So I have to question the validity of your anecdote. And even if you HAVE completely avoided any going-through-the-motions performance reviews, because you're working only for SUPER-early-stage seed round startups, then well... there are plenty of disadvantages to that life too. Not the least of which is that rising interest rates will likely be choking off the 15-year private equity gravy train cycle this year.
A formal review process at least surfaces those thoughts. It’s better than the quiet process where managers form their own conclusions without communicating them.
Individual performance reviews reduce incentives to cooperate, because you only need to have a good review in comparison, not on some non-existent absolute metric.
Performance review systems will always have flaws, but it’s better (in nearly all workplaces) to have a formal and transparent process for them than to have none at all.