LinkedIn founder Reid Hoffman shares the management epiphany that took his company to the next level

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LinkedIn founder and chairman Reid Hoffman speaks at the 2016 New York Times New Work Summit.

Although LinkedIn founder Reid Hoffman founded his first company in 1997 and has a reputation as one of Silicon Valley's brightest minds, it wasn't until he was creating a curriculum for his "Blitzscaling" Stanford class last year that he realized just how important corporate culture is, he said Tuesday at the New York Times New Work Summit.

"All of the successful scale companies do end up with some sort of strong culture because in fact it's a necessary component" for scaled growth, he told moderator Jenna Wortham.

That is, when a company's employee count surpasses around 150 0r so, it becomes impossible for everyone to know everyone else, and there is a risk that teams become more isolated from each other as more people join. If not addressed, this yields toxic growth that can eventually affect the company's financial performance.

In order to effectively scale, Hoffman argues, the company's leadership needs to codify its culture and make it well-known both internally and externally.

It's what Jeff Weiner was able to accomplish when Hoffman hired him as LinkedIn's CEO in 2009. Since joining, Weiner has overseen LinkedIn's headcount grow from a few hundred people to 9,200.

According to Hoffman, Netflix CEO Reed Hastings said the reason they created the Netflix culture deck in 2009 - which has been viewed millions of times online - was because they kept losing or having to let go of talented people after they spent just a month at the company. The new hire may have had great credentials, but once they joined, both they and their team realized they weren't a cultural fit.

Hastings told Hoffman that defining the elements of Netflix's culture allowed the company to both hold its members accountable internally and recruit the talent required to take it to the next level.

You can watch the full interview below.