well there is only one thread with the same error message... but
http://desktop.arcgis.com/en/arcmap/10.3/manage-data/las-dataset/lidar-solutions-creating-raster-dem...
has a section on the procedure so that may be an issue..
Using the LAS dataset
A LAS dataset simply references a collection of LAS files and, optional feature classes that define surface characteristics, such as break lines. LAS datasets are stored as files using the *.lasd extension. Use the Create LAS Dataset geoprocessing tool to define the LAS dataset, then make a layer from it by adding it to a map. Define point filters from the Filter tab of the LAS dataset's Layer Properties dialog box. Filter properties are important because they control what points from the LAS files to process. Neither DEMs nor DSMs are made from all points; you must use a filter.