or email.

I believe personalization and contextualization are becoming critical building blocks in the future of the web. Earlier this year I wrote that personalization is one of the most important trends in how digital experiences are being built today and will be built in the future. Tools like Acquia Lift allow organizations to better understand their customer's context and preferences so they can continue to deliver the best digital experiences. With the latest release of Acquia Lift, we've taken everything we've learned in personalization over the past several years to build a tool that is both flexible and easy to use. I'm excited to see the new Acquia Lift in the hands of our customers and partners.

State of Drupal presentation (September 2016)

DrupalCon Dublin marked my 28th DrupalCon and #Driesnote presentation. You can watch a recording of my keynote (starting at 23:55) or download a copy of my slides here (185.4 MB).

The first half of the presentation I provided a technical update on Drupal 8. I showcased some of the big changes in Drupal 8.2 such as the settings tray, REST API improvements, migration tool improvements, and easier to use block placement. I also talked about how we've transformed Drupal 8 for continuous innovation. I'm super excited about our improved development process and release cycle, as it helps us ship innovative updates to Drupal 8 faster and with a much easier upgrade path.

The second half of the talk focused on "The why" of Drupal, and asked an important question for all of us to think about: what is Drupal's collective purpose? In addition to me talking about my own purpose, my team interviewed Drupal people around the world about their passion and purpose.

I featured a lot of interviews with Drupalists. If you're interested in viewing their individual videos, they're now available on my YouTube channel:

© Paul Johnson

Special thanks to Ash for the amazing design work on my slides and helping with the interviews, and Paul Johnson for the nice photo of me listening to Zsófi.

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