To invite external users into VSTS, we first need to add them to the AAD directory. We can do this today with PowerShell, but you need the right module installed.
Make sure you have the AzureADPreview module installed.
If you need it, from an admin powershell prompt, you can use:
Install-Module AzureADPreview
To update it later: update-module AzureAdPreview
To remove it once it hits the stable module: uninstall-module AzureAdPreview