"First, he picks small venues where he can do rapid, low-risk experiments with new material. In gearing up for his latest global tour, he made between 40 and 50 appearances at a small venue called the Stress Factory in New Brunswick, New Jersey"
I've assumed that this was how all good stand-up comedians come up with quality new material since seeing Comedian, the documentary about Seinfeld.
They all do, even the bad ones. Next up: Innovate like Tiger Woods by practicing on a driving range.
I actually live near the Stress Factory and, small or not, it's actually a great place and pulls some big names ever so often — Chris Rock being one in recent memory, but Russell Peters is another who did a few shows there.
I think testing and getting feedback will always help those who want to improve their product. The key is knowing what to do with the feedback, whether you are a comedian or an entrepreneur, continual testing will always lead to the answers you need, even if they are the answers you don't want to hear.
I managed to see Larry David this way. He played a club (OK, the only club) in Provo, UT.