There is a world of difference between telling someone: "You didn't do very well" and "You'll never be any good". I've experienced both. The first makes you determined to try harder. The second makes you feel like you might as well give up. Or, as loftustb said, that you're a fraud and will be discovered sooner or later.
The time it happened to me I knew enough to understand what was going on...the person concerned thought I was over-confident, and actually I was anything but, but I have been assured by people who know me that I can appear that way. Even though I understood, it took me ages, plus loads of reassurance from others, before I could even begin to get over it.
And as far as flying is concerned, the amount of under-confidence that causes is actually quite dangerous. You can't give up when things get tough up there; you can't think you're a fraud and will never be any good: you HAVE to believe you can do it.