Here's how I see it (in pick up races): who cares if you come last? Slowly push your limits every lap, you'll soon get faster. Ignore where you come in a race. Also, if you're not comfortable with racing next to someone then back off and give yourself some space. Try starting at the back of every race until you get the confidence to go into T1 and not wreck the whole field.
To summarise it, have your own race. Ignore where you're going to finish and your lap times will soon pick up. When you're fast enough start racing with a few friends, get into a good battle and you'll soon get the confidence to do that with complete strangers.
