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Once you figure that out, then you go to booked shows (shows where you are specifically selected to perform) in front of big audiences like at the Improv or the Comedy Store. This is where you use your best jokes. But you can't know your best jokes before you try them out. You never know if something will be funny until you try it.
These are the fuzzy rules. Some people use improvisation at booked shows and some people perform the same jokes over and over again at open mics without experimenting but I'd say this is the standard path to take.
True, but becoming less true in these days of ubiquitous high-res cameraphones. Used to be that if you tried out some risky or potentially offensive new material in front of ten drunks, the worst-case scenario was that you pissed off the ten drunks. Now you have to worry about pissing off the whole world, because any one of the ten drunks can record you and upload the video to YouTube for the world to see. Which makes it harder to "A/B test" new material than it used to be.
I don't know of a solution to this. No one wants to hear the same jokes for a decade. To get new "best stuff" you have to experiment. When you experiment, it may not be funny/ready. And with today's technology, it can be recorded at any time.
Similarly, we have a Circus Open Mic in Seattle (https://www.facebook.com/events/533760116677373/) where ground rules are that admission is free and open to the public but it's generally a supportive and in-community audience. We've had comedians, magicians, aerialists, acrobats, jugglers, extremely weird people, clowns, and strip history lessons.
I present both of these as ideas for ways to develop and grow without being subject to eternal Google search indexing and YouTubing by random civilians. I think both of these seem to come down to controlling the venue and rules. If you experiment in a bar or club, you're in the wild.
We do these in theatres, black boxes, and dance/performance spaces. This allows us to control the door.